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Key political risks to watch in Cuba – 02-2012

Key political risks to watch in CubaBy Jeff Franks

HAVANA | Fri Feb 3, 2012 10:57am EST

Feb 3 (Reuters) – Cuba is opening the door to private management of some state-run cafes and service outlets in an apparent test of further reforms aimed at keeping the island one of the world's last communist countries.

The government said food prices rose nearly 20 percent in 2011 in a warning sign that economic change will not be painless.

Spain's Repsol YPF brought the massive Scarabeo 9 drilling rig into Cuban waters and began drilling what Cuba hopes will be the first of many wells in its untapped offshore oilfields.

ECONOMIC REFORMS

In eastern Holguin province, officials said 211 state-owned cafeterias would be leased to employeesin a semi-privatization similar to what has been done nationally with barber shops and beauty salons the past year and recently expanded to other service businesses such as watch repair and carpentry shops.

The Holguin program has not been mentioned in national media, but is likely a trial run before it becomes generalized, as was done with the other services.

The government, which wants to slash a million jobs from its payroll and encourage more private initiative, has said it will turn many small businesses, nationalized since the 1960s, over to employee cooperatives.

It is encouraging self-employment, with more than 362,000 people now working for themselves.

Economy Minister Adel Yzquierdo Rodriguez told the National Assembly in late December that 170,000 state jobs would be cut in 2012 and as many as 240,000 new non-state jobs added.

The government's goal is to have up to 40 percent of the island workforce of 5.2 million in non-state jobs by 2015.

President has made reform of Cuba's lagging agricultural sector a top priority and the Cuban state, which owns 70 percent of the country's land, has leased 3.5 million acres (1.4 million hectares) to 150,000 private farmers since he succeeded older brother Fidel Castro as president in February 2008.

In some areas, the state has increased the land farmers can lease to 165 acres (67 hectares), extended their leases to 25 years, allowed them to build homes on the land and will let them pass the leases on to family members.

Yet food output was up just 2 percent in 2011 and still below 2005 levels.

That, reduced food imports by the cash-strapped government and reforms allowing farmers to sell more of their production for market prices combined to make food prices shoot up in 2011.

The National Statistics Office reported that meat prices rose 8.7 percent while produce prices increased 24.1 percent, for an average of 19.8 percent on the year..

At the same time, the average monthly salary inched up only a few percentage points to the equivalent of $19 a month, the government said. The statistics stated what Cubans already knew — their buying power has shrunk under Castro's reforms.

President Castro told the National Assembly that Cuba still expected to spend $1.7 billion on food imports in 2012.

He also emphasized at a Communist Party conference the importance of an ongoing crackdown on corruption, which already has shuttered three foreign firms and sent executives of some of Cuba's biggest state-run firms to prison.

He said the party would implement term limits for the country's leaders, but he gave no details.

What to watch:

- The pace of reforms and their consequences.

- The development of small businesses.

- Agricultural production and food prices.

FINANCIAL HEALTH

Castro said the economy grew 2.7 percent in 2011 and was expected to rise 3.4 percent in 2012.

Cuba said it drew a record 2.7 million tourists in 2011, bringing in revenues of about $2.3 billion.

industry experts say has boomed this winter as the Arab Spring scared Europeans away from northern Africa, relaxed U.S. regulations made it easier for Americans to visit the island and Castro's reforms drew visitors curious to see the effects of changes. They said Cuba needs more hotels to accommodate its growing tourism industry, which is a top hard currency earner for the country.

Cuba is heavily indebted and still recovering from a liquidity crisis that led to a default on payments and freezing of foreign business bank accounts in 2009.

Castro told the National Assembly that accounts for foreign suppliers to Cuba had been unfrozen and steps taken to prevent the problem from happening again.

Hopes that reforms would bring more foreign have been slow to materialize, but Brazilian company Odebrecht said it would sign a contract to help Cuba improve its troubled sugar industry. One executive said the deal would include ethanol production.

Long-awaited golf course developments, aimed at attracting wealthier tourists, remain on hold.

What to watch:

- Resolution of outstanding short-term debt

- Signs of increased interest in foreign investment

- Growth of tourism and Cuba's ability to handle it

OIL PLANS

The Chinese-built Scarabeo 9 arrived in Cuban waters and at January's end began drilling the first of three exploration wells in Cuba's part of the Gulf of Mexico.

Spain's Repsol YPF and its partners plan to drill two of the wells and Malaysia's Petronas and its partner, Russia's Gazprom Neft, will drill the other, all this year and with the same rig.

The project has drawn opposition in the U.S. Congress, but, to allay safety concerns, Repsol allowed U.S. experts to inspect the Scarabeo 9 in Trinidad and Tobago. They said it met all international engineering and safety standards.U.S. companies are forbidden from operating in Cuba by the U.S. trade embargo.

Cuba depends on imports from its oil-rich ally , but says it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated 5 billion barrels.

What to watch:

- Results of Repsol's exploratory well.

- U.S. pressure to stop the drilling.

FOREIGN RELATIONS

A planned Papal visit in Marchimproved ties with Brazil, whose President Dilma Rousseff paid an official visit in January,are bright spots even as Cuba faces a more hostile Spanish government elected in November.

A major concern for Cuba is the health of Venezuelan President Hugo , a loyal ally whose government provides 114,000 barrels of oil a day and investment to Cuba. He underwent chemotherapy in Cuba and has declared himself cancer free, but experts say it is too soon to tell.

If he were unable to continue in office, it would be a big blow to Cuba.

U.S.-Cuba relations, which thawed briefly under President Barack Obama, have been frozen by the imprisonment of U.S. aid contractor Alan .He is serving a 15-year sentence for providing gear to Cuban Jews under a U.S. program promoting Cuban political change.

A document reported to be the court's sentence said Gross knew the political aims of his work and tried to hide it from Cuban authorities despite his claims to the contrary.

http://www.reuters.com/article/2012/02/03/cuba-risks-idUSRISKCU20120203

China, Cuba and the espionage alliance against the U.S.

Reflections in the Dragon's eye:

, Cuba and the espionage alliance against the U.S.Author – Toby Westerman Tuesday, January 10, 2012

China's intelligence operations are the "core arena" for achieving the superpower status which the Communist elite in Beijing so passionately desires. Central to its spy activities is the island of Cuba which is strategically located for the interception of U.S. military and civilian satellite communications. China's spy services also cooperates closely with Havana's own world-class intelligence services.

Inexplicably, the U.S. mass media are ignoring both the existence of the spy base as well as the Cuban-Chinese alliance which is responsible for it.

International News Analysis Today is challenging that media silence in an exclusive interview with counterintelligence expert Chris Simmons, who explains why China needs Cuba and details the dangers to the United States in Havana's espionage partnership with Beijing.

Simmons is a retired Counterintelligence Special Agent with 28 years service in the , Reserve, and the Defense Intelligence Agency, and has testified on the subject of Cuban espionage before members of U.S. House Foreign Affairs Committee.

Simmons notes that China has the largest espionage network in the world with an estimated two million career staff intelligence officers, making Beijing's spy services larger than the intelligence operations of all the other nations in the world combined.

While Americans are well aware of China's financial might, its espionage activities get relatively little attention.

"We are too often distracted by China's economic gains. For China, however, espionage and economics are tied hand in hand, and China has the largest appetite for U.S. secrets in the world," Simmons told International News Analysis Today.

The members of China's intelligence services, both its officers and those recruited as agents by those officers, tend to be ethnic Chinese, Simmons observed. This ethnic orientation of China's espionage services limits the available avenues of access to American security information. China's spy alliance with Cuba, however, assists China in overcoming this potential handicap.

Cuban penetration of U.S. society augments Chinese efforts and makes an extremely valuable contribution to Beijing's overall espionage effort. Cuba's human intelligence operations give needed perspective to information China receives both from its own operatives and from electronic spy bases operating in Cuba.

"That is why China needs Cuba," Simmons stated.

The kind of restricted information gathered electronically in Cuba covers military, economic, and political affairs, and ranges from how foreign policy is determined to indications of troop and fleet movements to significant details on important political figures.

The value Beijing places upon the information acquired via Havana can be seen in the October 2011visit to the island by Gen Guo Boxiong, Vice Chairman of China's Central Military Commission. Guo's presence in Cuba underscored that China has a special military commitment in addition to a sizable economic in Cuba.

China is in the process of replacing Cuba's aging Soviet-era military equipment, purportedly supplying only "non-lethal" aid. The U.S. prohibits "lethal" assistance to Cuba, and Beijing is risking U.S. sanctions if that prohibition is known to be violated. The true volume and nature of Chinese military aid to Cuba is, of course, difficult to assess.

General Guo's trip to Cuba follows a December 2010 military agreement, signed by top ranking PLA General Fu Quanyou, insuring needed military aid to the Castro regime.

Simmons pointed out that China's electronic intelligence activities on Cuba are particularly interesting, because China claims they don't exist.

"Officially they are not there," said Simmons, commenting upon Beijing's denials that it has electronic spying capabilities in Cuba.The island of Cuba has been used as an electronic spy base for decades

The island of Cuba has been used as an electronic spy base for decades, going back to the Soviet construction and use of the facility at Lourdes. The construction of the base at Lourdes was hard to miss as the concrete buildings and large antennas appeared on the Cuban landscape.

The Russians pulled out of Lourdes in 2001, much to the relief of many in Washington and the expressed displeasure of and his regime. Simmons stated that Moscow scored a propaganda victory in the U.S. media and among the U.S. political establishment with its abandonment of Lourdes.

The reality of the matter, however, was much different than appearances seemed to indicate, Simmons told International News Analysis Today.

When the Russians left Cuba, they also left a well-trained Cuban electronic intelligence battalion functioning on the island at the base in Bejucal, as well as an understanding with Havana to share intelligence information important to Moscow.

As a result, Russia saved millions of dollars which had been spent on the Lourdes base, Moscow avoided Congressional censure and obtained important economic cooperation from the United States, all at the same time still receiving important intelligence information on the U.S. from Cuba.

"It was a win-win situation for the Russians," Simmons stated.50-100 Chinese intelligence officers are at Bejucal gathering and interpreting information

The base at Bejucal, however, is still operating. While the Cubans technically run it, some 50-100 Chinese intelligence officers are at Bejucal gathering and interpreting information, according to Simmons.

In sharp contrast to Moscow, there is no political cost to China.

"It took us years to find out they [the Communist Chinese] were operating there. We found out through émigrés, defectors, and travelers to Cuba," Simmons told INA Today.

Unlike the Soviets, China has not constructed a facility and only with the greatest of difficulty can the Chinese be connected with Cuban electronic spy base activities. In this way, China can plausibly deny both the use of the base and the transference of information from its Havana embassy to Beijing, Simmons informed INA Today.

The Chinese even took pains to cover the expected increase in radio traffic from the Chinese embassy in Havana to Beijing as the Bejucal base, and smaller bases across the island which are connected with it, became more active.

In anticipation of a greater volume of radio communication activity between Cuba and China, Beijing gradually increased useless or "dummy" radio traffic with Havana. These "dummy" messages were later replaced, at least in part, with actual intelligence information generated from the Bejucal facility and its sub-stations as they became an important Chinese information source.

As a result, the U.S. has difficulty determining the "spikes" of real intelligence information within the broadcasts of "dummy" transmissions coming from the Chinese embassy in Havana, Simmons said.

The eye of the Chinese dragon is upon the United States. We do not know what information is coming from bases that supposedly do not exist, but Simmons commented on China's military and commercial investment in Communist Cuba and declared that, "Whatever they [the Chinese] are paying, they are getting a steal."

Chris Simmons is a security consultant and is author of the soon to be released novel, The Spy's Wife.

http://www.canadafreepress.com/index.php/article/43802

Key political risks to watch in Cuba – 01-2012

Key political risks to watch in CubaWed Jan 4, 2012 3:03pm GMTBy Jeff Franks

HAVANA Jan 4 (Reuters) – Cuba has opened more of its retail services to the private sector and liberalized land lease terms so farmers can rent more state land and keep it in the family as reforms aimed at fortifying the socialist system for the future continue.

The Caribbean island's self-employed sector has continued to grow and Cuba's long-delayed hope of exploring for oil offshore is close to becoming a reality as a Chinese-built drilling rig is expected to reach Cuban waters this month.

If oil is found, it will take at least three to five years to produce, but eventually should reduce or eliminate reliance on oil imports from , whose Hugo , the island's top ally and economic partner, had surgery for cancer last year.

ECONOMIC REFORM

The government said it would allow Cubans to operate various service businesses such as appliance and watch repair, locksmith and carpentry shops, just as it has done the past year with 1,500 state barbershops and beauty salons. [ID:nN1E7BPOOL]

They will pay a monthly fee for the government-owned space, buy supplies, pay taxes and charge what the market will bear in another step away from the doctrinaire communism imposed after the 1959 revolution.

Government officials said there are now more than 357,000 people working in the self-employed sector, the growth of which is being encouraged because the cash-strapped government wants to slash a million jobs from its payrolls and encourage more private initiative. It has temporarily lowered taxes and begun providing credits to the new entrepreneurs.

No figures have been released but government insiders said in October that just under 150,000 people had lost their jobs as the government pushes toward its goal of having up to 40 percent of the island workforce of 5.2 million in non-state jobs by 2015.

Minister Adel Yzquierdo Rodriguez told the National Assembly in late December that 170,000 state jobs would be cut in 2012 and as many as 240,000 new non-state jobs added.

The Cuban state owns 70 percent of the land on the island and, according to figures given at the National Assembly, has leased almost 3.5 million acres (1.4 million hectares) to 150,000 private farmers since 2008 with the goal of increasing agricultural production so it can reduce budget-draining imports. About 70 percent of the leased land was said to be under cultivation.

Food output was up in 2011, but still below 2005 levels, so starting this month, in response to farmer suggestions, the amount of land they can rent has been quintupled to 165 acres (67 hectares) and leases extended from 10 years up to 25.

The leases can be renewed and passed on to family members and farmers can build homes on the land. [ID:nN1E7BH02Q]

President told the National Assembly that Cuba still expected to spend $1.7 billion on food imports in 2012.

He also emphasized the importance of an ongoing crackdown on corruption, which already has shuttered three foreign firms and brought the arrest of top executives at Tecnotex, a company run by the Cuban military.

Cubans had hoped Castro would announce reforms making it easier for them to abroad, but he said only that changes would be made gradually.

The Cuban Communist Party and the government passed a series of reform plans this year that would move all business administration out of the ministries and grant newly formed holding companies more authority to make day-to-day decisions and control a percentage of their profits.

Cubans are now allowed, for the first time in decades, to buy and sell homes and used cars. As of the end of November, 6,009 cars had changed hands and 301 homes had been sold, officials said.

What to watch:

- The pace of reforms and their consequences.

- The development of small businesses.

- The shedding of business management by the ministries.

FINANCIAL HEALTH

Castro said the economy grew 2.7 percent in 2011 and was expected to reach 3.4 percent in 2012.

Cuba said it would end 2011 with a record 2.7 million tourists for the year and a 9 percent increase in revenues over the $2.1 billion in 2010. Tourism is a top hard currency earner for the island.

Reserves at the Bank for International Settlements stood at $5.649 billion in June, double what they were three years ago.

Cuba is heavily indebted and still recovering from a liquidity crisis that led to a default on payments and freezing of foreign business bank accounts in 2009. [ID:nN24211495]

Castro told the National Assembly that accounts for foreign suppliers to Cuba had been unfrozen and steps taken to prevent the problem from happening again.

Hopes that reforms would bring more foreign have yet to materialize with no significant new ventures this year.

Long-awaited golf course developments, aimed at attracting wealthier tourists, remain on hold. [ID:nN04118234]

What to watch:

- Resolution of outstanding short-term debt

- Signs of increased interest in foreign investment.

OIL PLANS

A Chinese-built drilling rig, the Scarabeo 9, was in Trinidad and Tobago in early January and expected to reach Cuba later in the month. It will be used in the first major exploration of Cuba's part of the Gulf of Mexico. [ID:nN1E77P03U] Spain's Repsol YPF and its partners will get the rig first, followed by Malaysia's Petronas and its partner, Russia's Gazprom Neft.

The project has drawn opposition in the U.S. Congress [ID:nS1E78R1P9], but, to allay safety concerns, Repsol will let the United States inspect the rig. [ID:nN1E79H1XN] [ID:nN1E7BJ077] U.S. companies are forbidden from operating in Cuba by the U.S. trade embargo.

Cuba depends on imports from its oil-rich ally Venezuela, but says it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated 5 billion barrels.

What to watch:

- U.S. inspection of drilling rig.

- Results of Repsol's exploratory well.

- U.S. pressure to stop the drilling.

FOREIGN RELATIONS

A planned Papal visit in March [ID:nL6E7NC3I6] and improved ties with Brazil are bright spots even as it faces a more hostile Spanish government elected in November.

A major concern for Cuba is the health of Chavez, whose government provides 114,000 barrels of oil a day and investment to Cuba. He underwent chemotherapy in Cuba and has declared himself cancer free [ID:nN1E79J13X], but experts say it is too soon to tell. If he were unable to continue in office, it would be a big blow to Cuba.

U.S.-Cuba relations, which thawed briefly under President Barack Obama, have been frozen by the imprisonment of U.S. aid contractor Alan . [ID:nN1E7AT2CK] He is serving a 15-year sentence for providing Internet gear to Cuban groups under a U.S. program promoting Cuban political change.

Cuba is angry that five Cuban agents have been jailed in the United States since 1998, and has given no indications that Gross will be released early. [ID:nN1E7BR0BZ] (Additional reporting by Marc Frank; Editing by Kieran Murray)

http://af.reuters.com/article/energyOilNews/idAFN1E7BR07020120104?pageNumber=2&virtualBrandChannel=0&sp=true

Bright future ahead? Cuba’s economic changes create new entrepreneurs

'Bright future' ahead? Cuba's economic changes create new entrepreneursBy The Associated Press

HAVANA – Where some might see a rotten window frame pocked by termites, Julio Cesar Hidalgo envisions a polished takeout counter, the rich smell of garlic and oregano wafting out onto a warm Havana street.

In his mind's eye, the coarsely-laid concrete covering the surfaces of his shabby living room is already a gleaming white countertop laid with sandwiches, pastries, and balls of yeasty dough; a gas oven in the corner bakes mouthwatering pizza.

Franklin Reyes / AP, file

Julio Cesar Hidalgo takes a break after preparing pizza at his newly opened Baldoquin's Cafeteria, run out of his home, in Havana, Cuba.After Cuban authorities announced last September that they were opening the island's closed Marxist to a limited amount of private enterprise, Hidalgo was one of the first to line up for a new business license.

Ever since, the 31-year-old baker has been transforming the front of his narrow apartment in a run-down section of Old Havana into a standup pizza joint and cafe. In a land of modest dreams, Hidalgo says his is simple: to be the master of his own labor.

"It's not going to make me rich," he laughs, adding that he may make only a little more than he does now in a $12-a-month job at a state-run bakery. "But I'll be working in my own home and I'll be my own boss."

Hidalgo and tens of thousands like him are chasing their entrepreneurial ambitions in Cuba's year of economic change, hopeful that a sweeping fiscal overhaul announced last year by President is for real. The Cuban leader said the country would lay off half a million state workers by March 31, while granting licenses for a broad, if slightly random, array of businesses.

The new entrepreneurs face towering challenges in getting their enterprises off the ground, including high taxes, a lack of raw materials, an uncertain customer base, labyrinthine bureaucratic rules and limited access to startup capital. Yet, their success or failure will go a long way in determining the future of Cuba's revolution.

The Cuban state now employs 84 percent of the island's workers and controls 90 percent of the economy in one of the world's last bastions of Soviet-style communism. If the free-market experiment works, the cash-strapped government could shed millions of dollars from its payroll while boosting much-needed tax revenues and creating a new business and consumer class. It could also legalize part of a booming black market that provides everything from sausages to satellite television.

If the experiment fails, however, this already disillusioned and dysfunctional country will have turned hundreds of thousands of people out of their government jobs and into an uncertain future. All of this in the same year that Raul Castro turns 80, and his older brother Fidel is widely expected to step down from his final official post as head of the Communist Party.

Through January 7, more than 75,000 people had received new licenses, joining about 143,000 private sector workers left over from the island's last dabble with capitalism. Government economists say they hope a quarter of a million new entrepreneurs will eventually sign up.

Almost all the new businesses are small, operating out of homes or on street corners. But the stakes for Cuba couldn't be higher, with the economy weighed down by crippling disorganization, a broken infrastructure, endemic corruption and an enormous labor force that has become accustomed to getting paid very little — and doing very little in return.

Among the thousands who have taken the leap into private enterprise are Maria Regla Saldivar, a 52-year-old black belt in Taekwondo who plans to open a gymnasium in the ruins of a destroyed laundromat, and Javier Acosta, who has started an upscale catering to tourists. There is Danilo Perez, a 21-year-old accountant who has gotten a license to buy and sell bootleg DVDs in Havana's hardscrabble El Cerro neighborhood, and Anisia Cardenas, a seamstress with a license to make clothes.

Many others are giving manicures, painting homes, fixing cars and driving taxis — services on the list of 178 officially sanctioned private activities. Some of the other opportunities are more obscure, such as fresh fruit peeling. And some are so specific they refer to just two people, like No. 159, which makes it legal to be part of the Amor Dance Duo.

Even the Cuban government — in an internal document to party leaders obtained by The Associated Press — warned that many of the businesses will fail within a year. And many Cubans say privately that they will wait and see if ventures such as Hidalgo's prosper before jumping into the fray themselves.

But for now, optimism and excitement reign among the new entrepreneurs.

"We are going to be a success. I am sure of it," says Gisselle de la Noval, 20, Hidalgo's bright-faced girlfriend, who will work the till at the pizzeria and share in its profits. "This (economic) opening was marvelous … I think those who know how to take advantage of it will have a bright future."

Judy Gross, whose husband Alan has been in a jail in Cuba for two years, talks about his conviction and the struggle to bring him home.

Dismal economyCuba's push to open its economy to private enterprise does not indicate an ideological change of heart among its Communist leaders. It is based on necessity.

The economy has been slammed by the global economic downturn, a drop in nickel prices and the fallout from three devastating hurricanes that hit in quick succession in 2008. Revenues from tobacco, rum and sugar have fallen, as have remittances from Cubans living overseas.

Prevented from borrowing from international monetary institutions by the 48-year U.S. trade embargo, Cuba was forced to reduce and other imports from its main trading partners by 37 percent.

The economy grew by just 1.4 percent and 2.1 percent respectively in 2009 and 2010, a terrible performance for a small, developing country — and figures many economists dismiss as fantasy anyway, since Cuba counts state spending on social programs when calculating economic growth.

Even state-run newspapers have been filled with stories of extraordinary inefficiency, with dozens of "watchmen" paid by the state to guard fallow fields, or 30 emergency workers at a standing idle because all have been assigned to a single ambulance.

"My fear is that the Cuban state is completely broke," says Uva de Aragon, a Cuba expert at Florida International University, who is closely watching the free enterprise experiment. "I don't want to think about what will happen, even in the medium-term, if it doesn't work."

Shortages are everywhere: in the sparse shelves at state-run supermarkets; along the unlit city streets and empty, rutted highways; in the antiquated factories on the outskirts of cities and in the tractorless farms dotting the countryside, many still relying on oxen to till the earth. The country of 11.2 million people has the lowest penetration in the Western Hemisphere.

The state pays workers salaries of about $20 a month in return for free care and , and nearly free transportation, utilities and housing. At least a portion of every citizen's food needs are sold to them through ration books at heavily subsidized prices.

Getting by on those salaries is such a struggle that stealing from state-owned companies is endemic, a major perk of having a job, and a frightening loss for those about to be laid off. The thievery is also a huge cost to the government, one of the reasons the country finds itself in such dire economic straits.

Since taking over from his ailing brother Fidel in 2006, — first temporarily, then permanently — Raul Castro has been whittling away at the subsidies.

In recent months he's cut free workplace lunches, removed potatoes, peas, cigarettes, soap, detergent and toothpaste from the ration book, and suggested the whole system must eventually be scrapped.

Just how bad things had gotten became apparent in September, with a red-letter headline in the Communist Party newspaper Granma that the state would lay off a tenth of the island's work force, while opening up the private sector. Days later, authorities published the list of 178 activities in which new licenses would be issued.advertisement

The list steers clear of activities that could present a threat to the state's monopoly on most economic activity. There are no licenses for independent lawyers, bankers or engineers, nor for Cubans to work privately in strategic sectors such as mining or hotel management.

Still, there is no overestimating the scope of the change.

For the first time since the 1960s, Cubans will be able to hire employees. They may rent out their homes and cars more freely, and hope to one day get business loans from state banks. Raul Castro has even called a rare Communist Party Congress, scheduled for April 16-19, in which the reforms will be enshrined as the country's only way forward.

The new entrepreneursHidalgo is a round-faced man with a permanently amused look in his eyes. Unlike most Cubans, he has been down the free enterprise road before — with disastrous results.

Cuba last opened up to some private enterprise following the collapse of its Soviet benefactor in the 1990s, which ushered in an era of extreme hardship known as the "Special Period."

In 1997, a 17-year-old Hidalgo and an older cousin opened a pizza joint in the same dingy apartment, only to find it was impossible to buy the cheese, flour and tomato paste they needed in state-owned shops.

They turned to the black market, and ran into trouble.

"The inspectors would show up … sometimes once a week, sometimes twice a week," Hidalgo says. "They demanded receipts, and when I couldn't provide them they confiscated everything. They forced us to close."

In those days, decribed the reforms as a necessary evil and quickly scaled them back once the crisis had ebbed. From a high of 209,000 license holders for private enterprise in 1996, Cuba's tiny entrepreneurial class had dropped by a third by 2010.

Raul Castro has vowed it will be different this time around, telling Parliament in December that "the life of the revolution is in the balance." The government has pledged an initial of $130 million to purchase the raw materials new businesses will need, and Hidalgo pointed to a stack of unopened boxes of white tile he purchased for $8 a box in a state-owned shop.

Still, the path to self-employment promises to be tough.

Hidalgo has already invested $700 in the pizzeria, largely with a gift from a cousin in Atlanta.

Given the price of ingredients, Hidalgo thinks he'll have to charge upward of 20 pesos ($1) for a personal-size pizza with olives and oregano — a small fortune for anybody living strictly on a Cuban government wage. And he's already got competition: Two neighbors on his rundown street have licenses to open cafes.

The government has made it easier for Cubans to rent space to each other, but there is no retail property available for private citizens, and few would have rent money even if there was. Most people either must carve out part of their home, or come up with creative ideas to get around the real estate shortage.

Saldivar, the martial arts black belt, beamed with excitement as she walked through the skeleton of a building that was once an industrial laundry in Havana's Nuevo Vedado neighborhood. She is petitioning the government to turn over title to the property so she can transform it into a gymnasium, and meanwhile, is using a small park nearby to hold fitness classes.

The building has no roof or walls, and the oil-stained concrete floor is littered with truck-sized pieces of rusted machinery, but Saldivar is not deterred.

"I'll fix it up," she insists. Her bigger worry is that authorities have not included martial arts in the list of acceptable activities. Saldivar says she will either have to limit her classes to aerobics, or "inventar," a Cuban specialty that roughly translates as "to improvise."

"I don't plan to give Taekwondo classes," she deadpans. "I'm teaching the kids 'Quimbumbia'," Saldivar's word for a discipline remarkably similar to Taekwondo.

Making life-long dreams come true?Another challenge facing the private sector is taxes, which can be as high as 50 percent, not including social security. Many prospective entrepreneurs say the taxes will make it difficult for new businesses to break even, and could also scare many people already making a living on the black market from becoming legit.

One woman, who has legally rented out rooms in Havana's trendy Vedado neighborhood since 1994 and describes herself as a strong supporter of the revolution, complained the new system significantly increases her taxes: She will pay double the current $108 per room, per month.

"I'm thinking of turning in my license," she says, asking that her name not be used for fear of attracting the attention of authorities. "What will be left for us after we pay the government?"advertisement

The burden will not be as high for some, however. For cafes, gymnasiums and many other activities, business owners will pay a fixed monthly fee of somewhere between 100 and 350 pesos ($5-$17), plus social security and payroll taxes.

At the end of the year, most will be asked to declare their income under oath and pay a percentage of the profits. But in a nearly all-cash economy, few are expected to give an honest account.

Phil Peters, a specialist on the Cuban economy who is vice president of the Arlington, Virginia-based Lexington Institute, says the government must walk a thin line between zealously policing the private sector for tax dodgers and black marketeers, and sucking the life out of the economic opening before it gets off the ground.

He says the government must make good on its pledge to create a system of wholesalers, and find a way to extend microcredits to small businesses. Eventually, employee-owned "cooperatives" could take over inefficient state enterprises.

"If the government is serious about laying off half a million unproductive workers, then it has a very strong interest in making the entrepreneurial sector work," Peters says.

Already, there are signs that the other major prong of the reform effort — the layoffs — are going more slowly than anticipated. Four months after the cuts were announced, it is unclear how many people have actually lost their jobs.

Midlevel managers told AP that workers' commissions set up to decide who is expendable have been slow to hand over names. Cubans familiar with deliberations in several ministries and state-owned companies say leaders — including some Cabinet members — have been reluctant to shed thousands of their employees.

"It is a difficult and dangerous process, particularly if it is not handled well, or if there is favoritism or corruption," a worker on one of the commissions told AP, speaking on condition of anonymity for fear of losing her job.

Perhaps the strongest warning that the reforms do not go far enough has come from two prominent economists at the state-run Center for Cuban Economic Studies.

In a rare opinion piece published in a small Catholic magazine, Pavel Vidal Alejandro and Omar Everleny Perez warned that there are not enough approved free-market activities to absorb half a million laid-off state workers, and not enough white-collar jobs for an educated population.

They said it was hard to imagine that illiquid state banks could make good on the government's pledge to extend microcredits, and urged the state to reach out to foreign investors.

On a small scale, such investment is already happening. Several entrepreneurs said they had received seed money from relatives overseas, most of them in the United States. A recent decision by the Obama Administration that allows any American to send up to $2,000 a year to Cuba could make such loans easier.

Even if these new businesses get off the ground, it remains to be seen whether they will have enough customers, with so many newly unemployed. But entrepreneurs such as Hidalgo are riding a wave of hope.

Hidalgo waits as a van pulls up carrying a gas oven, a loan from his girlfriend's mother. He says he expects to be open for business by the end of February, and plans to call the pizzeria "Baldoquin," after his grandfather. After more than a decade fantasizing about his own business, Hidalgo says he can hardly contain himself.

"Just imagine it!" he gushes, thinking of that first pizza out of the oven. "It will be the realization of a dream I have held onto forever."

http://worldnews.msnbc.msn.com/_news/2012/01/03/9911431-bright-future-ahead-cubas-economic-changes-create-new-entrepreneurs

Banks Begin New Loans for Home Repairs and Investment

Cuba: Banks Begin New Loans for Home Repairs and By THE ASSOCIATED PRESSPublished: December 20, 2011

Cuban banks began offering loans Tuesday to people hoping to renovate their homes or invest in a private business, continuing a series of free market reforms pushed by Raúl Castro. The Communist Party newspaper Granma reported that the smallest loans would be for $41 and that larger ones would depend on each borrower's ability to pay.

http://www.nytimes.com/2011/12/21/world/americas/cuba-banks-begin-new-loans-for-home-repairs-and-investment.html?_r=1&partner=rss&emc=rss

Cuban entrepreneurs reshaping island’s stagnant revolution

Capitalism

Cuban entrepreneurs reshaping island's stagnant revolutionsonia vermaHAVANA— From Thursday's Globe and MailPublished Wednesday, Oct. 12, 2011 8:42PM EDTLast updated Sunday, Dec. 18, 2011 11:45PM EST

Barbershops, beauty salons, restaurants and car washes have sprung up across Cuba in the year since the Communist Party allowed citizens to open small, private businesses in an effort to save the country from ruin.

The government says more than 157,000 people have qualified for business permits and are currently self-employed. This new generation of Cuban entrepreneurs is quietly reshaping the island's stagnant revolution in a way that was inconceivable when was in control. The economic changes brought about by his brother Raul, however, are proving slow to take hold.

Cubans wait to order their meals at Tio Tito in Havana, Cuba Sept. 27, 2011. Taking its colour scheme from American fast giant McDonald's the small is one of many that have opened up since recent economic reforms in Cuba have allowed for some private enterprise to exist.Photos

Many are being implemented by young Cubans with virtually no memory of life before communism. Some new entrepreneurs are struggling to understand how to pay small-business taxes or navigate the country's labyrinthine bureaucracy. With virtually no access to bank loans or credit, most are relying on family living abroad to float their new ventures.

Still, Cuba is buzzing with new energy as people attempt, for the first time in their lives, to make money outside of the underground . Business owners are experimenting with novel concepts, such as advertising and open competition. It's unclear, however, how far the Cuban authorities will allow the reforms to go – whether small business owners will be permitted to accumulate vast amounts of wealth, for example, or build empires.

At the moment, however, these new entrepreneurs seem content enough to turn a profit they can officially pocket.

IVAN GARCIA PENA

His idea for a restaurant might ring a bell: a fast-food joint with a red and yellow colour scheme where, for a couple of bucks, clients get a meal deal.

Mr. Pena, 39, spent a decade of his life as a poorly paid information officer in Cuba's department before he decided to open Tio Tito's in January. He siphoned his savings, hawked his personal gym equipment and sold his mobile phone to finance the construction of a modest grill in his front yard, borrowing refrigerators and Tupperware from friends.

"Some of my friends thought I was crazy. Others encouraged me," recalled Mr. Pena, his voice partially drowned out by the song Stand By Me blasting from a super woofer on a shelf, next to the mustard.

With no restaurant experience to speak of, he relied on what he gleaned as a customer from previous trips abroad, to , and Portugal. An American friend offered to design and build a website, which is hosted in Miami. He hired six employees, including his brother, Tito, who works as head chef, paying them the equivalent of $25 a month, plus a commission.

His inspired colour scheme? "If it works for McDonald's it can work for me," he reasoned.

The family has yet to recover their initial of $3,000. Business is brisk, however, and Mr. Pena is hopeful that soon he will turn a profit.

"I want Tio Tito franchises all over Havana," he said.

He prefers the life of an entrepreneur to his previous existence as a bureaucrat.

"You're obtaining profit from your own work. If you work more you will earn more. The disadvantage is that this is much more work than being an information officer."

LAZARO RAFAEL

He's led a double life since officially entering Cuba's work force: During the day, he worked construction for a government ministry; by night he worked as an underground mechanic, fixing cars for friends and relatives at an unofficial workshop.

Between his two gigs, he earned about $15 a month.

His fortunes, however, changed in December when he quit his day job and applied for a business licence to open his own garage. Since officially opening shop, his income has tripled.

"I still have the same clients, but now I can do the work in the open," Mr. Rafael, 31, said standing in the shade outside his seaside apartment in Havana's quiet Miramar neighbourhood.

His wife, Rachel, is an economist in the provincial Communist Party office. Under Cuba's new economic plan, her job could be in jeopardy as the country seeks to drastically trim its public service by half a million workers over five years.

With his own thriving business for them to fall back on, Mr. Rafael isn't particularly worried. His biggest problem at the moment is finding a garage to rent – or even buy – when Cuba changes the law to allow people to purchase private property in the coming months.

For now he works on the street, which is strewn with cables and car parts.

Today, he is trying to coax an aging Peugeot to start. Five more cars await service with troubles ranging from a trunk failing to open to a broken headlight.

A team of government inspectors has paid a visit to demand proof he has paid his last instalment of taxes.

Mr. Rafael produced a bank receipt showing he paid the $40, but the inspectors said the government has not received it, and ordered him to pay it again.

"The system is not yet perfect," he says, "but at least we are moving in the right direction."

JANETTE ALVAREZ

When she worked as a cook in a state-run cafeteria, her kitchen was fully stocked when she arrived at work each morning. Now, as her own boss, she scrambles to find basic supplies in the shops.

"This is very hard," the mother of two teenagers said, standing behind the counter of La Jugada Perfecta, her baseball-themed restaurant dedicated to the Industriales, Cuba's wildly popular baseball team that was founded 50 years ago in the wake of the revolution. The restaurant name translates as A Perfect Play.

"We are not used to this and we have to go out and find everything we need. It's not like working for the state," she added.

Sometimes she comes up short. Unable to source proper kitchen appliances, she appealed to relatives in Miami who sent a brand-name blender and two bright orange coolers from Home Depot.

Ms. Alvarez's husband, an accountant, helped set up the books, but the restaurant is women-owned and women-run.

Most days, clients line up all the way to the sidewalk to order an Extra Base (hamburger with fries) or a Strike (bacon burger). The prices are roughly twice that of a state-run cafeteria.

"I don't mind paying for quality," said a 26-year-old economist named Alfredo Garcia, sipping on a strawberry milkshake.

Ms. Alvarez used to earn the equivalent of $80 dollars a month. Now she pays $16 tax every month, as well as about $4 in social security for each of her two employees, both cousins.

She is ploughing all her profits back into the restaurant, and hopes to one day pay back the relatives in Miami who floated her.

"Up to this point I believe we made the right choice," Ms. Alvarez said.

"This is a new thing for us, but as time goes by I hope we are going to be well," she said.

WALKIS HERNANDEZ LEGRA

She's a life-long bureaucrat who currently presides as director of the office for work and social services in Havana's Plaza Revolucion.

She harbours no ambition to start her own business, but anyone in the neighbourhood who does must first receive the blessing of her staff, which issues all permits for the district.

Since the new law came into effect, about 40 people file through this crumbling building each day, searching for door No. 6, where a handful of state workers surrounded by broken filing cabinets sort through applications. The process takes about eight minutes.

Applicants submit their identity cards with two pictures and a written application. Five days later, they come back to pick up their permits. The process has been simplified from a few months ago, when applications had to be reviewed by the neighbourhood Committee to Protect The Revolution before permits could be issued.

On this day, Nara Creas, a 63-year-old who constructs costumes and pinatas for children's birthday parties, has come to renew her license. Nelson Cruz, a 26-year-old taxi driver, is also applying for a permit, to turn his taxi business into something official.

"Our department rarely takes five days to complete the application process. We can do it in one or two days," Ms. Legra said with pride. Her office has processed roughly 6,000 applications since last October, when the decree came into effect.

Permit in hand, entrepreneurs then proceed to the local tax office for an assessment of how much they will pay per month.

After that, they can officially open for business.

http://www.theglobeandmail.com/news/world/americas/in-cuba-its-viva-la-evolucion/article2199403/singlepage/#articlecontent

Scotiabank, RBC eye Cuba operations

Scotiabank, RBC eye Cuba operationsgrant robertson — Banking ReporterGlobe and Mail UpdateLast updated Monday, Dec. 19, 2011 6:32AM EST

National Bank of has operated an office in Cuba for 16 years, making it a rarity of sorts among Canadian banks, but it may soon have some company.

At least two other Canadian banks are said to be looking at setting up shop in Cuba, according to a report in the London-based Financial Times on Sunday night.

Amid economic reforms on the island, Bank of Nova Scotia has reportedly applied to Cuban authorities to set up a representative office in the capital. Royal Bank is also considering opening an office in Havana, the report said.

Scotiabank, which has extensive operations across South America and the Caribbean, and RBC, Canada's largest bank, both had branches in the country before the 1959 Cuban Revolution ushered in Communism, and a subsequent U.S. , which slowed foreign .

However, economic reforms in Cuba, stemming from the handover of power from long-time to his brother, Raúl Castro, are changing the country as the government looks for ways to boost Cuba's .

If RBC and Scotia return to Cuba, they would join Montreal-based National, Canada's sixth-largest bank, on the island. National opened a representative office in Havana in 1995. The small operation is not a bank branch though, and mostly handles trade finance.

Banco Central de Cuba, the country's central bank, lists National as having a relationship with the country that dates back more than 28 years, including financing export development, securities and insurance businesses there.

The Cuba Trade and Economic Council lists more than 80 companies in Canada with business ties to Cuba, including Bell Canada, Bombardier, and dozens of oil and gas companies.

http://www.theglobeandmail.com/report-on-business/international-news/scotiabank-rbc-eye-cuba-operations/article2275793/

Cuba encourages foreign investment in mining, alternative energy

Cuba encourages foreign in mining, alternative energy

The Cuban government is encouraging foreign companies to invest in non-nickel mining and alternative energies on the island, official business weekly Opciones said, citing the Centro de Promoción del Comercio Exterior y la Inversión Extranjera de Cuba (CEPEC).

While nickel has evolved into the biggest export commodity over the past 15 years, Cuba is struggling to return most other mining activities to levels before the fall of the Soviet Union. According to Opciones, foreign investors are sought for high-risk contracts for surveying and geological research in gold and silver, as well as copper, lead and zinc.

In one of the few non-nickel mining projects, state company Geominera S.A. is in the process of reopening the El Cobre gold mine near Santiago de Cuba, after a 10-year hiatus. The Oro-Barita project at El Cobre is financed by and the ALBA trade and integration agreement, and part of a larger effort to restart gold mining at five locations on the island.

Other opportunities include renewable-energy generation using wind power and biofuel from sugarcane bagasse, according to CEPEC.

Early this year, Havana Energy Ltd., a subsidiary of London-based Esencia Group, signed agreements to invest in biomass electricity projects on the island. Havana Energy agreed to form a joint venture with Zerus S.A., a state company controlled by the Sugar Ministry, to set up and operate a 30-mw power plant next to the Ciro Redondo sugar mill in central Ciego de Ávila province. This pilot project could be followed by four additional sugarcane bagasse-fueled power plants throughout the island.

According to CEPEC, , oil, mining and energy are on top of the government's priority list for foreign investment.

CEPEC encourages joint ventures and other forms such as joint production or service agreements and management.

http://www.cubastandard.com/2011/12/17/cuba-encourages-foreign-investment-in-mining-alternative-energy/

In Cuba Property Thaw, New Hope For A Decayed Icon

In Cuba Property Thaw, New Hope For A Decayed IconMaleconBy PETER ORSI and ANDREA RODRIGUEZ 12/17/11 09:37 AM ET AP

HAVANA — Along Havana's northern coastline, storms that roll down from the north send waves crashing against the concrete seawall, drenching vintage cars and kids playing games of chicken with the salty spray.

Fisherman toss their lines into the warm waters, shirtless men play dominoes on card tables, and throngs of young people gather on weekend nights to laugh, flirt and sip cheap rum.

This is the achingly beautiful and most instantly recognizable part of Havana's cityscape: the Malecon seafront boulevard, with its curlicue lampposts and pastel buildings rising into an azure sky.

Just about anywhere else in the world, it would be a playground for the wealthy, diners in four-star restaurants and tourists willing to spend hundreds of dollars a night for a million-dollar view.

But along the Malecon, many buildings are dank, labyrinthine tenements bursting beyond capacity, plagued by mold and reeking of backed-up sewer drains. Paint peels away from plaster, and the saline air rusts iron bars to dust. Some buildings have collapsed entirely, their propped-up facades testimony to a more dignified architectural era.

Now, for the first time since the 1959 revolution, a new law that permits the sale of real estate has transformed these buildings into extremely valuable properties. Another new law that allows more people to go into business for themselves has entrepreneurs setting up shop and talking up the future. And a multimillion-dollar revitalization project is marching down the street improving lighting, sidewalks and drainage.

The year has seen some remarkable first steps toward a new Cuban economic model, including the sacrificing of a number of Marxism's sacred cows. The state is still firmly in control of all key sectors, from energy and manufacturing to care and , but increasingly people are allowed to engage in a small measure of private enterprise. Officials say the changes are irreversible, and this is the last chance to save the .

Yet Cubans will tell you that change comes slowly on the island. Strict controls on foreign and property ownership mean there's precious little money to bankroll a capitalist revival. Even some Malecon denizens who embrace the reforms see a long haul ahead.

"It's not that I see the future as black, more like I'm seeing a little spark from someone 3 kilometers away who lit a match," said Jose Luis Leal Ordonez, the proprietor of a modest snack shop."But it's a match, not a lantern."

Leal's block, the first one along the promenade, has offered a front row seat to five decades of Cuba under Fidel Castro. The residents of Malecon 1 to 33 have watched the powerful forces of revolution play out beneath their balconies, and today they're bracing for yet another act as Castro's younger brother Raul turns a half-century of Communist dogma on its ear.

___

Given that Cuba's national identity has been inextricably bound up with its powerful neighbor 150 kilometers (90 miles) to the north, it is perhaps fitting that the Malecon is the legacy of a "Yanqui."

The year was 1900 and the country was under U.S. control following the Spanish-American War. Governor General Leonard Wood, who commanded the Rough Riders during the war with friend Teddy Roosevelt as his No. 2, launched a public works program to clean up unsanitary conditions and stimulate the economy. A key element was the Malecon.

At that time Havana ended about a block from the sea, separated from the waves by craggy rock. Raw sewage seeped into the bay nearby, so fishermen and bathers avoided this part of the waterfront. Only later would high-rise hotels and casinos spring up to make the Malecon a world-famous draw.

For those early American occupiers, "The idea was to create a maritime drive so the city, which until now had its back to the sea, would begin to face the ocean," said architect Abel Esquivel. Since 1994, he has been working with the City Historian's office to restore the crumbling Malecon.

As the boulevard and promenade took shape, buildings sprang up on this block. One of the first was a three-story boarding house for singles and childless couples who occupied 12 apartments.

Today those have been subdivided horizontally and vertically, again and again, to take advantage of every last inch of space, and some 70 families live crammed into every nook and cranny.

Leal runs his cafeteria in the home where he was born 46 years ago, at the dark crux of an interior passageway. It caters mostly to neighbors and goes unnoticed by tourists on the sun-drenched walk outside.

A lifelong supporter of the revolution, Leal is grateful for the opportunity to live rent-free and earn two master's degrees on the state's dime. Still, after years of frustration working for dysfunctional government bureacracies, he quit his state job. He opened his snack shop May 1, and already it brings more income than before, enough even for his daughter's upcoming "quinceanera," her coming-of-age 15th birthday party.

He is one of the people on this block who is buying into Castro's entrepreneurial challenge.

Another is Omar Torres, who operates a private restaurant known as a "" on a second-story terrace with sea and skyline views. He praised the government for lifting a ban on the serving of lobster and steak and allowing him to more than quadruple the number of diners he can seat.

Downstairs, an artist runs an independent gallery selling paintings of "Che" Guevara and cityscapes to tourists. Although he doesn't own the house, he's so confident in the future that he's using the income to remodel his rental.

Elsewhere folks are letting out rooms to travelers, and newly licensed street vendors are now legally peddling peanuts in tightly wrapped paper cones.

"Cubans dream of truly feeling like masters of their own destiny, for the state not to interfere in personal matters," Leal said. "Until now the state told you that you couldn't even sell your home."

___

From its early days, the Malecon was a place to see and be seen, to celebrate a success, drown a sorrow or woo a sweetheart. By the 1920s it was a favorite strip for middle-class Cubans who motored up and down to show off their vehicles.

Havana developed without a strong central plan or dominant core, and the Malecon became one of its most important communal spaces, said historian Daniel Rodriguez, a Cuban-American researcher at New York .

"I think the closest thing Havana has to an urban center is this long seawall," Rodriguez said. "It's a long, ribbony main square."

Today the concrete promenade stretches 6 kilometers (4 miles) from the harbor to the Almendares River, the last section completed in 1958 under strongman Fulgencio Batista.

Those were heady times, when the city's nightclubs pulsed with a mambo beat and mafia casinos on the Malecon drew planeloads of American tourists. But their days were numbered.

The following January, the young rebel Fidel Castro marched triumphantly into Havana and in short order began seizing mansions and apartment buildings and redistributing them to the poor, triggering a tectonic shift in as well as the rest of the economy and society.

Castro declared private real estate incompatible with the revolution's ideals. "For the bourgeoisie," he said, things like "country, society, liberty, family and humanity have always been tied to a single concept: private property."

___

In a country where everyone is guaranteed a place to live, millions are jammed into dilapidated, multigenerational homes. The government is landlord to vast ranks of tenants who pay nothing or a nominal rent of around $2 a month. Sapped of any sense of ownership, some cannibalized the old buildings, ripping out wood, cinderblocks and decorative tiles to use or sell. That, combined with the punishing climate, has stifled upkeep and hastened decay in the buildings on the Malecon.

One of them, the Surf, was a beauty when Griselia Valdes arrived here as an 18-year-old newlywed in 1963. The entryway was tiled in pink and black with white benches and a restaurant on the ground floor. The rooms even had air-conditioning.

The glass bricks that lined the front wall are long gone, demolished by big storms. A drainpipe dumps over a spider web of electrical wires hanging at eye level in a passageway, while rainwater filters through the walls and spills into the lobby. The elevator was taken out years ago, but with the motor left rusting at the top of the shaft, people fear it could come crashing down any day.

"Mostly it is us who have abused the building with the subdivisions, with the banging and the crashing," Valdes said. "From neglecting it, from indolence."

Jan Ochoa Barzaga, who lives in the hotel's basement, is pessimistic about how much 's reforms can change things. The factory worker finds it very frustrating that his girlfriend, like many others in Cuba, received a free university education from a generous government, but is languishing in a low-paid job.

Ochoa Barzaga tried to make the sea passage off the island in 2009, but was caught and returned home. If he had another opportunity to leave, he wouldn't think long.

"If they opened it up again," said the 32-year-old. "I'd be out of here."

___

The Malecon continued to serve as center-stage throughout Fidel Castro's rule, with the military conducting war games along the seawall during the 1960s after the failed Bay of Pigs invasion. In 2000 a flag-waving Castro personally led marches along the seawall to demand Cuban raft-boy Elian Gonzalez's return from the United States.

Four years earlier, with Cuba buckling under a severe economic crisis following the collapse of the Soviet Union, thousands marched through the streets with makeshift plywood and inner-tube rafts and set off from the Malecon in a desperate gamble to reach Florida. Many failed.

On Aug. 5 of that year, riotous protests erupted on the boulevard and surrounding streets that were likely the biggest challenge to Castro since he took power. Amid looting and dozens of arrests, Castro addressed the crowd from atop a military vehicle.

"We were witnesses to all that," said Torres, the private restaurant owner, who saw the multitudes from his balcony. "You began to reconsider the meaning that Fidel has for Cubans, because in a moment of chaos and uncertainty, his presence was something else. Even the rioters began shouting, 'Fidel! Fidel!'"

That image of a robust, charismatic father figure faded when illness forced him from power five years ago.

The future is left to Raul, who at 80, is five years younger than his brother. He has dropped one bombshell after another with his economic reforms. None caused more of a stir than the measure legalizing the real estate market.

There's no sign of an imminent gold rush along this block of the Malecon, or anywhere else. Few individuals hold title to these homes; most rent from the government. Meanwhile the new law contains protections against individual accumulation of property or wealth, and officials insist this is no wholesale embrace of capitalism.

"All these changes, necessary to update the economic model, aim to preserve socialism, strengthen it and make it truly irrevocable," Raul Castro said in December 2010.

There's also the question of money: Cuba has only a tiny middle class with the kind of coin to not only buy a seafront home but afford the maintenance needed to keep the corrosive air at bay. The new law bars anyone not a permanent resident from buying property, including exiles who still imagine a day when they might return.

For Jorge Sanguinetty, who grew up a few blocks from the Malecon and was an economist for central planning under Fidel Castro before fleeing in 1967, the history of the seawalk is personal.

"I was like Tom Sawyer or Huck Finn. I used to go fishing there, walking through the rocks. We could see the salt from the waves on our windows during the storms," Sanguinetty recalled, saying he still dreams about it more than 40 years later. "You have to see a sunset (on the) Malecon. They are absolutely sensational."

Sanguinetty, founder of the international development group DevTech Systems, is writing a book about potential redevelopment in Cuba and has followed the issue closely over the years. He said the same forces that caused the Malecon's decay also added to its charm.

"The stagnation of Havana had this unintended consequence: Even though many things have fallen apart and are no longer salvageable, Havana will remain very desirable because uncontrolled development didn't take place," he said by phone from his office in Miami. "So there are many jewels there architecturally, and the Malecon is one of the most beautiful jewels in the crown."

___

When it comes to the Malecon, the City Historian's Office wields near-total control. A largely autonomous institution, it collects undisclosed millions of dollars each year from the hotels and tourist restaurants it runs in restored buildings, and plows a big chunk of that back into rehabilitating more. The office recently said it has more than 180 projects, on top of the hundreds already completed.

The result has been an architectural rebirth that's on display in the gleaming Spanish-American cultural center, a rescued former tenement next door to Leal's building. A few doors away is a near-total rehab with brand-new apartments upstairs from a state-run restaurant, a mixed-use model that could be repeated.

There are also reminders that money is tight. Residents here remember how in the early 2000s, at the site of the collapsed Hotel Miramar, a fancy hotel from 1902 where tuxedoed waiters once attended to a fashionable clientele, Fidel Castro and Chinese Jiang Zemin laid the cornerstone for a $24 million hotel to be built with help from Beijing.

Construction mysteriously froze after just a few weeks. Today, bricks form a single uncompleted first story and a faded artistic rendering tacked to a fence depicts the glassy, hyper-modern structure that never got built.

Despite the decay and unfulfilled hopes, the residents say they live in a magical place that creates a sense of community that doesn't exist even one block inland.

"I'm right on what we call the balcony of the city," said Leal, the cafeteria owner. "For me there's no place more sacred than where I live."

___

Associated Press writer Laura Wides-Munoz in Miami contributed to this report.

http://www.huffingtonpost.com/2011/12/17/cuba-property-new-property-law_n_1155297.html

Cuba seeks Japan investment in oil projects

Cuba seeks Japan in oil projects(AFP)

HAVANA — Cuba has invited Japan to invest in its oil industry, Cuba's Foreign Ministry said Wednesday as the communist-ruled island intends to begin drilling early next year in its offshore economic zone.

Havana's ambassador to Tokyo Jose Fernandez de Cossio "signified Cuba's interest in Japanese companies participating as partners in various aspects of the country's high-priority oil industry," the ministry said on its website cubaminrex.cu.

Addressing a recent Tokyo seminar including some 70 representatives of Japanese companies, Fernandez de Cossio spoke of the "real potential of Cuba's petroleum industry" and stressed that "a legal framework exists in which Japanese firms can find business opportunities," the ministry said.

Cuba manages a zone of some 112,000 square kilometers (43,000 square miles) in the Gulf of Mexico. Of the zone's 59 blocks, 22 are under contract with Norway's Statoil, which has formed a consortium to exploit the blocks with 's Repsol, OVL of India and PDVSA of , among others.

According to state-owned Cubapetroleo, the island and its foreign partners will begin next year drilling five wells in the gulf, where Cuba estimates its zone contains some 20 billion barrels of oil.

Cuba's 2010 onshore and offshore production totaled 21.4 million barrels, representing nearly half the island's energy needs. It imports the rest from its closest regional ally Venezuela, which provides Cuba with some 100,000 barrels per day, at cut-rate prices.

http://www.google.com/hostednews/afp/article/ALeqM5i3D6dxiBYlyscsetFX6p8ZbOyCPQ?docId=CNG.d1c14754f585e752b4e73771c6fc1b86.7c1

Cuba MBA’s: As Communism Lingers, A New Backdoor To Capitalism Opens

Cuba MBA's: As Communism Lingers, A New Backdoor To Capitalism Opens

A Spanish and Catholic clergy in Cuba have joined forces to help Cuba's business leaders of the future — even if 'What Future?' remains a looming question as regulations still restrict free enterprise from blooming under the Castro regime.By Daniela ArceAMÉRICAECONOMÍA/Worldcrunch

HAVANA – Even before Cuba began cracking its doors open to capitalism, Paulino Garcia always displayed an entrepreneurial spirit. He spent two years at a university in the Soviet Union before returning to his native Cuba to continue his law studies at the University of Havana. After working for a firm called Climex, Garcia eventually managed to open his own in 1996, thanks to a new law introduced that allowed people to work for themselves.

"I built it from nothing, and with a lot of sacrifice," Garcia says. "I really wanted to have my own restaurant."

When Cardinal Jaime Ortega Alamino told José Luis Mendoza, the of the Catholic University (UCAM) in Murcia, Spain, that all of the administrators and owners of small businesses in Cuba needed to go to business , he was thinking about people like Garcia.

At the end of 2010, 's government changed the rules and opened up the to a small amount of private business. In November, it announced that barber shops and small cafeterias would become private, and that he would allow an expansion in the number of small restaurants like Garcia's. Now people are starting to realize that running a business requires more than just intuition and common sense.

"The cardinal was reflecting on this need, and our president offered to help fill it," says Gonzalo Wandosell, the vice-dean at the Business Management School at UCAM.

The classes began on Sept. 26 in a symbolic building: the old seminary of San Carlos and San Ambrosio, founded in 1689 and home to the Cultural Center of Father Felix Varela. Wandosell indicated that the 45 founding students come from both state-run companies and private companies, and that there is no requirement for students to be Catholic. "They are engineers, lawyers and economists."

The Church's role in the new MBA program has been substantial. Since 1959, the Cuban clergy has been enemy No. 1 of the revolution, although the Church-state relationship has improved substantially since then, especially after Pope John Paul II's 1998 visit.

On the other hand, the financing for the project has come from a Spanish university, the colonial power up until 1898, which many Cubans still refer to as the Motherland. The connections between the two countries didn't chill in the wake of the Communist revolution, with Spanish in Cuba still strong today.

In contrast to the costly programs in other countries, the Cuban MBA is free for students, with the costs covered by the University and donations from businesses in Murcia.

According to Wandosell, the Spaniards are taking care of the instructors' salaries and expenses, while the Church "supplies the buildings and coordinates with local instructors," as their director, father Yosvani Carvajal, said.

It isn't the first program of its type attempted Cuba. The Argentinian Business School ADEN tried it first, and was followed by a series of other high-profile trials and failures.

The innovation in the UCAM program is that it is the only one directed exclusively towards entrepreneurs and sole proprietors. That is not the case at the MBA program at the University of Havana, where students must be employed by an official state business to be accepted.

Not recognized at home

Majel Reyes Quesada, an MBA student with a Bachelor's degree in English, said he had practical reasons for wanting to do the program. "I see myself doing something in the future, with the possible new economic opening," he said. "Maybe I'll create a small business."

This is a typical student profile, and it can explain the pragmatic character of the curriculum. "In Spain we would call it professional master's degree," explains Wandosell. "It offers advanced training in business management, but is very orientated toward small and very small businesses and cooperatives, which are the type of enterprises that are being started in Cuba."

In spite of the recent reforms, there are still substantial obstacles for potential entrepreneurs on the island nation. On the one hand, the list of authorized activities precludes Cubans from opening businesses likely to grow large. For example, a book-repair shop is ok, but a publishing house is not. An artisan bricklayer can open his or her own business, but not a construction company. No such company can open while Cuba's constitution specifies that "the economic system is based on socialist principles."

In addition, there is no credit or micro-credit system. Without any access to start-up funds, entrepreneurship opportunities remain limited; and finding funding can be a major obstacle even for people with family abroad. And although the Communist Party passed a resolution during their most recent congress to liberalize the wholesale markets, the reforms have yet to be implemented.

Is this the back door to Cuba's capitalist tradition? Father Carvajal offers the Church's non-ideological position: "It is for Cuba's benefit. The graduates are for Cuba."

At the end of their program, the MBA students will have a degree recognized in the , but not in their own country. The Ministry will not officially sanction the program until it is paired with a Cuban university.

Read more from AméricaEconomía in Spanish

http://www.worldcrunch.com/cuba-mbas-communism-lingers-new-backdoor-capitalism-opens/4264

Cubans Can Sell Their Homes / Laritza Diversent

Cubans Can Sell Their Homes / Laritza DiversentLaritza Diversent, Translator: BW, Translator: Haydee Diaz

This past November 2nd, the Cuban government published the Legal Decree Number 288 that modified the "General Law of the Home", and permitted the buying and selling of real estate between private parties, until then it was prohibited by national legislation.

The new law took effect the 10th of November and generally permits owners: Cubans and foreign permanent residents in the country to dispose freely of their real estate.

However, it keeps as a legal requirement, the possibility of owning only one family home and another located in a vacations or summer area. With respect to the exchanges, donations, and trading, it establishes that it can be formalized before a notary public of the municipality where the real estate is located, prior to registration in the Property Registry.

The real estate registry started to operate in Cuba in the middle of the 19th century. In the 60s, it came to a standstill with the creation of the General Law, ending legal sales. It was reopened in 2003, due to the requirements of foreign . Currently, it constitutes an indispensable requirement to carry out transfers of ownership.

The legal decree also eliminated the existing permit that owners had to obtain from the Municipal Director of the Home, to trade and donate their real estate. Also, it repealed the method of losing a building (confiscation), in cases of transfers of property, construction, expansion, and rehabilitation of houses.

Nevertheless remaining in force are the restrictions of of residence, which impose migratory rules for the capital and for zones of high significance for undergoing a special administrative regimen, as is the case with Old Havana, in the capital, Veradero, and Matanza.

The Legal Rules permit compensation in the case of a difference in the values of the real estate that is traded, which was forbidden before. Also, they reestablish the rights of heirs who are able, in every case, to be awarded the housing, if and when they have no other property. Previously, the beneficiary dweller acquired the property, otherwise, the law recognized the cohabitant.

It maintains the confiscation for leaving the country, but it permits family members to acquire the real estate for free. Before, the state sold the confiscated houses, or some of them, to the co-owner or cohabitant who could show they had lived for 10 years with the emigrant owner. Also, they could not dispose of the housing during the four years before their departure, a restriction that was eliminated.

It imposed the payment of taxes for the Transfer of Real Estate for those who acquire the housing and for the sellers, through Personal Taxes. The taxes on the purchase are based on 4% of the value of the home and are paid in Cuban pesos.

In general, the new law eliminated a series of prohibitions that prevented Cubans from exercising the powers of disposal arising from their ownership. However, it keeps some restrictions pertaining to within the national territory, which impedes the full realization of this right.

On the other hand, it simplifies a series of bureaucratic obstacles. However, the paperwork and the time it takes to exercise this right will be hardly reduced. The state does not have the adequate infrastructure and the conditions for the provision of legal services with the efficiency and the quality that the new regulations require.

Translated by: BW, Haydee Diaz

November 14 2011

http://translatingcuba.com/?p=12843

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