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 food 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 Raul Castro 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.

Travel industry experts say tourism 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 investment 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 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:

- 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
Chavez, 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
Gross.He is serving a 15-year sentence for providing Internet 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.
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 Army, Army 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 investment 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 Fidel Castro 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

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
Venezuela, whose President Hugo Chavez, 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.

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 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 food 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 Raul Castro 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 travel 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 tourism 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 investment 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 Gross.
[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

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 economy 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 Raul Castro 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 restaurant 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 economy
Cuba'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 food 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 hospital 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
Internet penetration in the Western Hemisphere.

The state pays workers salaries of about $20 a month in return for free
health care and education, 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 entrepreneurs
Hidalgo 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, Fidel Castro 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 investment 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

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 President 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
sonia verma
HAVANA— From Thursday's Globe and Mail
Published Wednesday, Oct. 12, 2011 8:42PM EDT
Last 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 Fidel Castro 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 food giant McDonald's
the small restaurant 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 economy.
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 tourism 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 Spain, Chile 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 investment 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 illegal 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

National Bank of Canada 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. embargo, which slowed foreign investment.

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

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/

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 Venezuela 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, tourism, 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 hotel management.

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

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 health care and education, 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 economy.

Yet Cubans will tell you that change comes slowly on the island. Strict
controls on foreign investment 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 tourism 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
"paladar" 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 University.

"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 housing 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 Hotel 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 Raul Castro'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 President 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

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 Spain's Repsol, OVL of India and PDVSA of Venezuela,
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

A Spanish university and Catholic clergy in Cuba have joined forces to
help train 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 Arce
AMÉRICAECONOMÍA/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 restaurant 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 president
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 school, he was thinking about people like Garcia.

At the end of 2010, Raul Castro's government changed the rules and
opened up the economy 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
investment 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 travel 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 European Union, but not in their own country. The
Education 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

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 Housing Law, ending legal sales. It was reopened in 2003,
due to the requirements of foreign investment. 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 illegal rehabilitation of houses.

Nevertheless remaining in force are the restrictions of freedom of
residence, which impose migratory rules for the capital and for zones of
high significance for tourism 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
freedom of movement 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

In the Gaceta Oficial No. 40 the government published the new framework
in which the self-employed, micro businesses and private farmers,
starting Dec. 20, will be able to be financially active. This new legal
framework puts them practically on equal footing to the financial
services and credit a state enterprise can access.

The new financial regulations equally apply to the soon-to-be-coming
non-agricultural cooperatives and other non-state entities that may be
allowed in the future. The regulations also leave the door open to loans
for consumer good, automobile and home purchases, even though they state
that this won't be a priority for now.

Three state banks, Banco Metropolitano, Banco de Crédito y Comercio, and
Banco Popular de Ahorro, will be in charge of responding to the new
loans and financial services. The self-employed and micro entrepreneurs
may apply for loans starting at 3,000 non-convertible pesos (CUP) —
US$125 at current exchange rates — while loans for private farmers start
at 500 pesos CUP, or $21. These loans can be used both for working
capital or investment purposes. There is no upper limit for the loan
amounts. The Central Bank will set minimum and maximum interest rate ranges.

Loan applicants must specify the viability of the business and
guarantees. In case of repeated non-compliance, the financial
institution will take legal steps, according to the guarantees defined
in the contract. As collateral, applicants may use their own bank
deposits or those of third persons, movable goods, mortgages of vacation
homes, or unimproved lots, among others. All these guarantees could be
subject to seizure. The regulations establish that the debtor's
permanent home may not be put up as collateral.

The banks may, furthermore, open checking accounts in CUP or convertible
pesos (CUC) for non-state sector clients. The opening of a checking
account is obligatory for businesses with gross annual revenues
exceeding 50,000 pesos CUP (US$2,083).

Another new financial measure is that the entire non-state sector may
use, in addition to cash, the following payment instruments: a) bank
transfers, b) checks, c) payment order, d) debit or credit card, e)
local letter of credit, f) demand bill, g) promissory note, and h)
others that are used in banking.

It's difficult to make an evaluation of the new measures before they
have been put to practice. Even so, some general traits about potential
and challenges can be anticipated.

The opening of credit by state banks will allow to add new resources to
the disposition of private undertakings. In principle, the banks would
be better qualified to select projects with higher profitability and
lower risk, which in turn would increase efficiency in the allocation of
temporarily free resources in the economy.

This way, a proliferation of informal finance would be avoided. Until
now, capital for private businesses has originated from savings of the
entrepreneurs, remittances from abroad, and informal finance resources
(loan from a family member, friend or other person).

A foreseeable challenge is that, effectively, these three banks — whose
basic experience and knowledge was formed under the logic of credit for
medium-size and large enterprises — will be able to speedily assume the
principles that govern microfinance. An alternative, more attuned with
international practices, would have been to create microcredit banks or
other financial institutions that solely specialize on serving this
market segment. The formation of mixed-capital microcredit institutions
(for example with some Latin American microcredit bank) would multiply
the financial, logistical and know-how potential of Cuban banks facing
the opening of a non-state small-business sector.

The possibility of non-state sector companies opening checking accounts
and using all payment instruments has the following positive effects:

•Their operational costs will shrink. By way of banks, they would be
able to pay their taxes, Social Security contributions, utility bills,
and more. This would reduce the risk and cost of handling and
accumulating excessive amounts of cash.

•Their links with state companies and institutions would begin to be
financially viable.

•It would facilitate legal control, particularly it would contribute to
reducing fiscal evasion.

For monetary policy, the opening of banking for the non-state sector has
also implications. It can bring about considerable changes to the
composition of demand for money. Once credit expands to the non-state
sector, new financial transmission mechanisms will appear, and it will
increase the ability for monetary policy action to influence economic
activity in the short term, and to control inflation.

The new financial services also represent challenges for the Cuban
banks, which seem to have already reached capacity in serving their
existing clientele. That clientele, moreover, has little access to
alternatives such as online or telephone banking, magnetic cards and
automatic teller machines. Therefore, bottlenecks in providing financial
services to the private sector will likely be forming.

The banks and the non-state sector will face another type of challenge
to advance within the new financial framework, due to the very economic
environment in which they must function. Dual currencies and exchange
rates, lack of access to a wholesale supplies market, import
restrictions, domestic financial crises, limited convertibility of the
currencies, deficiencies in the incentives system of state companies
would be among the most significant obstacles.

Even so, the new measures still seem very positive, because they signal
the real acceptance of new actors within the Cuban economic model,
because of the positive impact they must have due to their performance,
and because of the potential (and challenges) of an economy that will be
more accelerated by banks and credit.

Pavel Vidal is an economist with the University of Havana's Centro de
Estudios de la Economía Cubana (CEEC).

http://www.cubastandard.com/2011/12/03/analysis-cubas-new-financial-policy-%E2%80%94-accelerating-the-economy/

HAVANA TIMES, Dec 1 — The recent authorization given to different types
of cooperatives to sell products directly to the tourism industry is
positive and significant for two reasons.

Firstly, this is a measure that introduces a note of rationality to the
Cuban economic system – after five decades of its having been incredibly
mediocre and bureaucratic.

Farming and livestock products of whatever kind has been only recognized
as payable merchandise after they're recorded by bureaucracies designed
for that purpose, with all the waste entailed. Even though this rigidity
has weakened somewhat in the heat of the unending crisis, in essence, it
continues in this vein.

I remember one case that I observed directly in the small town of
Chambas (in Ciego de Avila Province) while conducting sociological
research in the late 80's. There's no doubt that it would have inspired
the great dramatist Eugne Ionesco, as well as his theater of the absurd.

Though in Chambas there was a port close to the Punta Alegre fishing
operation, which supplied fish to a cooperative, those same fish had to
be transported many miles to the provincial capital, where they then had
to be registered as payables, thereby becoming "real." Subsequently they
had to be transported back that same distance to Chambas.

However, since the trucks' cooling systems were poor, the freight would
often return spoiled. This meant that the locals couldn't eat fish, not
unless they turned to the black market. It was here that the fishermen
of Punta Alegre (many of whom lived in Chambas) became responsible for
shortening the path of those unfortunate denizens of the sea.

Fast forwarding to the 90's – amidst the terrible crisis that Cuban
authorities euphoniously refer to as the "special period in a time of
peace," I had the opportunity to learn a little about the issue of
foreign investment in hotels in Varadero.
At one of them I talked at length with a young Spanish manager, a
Taylorist technocrat who had decided to siphon off as much surplus value
possible from each of his Cuban employees in the shortest amount of time
possible.

I remember that the person in charge at the front desk was a former head
of the philology department of a university in the middle of the island.
This was someone who not only knew English and French, but who had read
Racine and could recite Walt Whitman by heart. Nonetheless, her legs
were always swollen because of having to stand up all day.

Then too there was this manager of a jewelry store (also a former
university professor), so refined and intelligent, capable of selling a
wedding band to an 80-year-old priest. This woman would complain and
carp daily about her frustration with a job that only allowed her to
survive with some low level of comfort while others fell victim to
poverty and deprivation.

The young Spanish manager was delighted with his situation, except with
the purchasing of the hotel's fresh fruits and vegetables. He had to buy
them from an intermediary who lived in nearby Cardenas, though this
person was usually short on produce and could only offer wilted lettuce
and overly ripened mangoes. The challenge wasn't about what this junior
manager wanted, but what he could get.

With a mischievous smile, he confided in me that he found out a way to
obtain many products directly from places like the Bahamas, Cancun and
Florida (a fact that I hope won't be taken into account as
circumstantial by US congress member Ileana Ros-Lenthinen).

The new measure allowing direct sales should have had a positive effect
on reducing costs and on the formation of a chain of products and
services vital for local development. This is a way to boost tourism as
an engine for economic growth – and for that reason alone I think it's
important and beneficial. I also believe that steps of this nature
should occur in all directions, not just in relation to agriculture.

But there's a second point that I think is even more important: its
systemic impact.

The Cuban system — economically and politically — has always been based
on the existence of a severely centralized vertex and a fragmented and
isolated base. In this centralization has resided the capacity to
control and prevent critical disruptions.

As such, if we review the history of the system, we'll see that
preventive banning and prohibitions have been more frequent and
effective than the direct repression of dissent.

In politics this has been very clear: Each institution is a vertical
structure which in turn feeds into the political center. There are no
horizontal relationships or communications. Everything ultimately issues
into a very small cupola of power occupied by a leader (for whom we
parade in front of every May Day) surrounded by a narrow circle of
subordinate collaborators (who vary according to circumstances).

For decades this leader and his inner circle were the only legitimate
producers of politics and ideology. The rest of us have been nothing
more than consumers.

The economy evolved in the same manner. Everything began with a
bureaucratic and centralized plan, which was constantly violated by that
same bureaucratic and centralized structure.

Operating exactly like the regimented political system, the market was
fragmented to avoid free contact with its agents. Moreover, starting in
the 90s, the economy was also marked by two different currencies. This
opened the door to the promising field of currency exchange
profiteering, which was actively taken advantage by officials
metamorphosing into the new bourgeoisie.

All of this explained the Spanish manager's anxiety and his final
decision to seek overseas vegetables, despite having excellent
agricultural fields only a few miles away from his tourist ghetto. All
around was land teaming with farmers ready and willing to produce, but
they were hamstrung by inspectors and police officers intervening to
commandeer the produce into state warehouses.

With this recent measure, another step forward has been taken in the
defragmentation of markets. This is moving in the same direction as the
new law that will deregulate the housing market. Therefore, this
represents another serious step in that other process — which will be
long and painful — of the construction of capitalism in the country.

But let me reiterate: It's a positive step. It will help boost the
economy and food production, all of which is extremely important for a
society which, because of mismanagement, has been reduced to poverty and
an alarming degree of vulnerability.

If there ends up being more food produced in Cuba and most Cubans eat
better, this is a positive. If there will be more autonomous actors —
even if only in this limited area of ??the economy — this too will be
positive. And if these actors engaged in production and accumulation
wind up employing workers and paying them better than what the state
does, then it's so much the better.

In addition, all of this creates a less rarefied atmosphere for
advancing an agenda of national reconstruction, one of a democratic
republic of justice and solidarity.

Yet obviously this is not what is suggested by the reforms of the
general/president, whose anti-democratic pedigree no one has the right
to doubt. His agenda is not that of democracy. This is because the
expected autonomy will be in the market, not in politics. And it's not
certain that a commercial invigoration of the economy will lead in a
linear direction to a democratic opening.

There will be production, yes; and liberalization (meaning more
liberalism), but not more democracy.

In fact, I would dare to argue that the production of democracy would be
dysfunctional, because the opening taking place in Cuba, one aimed at
achieving optimum performance, must coexist with a working class and a
citizenry without rights and without the organizational infrastructure
or experience to raise demands.

Borrowing from the infamous anti-Cuban metaphor posited by Granma editor
Lazaro Barredo, the public is like insistent wide-mouthed nestlings, but
in this case they would find themselves with their mouths closed shut.

In politics, the Cuban government will only concede what's necessary to
assure that its economic model functions in its behalf. Hence we saw the
agreement with the Catholic hierarchy, the release of prisoners and the
recent relaxation of internal migration – all of which is ultimately a
better scenario for the housing market to work, the laundering of
fortunes and converting treasures into capital.

Soon we will see a few liberalizing steps with regard to emigration.
These are necessary to attract "foreign savings," which represents the
money of emigrants, arriving in the form of remittances or investments.

But that's it. The Cuban authorities, their intellectuals and their
subservient underpaid bloggers have been very clear in that the opening
of democracy and the rebellion of the island's "indignant" already took
place in 1959 – way back 52 years ago.

http://www.havanatimes.org/?p=56714

HAVANA, Dec 2 (Reuters) – Cuba's economy will end the year up 2.7
percent, state media reported on Friday, an improvement over the 2.1
percent increase registered in 2010 but a bit less than the 2.9 percent
forecast by the government.

Granma, the Communist party newspaper, blamed investment-related
construction problems for the less than expected performance. It cited a
recently concluded meeting of the Council of Ministers which adopted
economic plans and a budget for 2012, without providing further details.

The newspaper said budget deficit reduction would also fall short of
plans this year, due mainly to lower than expected revenue from sales
taxes, indicating internal trade did not perform as anticipated.

Cuban President Raul Castro has been leading an effort to reform the
communist-run country's Soviet-style economy as it struggles with heavy
debt and stagnation.

Castro, since taking over for his ailing brother Fidel in 2008, has
drastically cut imports while promoting domestic production and exports.

Cuban Foreign Trade Minister Rodrigo Malmierca said a month ago that
trade was up 27 percent through September, compared with the same period
in 2010, and on track toward a third consecutive surplus.

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

Granma reported on Friday that the government meeting concluded that
efforts to improve domestic food production, through a series of
reforms, had not gone far enough. Combined with higher international
prices, that was undermining efforts to cut imports that cover 60
percent to 70 percent of domestic consumption.

Granma said the government meeting, chaired by Castro, adopted "a group
of measures to eliminate immediately problems affecting Basic Units of
Cooperative Production," a form of farming cooperatives established on
state-owned lands.

The paper said measures were also approved modifying a land-lease
program, which grants small plots of land to new farmers for 10 years,
in order "to encourage the incorporation, permanence and stability of
the labor force and guarantee the permanent settlements of the farmers'
families."

Farmers have complained the leases are too short, the acreage is too
small and that a ban on building permanent structures on the land works
against increasing production.

http://www.reuters.com/article/2011/12/02/cuba-economy-idUSN1E7B10C320111202

Two Canadian developers are helping Cuba use golf to boost its ailing
economy
by Lyndsie Bourgnon on Wednesday, November 23, 2011 11:00am

In a famous picture, Fidel Castro and Che Guevara are playing a round of
golf. Guevara, in military fatigues, is studiously preparing a putt, and
Castro stands aside, scrutinizing his position. They both look serious,
but the context is hotly contested among historians—were they practising
for an upcoming meeting with U.S. president Dwight D. Eisenhower? Or
were they actually taunting him?

Cuba experts tend to agree it was a taunt. In post-revolutionary Cuba,
golf was a sport for the rich, the bourgeois. And for 50-odd years, it
all but disappeared from the island. (There's currently only one 18-hole
course.) But now Cuban authorities have given preliminary approval to
develop four luxury golf resorts. Two of those contracts have been
handed to Canadian developers.

Of the four, Ottawa-based Standing Feather International is the closest
to breaking ground. Their joint venture with a division of the Cuban
tourism ministry has been approved, and they're waiting for a final
sign-off from Havana to begin building. Plans for the Loma Linda Golf
Estates, in the eastern Holguin region, cover 520 acres and include two
golf courses, a five-star hotel, and 1,200 townhouse-style condos.

Standing Feather, which represents First Nations in Quebec and Ontario
and which already had business ties in Cuba, was first asked by Cuban
officials to consider a golf development in 2002. "They said the
all-inclusive, sun-and-sand model was getting a bit tired, and they
wanted to keep it rising," says Standing Feather managing director Chris
Nicolas. "This type of value-added tourism offers more variety and
certainly caters to a higher level of tourist. It's a completely
different model for Cuba."

The company expects the deal to be finalized before the end of the year.
After incorporating the joint venture, it will set up offices in Cuba,
form a board of directors and begin the two-year building process. Once
the resort is fully completed, the total investment will top $530 million.

Montreal-based 360 VOX is also planning a golf resort in Jibacoa, near
Havana. It will include a marina and two 18-hole courses, along with a
nine-hole training course. The company is also hoping for a 2012 start
date. At a conference in Europe this spring, Cuba's tourism minister,
Manuel Marrero, said the government has plans to eventually build up to
16 courses.

Nicolas admits to being surprised when he first heard about Cuba's golf
ambitions. "I told them it was a waste of good farmland," he says. Which
is exactly how Cuba treated this type of development after Castro took
power—golf courses in the Havana region were promptly turned into
schools and hospitals. But today, outside investment is critical,
Nicolas adds. "Cuba's economy is razor-thin right now, and they could
not have come up with something that's going to give them as much
capital as quickly as the sale of real estate."

John Kirk, a Cuba expert at Dalhousie University, has noted a "massive
shift" in Cuban policy over the five years since Raul Castro took over
from his brother. "The golf course is part of a larger strategy to make
the Cuban socialist system more efficient," he says. "It's retaining the
socialist revolutionary basis, but to make it more productive for the
state there need to be significant compromises."

These compromises include opening the doors to foreign ownership, which
is bound to take off now that Cuba has announced its citizens can buy
and sell their own homes and vehicles. Foreign ownership of vacation
rentals (which Standing Feather and 360 VOX plan to offer) is expected
to boost the nearly bankrupt country's critical tourism industry.

Completing the resorts won't be easy. The U.S. trade embargo means
locating suppliers of high-quality goods has been difficult. Navigating
the negotiation process was itself a challenge. "Think about the nuances
of the contracts themselves," says Standing Feather director Stephen
Reynolds. "Can you imagine negotiating, for days on end, the capitalist
components to a socialist legal system? It's fascinating." And, like a
good golf swing, a lot harder to execute than it might appear.

http://www2.macleans.ca/2011/11/23/nice-shot-comrade/

HAVANA TIMES, Nov 23 — The changes being made in the Cuban educational
system are far-reaching reforms with enormous long-term implications.
They involve reducing the number of university students, increasing the
slots for technicians, creating schools to train skilled workers and
gearing the entire system to the needs of society.

The deputy minister of Higher Education of Cuba, Rodolfo Alarcon,
explained to us where these reforms are heading.

What are the main steps of this readjustment? Has university enrollment
been reduced?

Rodolfo Alarcon: Well, actually there has been no adjustment in
available university enrollment. The whole movement of change that's
generally occurring in education in Cuba is based on achieving the
optimum quality in the development of students. One measure that was
implemented was the requirement of entrance examinations into higher
education. These include math, Spanish and the history of Cuba, which
are tests that must be taken and passed independently.

That has limited access, but it's not that enrollment slots have
decreased. This is something that must be resolved in the same measure
that the pre-university education increases its quality and efficiency,
and therefore more students pass the entrance exams.

Nevertheless, a youth who doesn't pass still has the option to keep
re-applying until they turn 25 and get one of the slots. What
characterizes this movement is the achievement of the maximum possible
quality of professional training in Cuba.

Does this encouraging of young people to go into mid-level technical
careers and to become skilled workers have the intention of redressing
the distribution of the labor force?

Rodolfo Alarcon: One of the distortions caused by that situation was
that virtually everyone in high school was studying to go on to the
university when in fact there was a tremendous need for mid-level
technicians, people who could solve concrete problems. There's a lack of
them.

With the new system they can go back and do their university studies
later, after working as a technician. That's the way a young person who
enrolls in technical level studies can help resolve the shortage that we
have at this level. They're being encouraged to go back to college
later, after first working.

Cuba is one of the few Latin American countries that have guaranteed
college access for all social sectors. So how is it going to ensure this
now that access becomes more difficult?

Rodolfo Alarcon: That's an interesting question. Cuba spends a
significant amount of its meager resources on general education and on
higher education in particular. We have various types of courses. The
ones that are very resource demanding are the day courses, but we also
have courses for workers who can't attend as often and are therefore
less expensive.

We have "distance education" programs that are going to be expanded and
are even less expensive, though the initial investment is high. This
allows everyone who wants to study in higher education to be able to do
so, that's the aim and what we're working on.

It's also being proposed that the university relate better to the needs
of the economy. Is this similar to the European reforms?

Rodolfo Alarcon: Well, it's not only the economy; it's also society as a
whole. Joining society to the market would be sounding the death knell
for the university. The university must have a commitment to its
society, which isn't solely the market; there are also social needs. It
has to anticipate the needs of society, that's its role.

So part of its mission is to meet the needs of the economy, though
that's not the whole mission. It happens that to the extent that the
Cuban economy, or the economy of any country, needs to expand, it's
logical that the university should work to help solve the problems of
the economy; that's part of its social commitment. The university should
contribute to the economy with its actions, and that too is what we're
trying to do.

We have always tried to make the work of the university relevant,
meaning that it meets the needs of society, though it must also be a
source of suggestions and ideas that might be beyond what is generally
thought in society at that time.

The new policy is directing young people towards technical training for
Cuba's development. Photo: Raquel Perez

The work of Cuban professionals is the country's main source of income.
Will this remain the same or will the university be directed towards
other sectors more productive than the services?

Rodolfo Alarcon: No, we're putting a great deal of emphasis on technical
and agricultural fields. Those are the main needs of Cuba at the moment.
That's why we're trying to direct students toward these areas and
creating opportunities so that they study these fields. The historical
level of preparation of teachers, doctors, etc. is being maintained, but
the priority is in other areas. Studies in the agricultural fields are
what the country needs.

Are you saying that we're going to see a Cuba that's more
production-oriented and less service-oriented?

Rodolfo Alarcon: We're creating a Cuba that won't rely on imported food
or importing things we can create right here in Cuba; and in that sense,
the university has an important role.

http://www.havanatimes.org/?p=56306

Sen. Nelson targeting Cuban oil exploration near Florida
By David Goodhue
dgoodhue@keysreporter.com

Bill Nelson, Florida's senior senator, and a Senate colleague from New
Jersey have introduced a bill that would hold foreign oil companies
directly accountable for oil spills that pollute U.S. territory.

The bill was written in anticipation of a massive foreign offshore
drilling operation that could begin in Cuban waters — as close as 50
miles from Key West — by late next month.

Nelson, a Democrat, and Sen. Robert Menendez, D-N.J., introduced the
bill on Nov. 9. It ensures that in the event of an oil spill, claimants
can directly sue companies responsible for the disaster. The bill also
removes the $75 million liability cap.

Nelson and Menendez said in a statement that the legislation is meant to
be a "big stick" to discourage foreign oil companies from drilling
offshore near Florida.

"Hopefully, companies seeking to drill in Cuban waters will think twice
once they know they would be fully liable for any damages to the Florida
Keys, South Florida beaches, or if the spill reached the Gulf Stream,
anywhere up the East Coast," Menendez said in a statement.

A statement from Nelson's office said current law contains "ambiguities"
that might allow companies "to argue that [lawsuits] could not be
brought directly against them under the Oil Pollution Act, the main body
of law that protects America from oil spills."

Spanish oil company Repsol will be the first of several foreign
companies to explore for oil in the Florida Straits aboard a giant
Italian-owned semi-submersible rig constructed in China and Taiwan. The
$750 million rig, named the Scarabeo 9, is en route to the Cuban coast
and is expected to arrive in late December or January.

Companies from countries including Russia, Brazil, Vietnam and Norway
will operate from the rig after Repsol. What is most concerning to some
observers is the depth of the project — more than 6,000 feet underwater.
The 2010 DeepWater Horizon/British Petroleum spill in the Gulf of
Mexico, which took 85 days to stop, happened at a depth of 5,500 feet.

Another concern about the project stems from the 50-year-old U.S. trade
embargo against Cuba's communist government. In the event of a spill,
U.S. companies with needed expertise would be delayed in helping with
cleanup efforts because they would need special permission from the
federal government to operate in Cuban waters.

Nelson said any delay in spill mitigation could prove disastrous for
Florida's environment and tourism-dependent economy.

"If there is a spill there, we could lose part of the Everglades, or the
Keys, or the coral reefs, or our fishing industry or tourism – and
jobs," he said.

How much oil is located in the area of the Florida Straits Repsol will
explore is up for debate. The U.S. Geological Survey estimates about
five billion barrels, but the Cuban government thinks the offshore area
holds up to 20 billion barrels.

Cuba is not the only Florida neighbor hoping to take advantage of its
potential oil reserves. A Bahamian energy investment firm, Bahamas
Petroleum Co., said recently that it hopes to partner with a major oil
company and begin exploration by 2012.

For more Keys news, go to KeysNet.com

http://www.miamiherald.com/2011/11/21/2512428/sen-nelson-targeting-cuban-oil.html#storylink=misearch

Announcing another round of layoffs in the sugar industry, Communist
Party daily Granma in a two-page spread laid out the structure of a new
state sugar company.

With the goal of cutting administrative cost by 55 percent and reaching
productivity goals that were not met after a first wave of changes and
cutbacks since 2002, the government dissolved the once-powerful Sugar
Ministry (MINAZ) and created a new state company that reports directly
to the Council of Ministers and whose success will be measured in profits.

The new company, called Grupo Azucarero, consists of 13 provincial
enterprises with 56 sugarmills; five aging mills will be completely shut
down, the newspaper said. Grupo Azucarero will manage a total of 814
production units, down from 932 in 2010, when the industry still was
directly operated by the Sugar Ministry. While the remaining sugarmills
will not be independent, they will enjoy more autonomy.

The company will pay sugarcane producers a price that adapts to world
sugar prices. In what is a novel move during the current harvest,
producer prices were raised from 50.90 pesos per ton to first 95 pesos,
and then to 104 pesos. Grupo Azucarero must liquidate existing debt with
producers within 20 years; sugarcane producers now pay a 5-percent sales
tax.

The government expects Grupo Azucarero to yield a profit of 120 million
non-convertible pesos in 2012, Granma said.

The Foreign Trade and Investment Ministry (MINCEX) is now working with
Grupo Azucarero to develop sugar export strategies. MINCEX also oversees
foreign investments in the sugar sector.

"A vital question in this reordering is decentralization, as a way to
lighten structures and eliminate red tape," Granma said. "In addition to
using resources more efficiently, this measure allows shortening
administrative distances and facilitating management. The new structure
will allow reinforcing contractual responsibility between entrepreneurs."

The sugar company is part of a new generation of state companies —
called Organizaciones Superior de Dirección Empresarial (OSDE) — that
enjoy a higher degree of budget autonomy.

http://www.cubastandard.com/2011/11/19/granma-publishes-details-about-new-sugar-company/

SOLEDAD GALLEGO-DÍAZ – Buenos Aires – 18/11/2011

Latin American leaders are paying close attention to see what changes,
if any, Spain's new government will make regarding its policy toward Cuba.

The Communist island's relations with Madrid and the rest of the
European Union have been an important focus of bilateral relations, and
Latin American presidents know that a conservative Popular Party (PP)
government won't be so keen to try to foment a friendly approach toward
the Castro regime.

During the past two decades, the majority of Latin American nations have
been governed by left-leaning presidents, who have identified themselves
more closely with Spain's Socialist Party. All of them recall the
hardline position the past PP government of José María Aznar took with
respect to Cuba, when the prime minister successfully campaigned at the
EU level to cool relations with Havana.

The PP has also not done much to improve its own image in certain
countries. After President Cristina Fernández de Kirchner won her first
term in 2007 ? taking over the Casa Rosada from her husband Néstor
Kirchner ? Spain's conservatives were very vocal in their opposition to
the idea of keeping the Argentinean presidency "within the family."

Nevertheless, even though Mariano Rajoy and Fernández de Kirchner are on
opposite ends of the political spectrum, bilateral relations between
Spain and Argentina are not thought to be in jeopardy should the PP
leader win the race on Sunday ? just in the same way Chilean-Spanish
relations didn't suffer when conservative Sebastán Piñera was elected
two years ago. Buenos Aires never cared for Colombia's former President
Álvaro Uribe, but now has a wonderful relationship with his predecessor,
Juan Manuel Santos, who is also a conservative.

Spain's relations with Brazil should the PP win are also expected to
remain on an excellent level. The Socialists have always had more
historic ties and contact with the Social Democratic Party of former
President Fernando Henrique Cardoso, than the Brazilian Workers Party
(PT), which is the governing party of President Dilma Rousseff.

Venezuela could be a different matter. But given that Venezuelans are
caught up with their internal problems, such as high crime and
inflation, as well as with the illness of their president, Hugo Chávez,
who is undergoing cancer treatment, they are unlikely to be overly
concerned about a change to a conservative government in Spain.

The majority of Latin American governments are paying close attention to
the economic crisis unfolding in Spain, which could have political as
well as financial repercussions for them. Between 1990-2010, Spanish
business deals flourished in the region, transforming Spain into the
second-largest investor in the region, after the United States.

Many Spanish companies now see their Latin American affiliates as being
essential to their survival. For example, more than 35 percent of Banco
Santander's operations are located in Brazil and more than 50 percent of
BBVA's holdings are located throughout the region. Repsol's Argentinean
affiliate, YPF, is responsible for 40 percent of the oil giant's profits.

Managers at some of Spain's transnational companies say they want the
new government to keep these figures in mind, as well as the importance
of the investments already made in Latin America because, as they say,
it is not about the region but rather helping the Spanish economy to grow.

http://www.elpais.com/articulo/english/Latin/America/keeps/watchful/eye/on/Spain/s/incoming/government/elpepueng/20111118elpeng_5/Ten

Amid economic reforms, Cuba goes after corruption
By PAUL HAVEN
Associated Press

HAVANA — Green-clad security agents swoop down on an upscale business
complex to shutter the offices of a Canadian car dealership. Top
executives at Cuba's famed cigar monopoly find themselves behind bars. A
former government minister trades his seat in power for a jail cell and
a 15-year term.

President Raul Castro is matching his free market economic changes with
a zealous battle against entrenched corruption on this Communist-run
island, much of it involving Cuban officials at major state-run
companies and ministries as well as the foreigners they do business with.

Cuba says the crusade is essential to save the socialist system. Others
wonder at the timing of a crackdown that has sent a chill through the
small foreign business community, just when the cash-strapped economy
needs international financing to push the reforms along.

Cuba has battled corruption before, even executing a former
revolutionary war hero on drug trafficking charges in 1989. But past
arrests have been largely limited to Cubans. Analysts say the current
crackdown seems different, with Canadian, French, Czech, Chilean and
English citizens jailed or sentenced for their alleged roles, and scores
of small South American and European companies kicked out of the country.

The sale of Korean cars and car parts slowed this year as two top
distributors, both Canadian, became ensnared. Meanwhile products like
Chilean wine, juice and tomato paste temporarily disappeared from
supermarket shelves, replaced after a few months by other brands.

One thing is clear. The rules of doing business in Cuba have changed
dramatically under Raul.

"This is not a campaign, what is happening in the fight against
corruption," Attorney General Dario Delgado told journalists this month.
"This is permanent. This is systemic. There is a will on the part of the
state … that corruption cannot be permitted."

While the nonprofit Transparency International says Cuba ranks better
than average worldwide in a measure of corruption and is third best in
Latin America and the Caribbean, graft here can be more corrosive
because the state controls nearly the entire economy.

Companies wanting to do business with Cuba must present their cases
directly to midlevel government officials who may make about $20 a
month. There is no open bidding for contracts and decisions go
unexplained, which businessmen say opens the possibility of graft.

A South American importer with a decade of experience selling food
products to Cuba before he was expelled for alleged corruption in 2009
said the payoffs can take many forms: from the gift of a bit of gas
money, a free meal or a computer pen drive for a relatively junior
"international purchaser," to free trips abroad, computers, flat-screen
TVs or large deposits of cash in foreign bank accounts for senior officials.

"The forms of persuasion – let's call it that – are nearly infinite," he
said, adding that the system is so pervasive that "a businessman must
always have a wad of cash to stuff the pocket of a guayabera," the
loose-fitting traditional Cuban dress shirt.

Cuban officials have not said what impact the crackdown will have on the
island's economy, but they have warned repeatedly that widespread graft
has the potential to destroy it.

"The fight against corruption is vitally important," said Comptroller
General Gladys Bejerano, a stern, poker-faced official who is
spearheading the investigations. "It doesn't produce fatalities and
there are no bombs or blood … but it is the only thing that can bring
down the revolution because it destroys our values and morality and it
corrodes our institutions."

Castro has thrown his full weight behind the project since taking over
from his ailing brother in 2006. In 2007, he signed a law imposing
stricter rules on public officials. When he put Bejerano in charge of
the Comptroller General's Office in 2009, he altered the chain of
command so that she would report directly to him and the Council of
State, Cuba's supreme governing body.

Even the Cuban leader has joked that Bejerano was not the most popular
at government parties.

"Comrade Gladys Bejerano was not well liked by some, and there was
always someone complaining" that her investigations are "demoralizing,"
Castro told legislators in a December 2010 speech. "They said 'Gladys is
very unforgiving, she can be very stern.' That is what we want. That is
what I constantly demand."

The arrests and raids also have sent a shudder through Havana's small
foreign business community, a collection of risk-takers who always have
accepted a high degree of uncertainty doing business with a Marxist
country that is subject to a 49-year U.S. trade embargo, and which has a
mixed track record of payment. Some now see themselves as targets.

Moves against them began in earnest in 2009 when more than 150 foreign
business owners and operators were expelled, according to businessmen
and a confidential Foreign Trade Ministry list obtained by The
Associated Press. But the pace of closures and number of arrests have
grown in recent months.

"It's like an earthquake," said a foreign business adviser who counsels
companies looking to enter the Cuban market. He said the crackdown is
coming just when Cuba is becoming more attractive because of Castro's
free-market opening, with rising demand for building supplies, car parts
and other products used by entrepreneurs and the state-run tourism
sector. Despite the arrests, he said, many new potential business
partners continue to visit Cuba in hopes of entering the market.

"It is a time of opportunity, but also great risk because of what is
happening: the arrests, the closures," he said, insisting on anonymity
out of fear that speaking publicly would damage his standing with the
government. "Everybody is nervous. Everybody is looking over their
shoulder to see who will be next, who is the next victim."

Authorities have acknowledged at least six sweeping corruption
investigations involving foreigners in the past two years, with at least
52 people sentenced to prison. And for every confirmed probe, rumors of
others abound. Cuba's state-controlled media seldom report on the
investigations, particularly those involving foreigners. Cubans are used
to the lack of transparency, which has turned Havana into a swirl of
whispers and intrigue.

Delgado defended the practice of giving few details on the investigations.

"There exists all the transparency in the world," he said. "But in Cuba
as in other countries, investigations have rules and details are given
when the moment is right."

Those whose arrests have been acknowledged include Alejandro Roca, a
former food industries minister who was sentenced in May to 15 years in
a case involving Rio Zaza, a Cuban-Chilean company run by Max Marambio,
a close friend of Fidel Castro who for years enjoyed access to the inner
circle of power.

The government has never revealed details of what Roca did, other than
to say he was sentenced for "continuous bribe-taking." Marambio, who
spent most of his time in Chile, was sentenced in absentia to 20 years.
A lawyer for Marambio declined to comment.

A separate case involving Marambio's brother, Marcel, ensnared 14
executives at Cuba's civil aviation authority and led to the firing of
its president, Rogelio Acevedo, a comrade-in-arms of the Castros since
their rebel days.

A dozen executives at cigar maker Habanos SA also have been jailed since
2010, including company vice president Manuel Garcia, according to three
sources close to the company, a joint venture between the Cuban
government and a subsidiary of England's Imperial Tobacco Group PLC. The
sources refused to be identified for fear of angering authorities.

In recent months there have been widespread reports of arrests at
national phone company Etecsa, which is run by the military, and of two
senior Telecommunications Ministry officials. A Western diplomat
confirmed the ministry arrests and two people close to Etecsa said
several senior executives were detained. The sources, who spoke on
condition of anonymity, said the case is linked to alleged corruption
involving a multimillion-dollar project involving Paris-based
Alcatel-Lucent and Cuban and Venezuelan state telecoms to lay an
undersea fiber-optic cable linking Cuba to Venezuela.

Officials boasted for months about the cable, which was expected to
increase Internet speed 3,000-fold. But the government fell silent as
its July launch date came and went, and there has been no appreciable
change in Internet speed. Etecsa and the government declined requests
for comment.

The government has given no information on probes of Tri-Star Caribbean
and Tokmakjian Group, the two car dealerships run by Canadians, as well
as investment firm Coral Capital Group, led by a Briton. The foreign
business adviser and another businessman who spoke on condition of
anonymity said all three cases sprang from a probe into graft at the Moa
nickel mine, where several Cuban officials and a Czech reportedly have
been detained. The project is a joint venture between Cuba and the
Canadian mining company Sherritt.

Tri-Star was shuttered in July and its president, Sarkis Yacoubian,
detained. Tokmakjian was raided in September, and president Cy
Tokmakjian placed under house arrest.

Tri-Star is listed on an Internet business registry as having an address
in Nova Scotia where a similarly named company, Tri-Star Industries, is
located. But the owner of the latter, Keith Condon, told AP there was no
corporate relationship between the two companies, though he did some
business with Yacoubian more than a decade ago. He said his company had
taken legal action.

Yacoubian's brother Greg in Toronto declined to comment. Several
messages were left for representatives of the Tokmakjian Group in Ontario.

A spokesman for the Canadian government, Jean-Francois Lacelle, said
Ottawa was "aware of the detention of two Canadian citizens" but would
not give details, citing privacy concerns.

Several foreign businessman applaud the crackdown, saying it is
important to level the playing field for honest companies, but even they
refused to speak on the record.

Their sentiment was echoed by Omar Everleny Perez, lead economist at
Havana University's Center for Cuban Economic Studies, who has argued
that the government must encourage foreign investment to keep the
reforms from foundering. Still, he said eradicating graft is vital even
if it discourages some investment.

"If you are going to undertake a profound change in the Cuban economy,"
he said. "You must take this problem on with great force."

—

Associated Press writers Andrea Rodriguez and Peter Orsi contributed to
this report.

http://www.miamiherald.com/2011/11/19/v-fullstory/2509592/amid-economic-reforms-cuba-goes.html

Cuba Takes Steps To Recover Sugar Industry

HAVANA, Cuba, Nov 14 (Bernama) — The Cuban government is currently
engaged in the process of reorganising the country's declining sugar
industry to restore its status as an important pillar of the national
economy, reports Xinhua news agency.

With the collapse of the Soviet Union, Cuba's main trade partner, raw
sugar production in the Caribbean country plummeted from 8 million
tonnes in 1990 to only 1.1 million tons in 2009, the lowest level in a
century.

This situation has forced the Cuban government to take new steps to
revive the island's once most productive sector.

According to the Official Gazette this week, President Raul Castro has
signed a decree to create a new government office, Azcuba, to replace
the Ministry of Sugar to oversee the country's sugar production.

Azcuba comprises 25 provincial and service companies, including two
research institutes on sugarcane and its derivatives and a national
training centre.

The decision to abolish the ministry, which failed to meet any state
function, was taken in September during a meeting of the Council of
Ministers headed by Castro, the official Granma daily said.

According to the special provisions, functions such as the control,
protection and development of the land fund for sugarcane production
were transferred to the Ministry of Agriculture.

The guidance and control of distributing sugarcane products and its
derivatives were passed to the Ministry of Economy and Planning, while
the Ministry of Foreign Trade and Foreign Investment received the order
to direct and control the sector's policy and marketing strategy.

The government also promoted a programme to modernise the century-old
sugar industry, including replacing the ancient KTP combine harvesters
of Soviet technology with more efficient Brazilian machines.

During a parliamentary session in August which analysed the country's
economic situation in the first half of 2011, Castro said his government
managed to stop the decline in sugar production.

According to the government, it aims to increase sugar production by 20
percent to 1.4 million tonnes in the coming harvest, during which sugar
mills nationwide will go into production throughout December 2011 to
January 2012.

The country currently has 56 sugar refineries, 46 of which will grind
during the next season, compared with 39 in the previous one.

According to experts, despite the dismantling of half of its sugar
refineries, Cuba still has the capability to produce 4 million tonnes of
sugar annually.

http://www.bernama.com/bernama/v5/newsgeneral.php?id=626603

COMMUNIST Cuba and democratic Ukraine, once part of the Soviet Union,
have challenged the free-trade credentials of the Labor government,
becoming the first countries to foreshadow action in global trade forums
against its tobacco plain-packaging laws.

The Cuban government and state-owned cigar company Habanos have warned
the federal government that forcing it to comply with the new laws,
which would apply to its famous cigars, could violate Australia's
obligations under the World Trade Organisation.

And Ukrainian ambassador to the WTO Valeriy Pyatnytskiy warned that the
legislation as it stood violated key international intellectual property
agreements.

The protests came as representatives of American business groups tackled
Julia Gillard at the APEC meeting in Hawaii on the plan, cautioning that
its impacts would be felt far beyond tobacco by threatening trademark
protection for other industries.

Local tobacco companies have already vowed to challenge the move in the
High Court of Australia once it becomes law, saying it strips them of
their trademarks, trade dress and other intellectual property rights.
Free trial

Trade Minister Craig Emerson said the government was firmly committed to
implementing measures to require plain packaging of tobacco products.

"These measures will be implemented in a way that is consistent with our
intellectual property, trade and investment obligations," he said.

But Mr Pyatnytskiy told The Australian his country, only free from
Soviet shackles and central planning for two decades, "has a significant
interest in maintaining full protection of trademark rights because they
are directly related to the value and volume of exports from Ukraine in
several sectors of our economy".

He cited alcohol and food as well as tobacco products.

He has legal advice that finds plain packaging violates the Agreement on
Trade-Related Aspects of Intellectual Property Rights, or TRIPS, the
cornerstone of the international intellectual property regime, and the
WTO Agreement on Technical Barriers to Trade. Mr Pyatnytskiy warned that
his government "will have no choice but to review carefully its legal
options under WTO rules and to take whatever actions it deems
appropriate in exercise of its WTO rights" if the plain packing bills
were not amended before they became law.

Cuba says plain packaging will destroy its cigar market in Australia.
"The government of Cuba

wishes to express its concern over the latest developments on the
proposed Tobacco Plain Packaging Bill 2011 and its adverse impact on
trade in non-cigarette products such as cigars," ambassador Pedro Monzon
said in a submission to the Department of Health.

Under the legislation, which will be finalised by the end of the year,
only the brand name and type of cigar will be allowed to appear on the
cigar box. Bands on the cigars will have to be removed or replaced by
brown ones, and cigars in tubes will have to be repacked in plain green
tubes.

Enjoying a cigar at Cohibar, in Sydney's Darling Harbour yesterday, New
Yorker Jim Vanleenen said he appreciated the government's objective of
reducing smoking but did not think plain packaging would have the effect
intended. "I travel constantly in my job, and I haven't heard of any
other country implementing a scheme like this," he said.

Representatives of American business groups tackled the Prime Minister
at the APEC meeting in Hawaii on the plan, cautioning its impacts would
go beyond tobacco to threaten trademark protection for other industries.

Cal Cohen of the Emergency Committee for American Trade said the laws
"would set off a major, major problem for the global trading system".

The committee is one of a range of US business groups — including the
US Chamber of Commerce, the National Association of Manufacturers, the
US Council for International Business and the National Foreign Trade
Council — which issued a statement yesterday after representatives met
Ms Gillard.

Mr Cohen stressed the organisations were speaking for business
generally, not the tobacco industry.

"This has nothing to do with regulating tobacco and everything to do
with the precedent that would be set by Australia violating its
international treaty obligations," he said.

Mr Cohen said he told Ms Gillard that Australia and the US had worked
strongly in international forums to protect intellectual property
against counterfeiting. "What is going forward is going 180 degrees in
the opposite direction," he told The Australian.

Additional reporting: Mitchell Nadin

http://www.theaustralian.com.au/national-affairs/cuba-fumes-over-tobacco-packaging-laws/story-fn59niix-1226194053123

(Reuters) – Cuba's top law enforcement official said Wednesday a
crackdown on corruption that has given Cuba's international business
community the jitters will continue and warned that no one was immune
from prosecution.

Attorney General Dario Delgado, speaking at a conference on corruption,
said the anti-corruption drive now underway in Cuba is "systematic,
permanent" and necessary to strengthen the communist country's economy.

"We will continue fighting until exhaustion, mercilessly, against all
manifestations of corruption in the country, committed by foreigners or
nationals," he said.

The crackdown began when President Raul Castro succeeded older brother
Fidel Castro at the country's helm in 2008 and said widespread theft and
graft had to be eliminated because it contributed to the Caribbean
island's chronic economic woes.

It coincided with reforms to strengthen Cuba's socialist system. Dozens
of Cubans have been jailed, including former government officials and
top executives of state companies.

In recent months, executives of two Canadian trading companies and a
British investment firm have been detained while investigators probe
their finances, diplomatic and business sources said.

Last year, a Cuban joint venture with a Chilean firm was shut down and
its Chilean executive Max Marambio sentenced in absentia to a long
prison term for graft. Marambio, once a close friend of Fidel Castro's,
stayed in Chile and denied the charges.

The legal actions have created unease among foreign businessmen, many of
whom say they fear being unjustly accused of illicit acts. Those worries
discourage foreign investment in Cuba at a time when the island needs
it, they said.

Delgado, speaking to reporters after his speech, said the government had
no problem with foreign businesses nor had the foreigners complained
about the crackdown.

"They have understood that (corruption) has to be eliminated. It is a
very noxious practice," he said.

"We will never stop defending the flags of honesty and dignity. It is
our duty," Delgado said.

(Reporting by Nelson Acosta; Writing by Jeff Franks; Editing by Kevin
Gray and Anthony Boadle)

http://www.reuters.com/article/2011/11/09/us-cuba-corruption-idUSTRE7A88F820111109

HAVANA (Reuters) – Cuba's wealthiest creditors have decided to test
President Raul Castro's pledge to improve the island's financial
credibility by inviting his government to talks with the Paris Club
about settling billions of dollars of outstanding debt, according to
Western diplomats.

A letter recently sent to the Cuban central bank asked if the
Communist-run country would like to explore the resumption of
negotiations broken off a decade ago, the sources said.

"Cuba was discussed for the first time in many years at the Club's
meeting on October 9 and 10, and it was decided to see if they were
interested in talking," a European diplomat said.

"They have not formally replied, but have expressed some interest
through the central bank," he added.

The Paris Club reported that Cuba owed its members $30.5 billion (19.0
billion pounds) at the close of 2010, but more than $20 billion of the
debt was in old transferable Soviet rubles that Russia now claims but
Cuba does not recognise.

According to its annual report, the Paris Club is an informal group of
creditor governments composed of Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, Norway, Russian Federation, Spain, Sweden, Switzerland, the
United Kingdom and the United States.

Unlike the International Monetary Fund and World Bank, from which Cuba
is excluded under to the longstanding U.S. trade embargo, the Paris Club
does not issue multilateral loans.

Castro, who replaced his ailing brother Fidel as president in 2008, has
drastically reined in imports, cut state payrolls and subsidies while
insisting the government get its financial house in order.

Last week, Cuba's government gave Cubans the right to buy and sell their
homes for the first time since the early days of the 1959 revolution —
a long-awaited reform that creates a real estate market and promises to
put money in people's pockets.

The Communist Party and government this year approved a five-year
economic plan that calls for efforts to "enhance Cuba's credibility in
its international economic relations by strictly observing all the
commitments that have been entered into."

The plan also said the rescheduling of Cuba's foreign debts must be
expedited and that "flexible restructuring strategies for debt
repayment" must be put in place as soon as is practical.

OBSERVERS CAUTIOUS

The Bank for International Settlements reported banks in 43 countries
held $5.76 billion in Cuban deposits as of March of this year, compared
with $4.285 billion at the close of 2009 and $2.849 billion at the close
of 2008.

Cuba last reported its foreign debt in 2007 at $17.8 billion, but most
analysts agree it now exceeds $21 billion, or close to 50 percent of
gross domestic product and 30 percent more than annual foreign exchange
revenues.

The central bank reported more than half the debt was classified as
inactive, dating back to when the country defaulted in the late 1980s,
while the remainder was active debt piled up after the demise of the
Soviet Union, Cuba's former benefactor.

In recent years, China has become the country's largest creditor with
local experts estimating the amount owed at around $5 billion.

Cuba over the last year restructured its debt with China and has been
pursuing similar bilateral agreements with various other creditors,
diplomats said.

"Talks can only be a good thing," said Stuart Culverhouse, chief
economist of Frontier Market Investment Banking at the London-based
Exotix. "Although Cuba has pursued bilateral deals, there have been no
substantive negotiations with the Paris Club for ten years. So it would
signal some progress."

"But I'd be cautious in concluding that it means some sort of
rapprochement on the debt is imminent," he added.

Western diplomats appeared divided between those who expressed cautious
optimism that something would come out of the initiative and those who
were skeptical it would go anywhere.

Talks between the Paris Club and Cuba were indefinitely put on hold in
2001 after nearly two years of discussions. During the talks, the United
States agreed not to participate.

The negotiations had marked Cuba's first sitdown with creditors to
negotiate multilaterally since the late 1980s when it defaulted.

Along with restructuring terms, Cuba's 20-billion convertible ruble debt
to the former Soviet Union was considered another major obstacle to any
multilateral accord.

Though Cuba and Russia have since agreed to put the old debt aside and
work to rebuild their economic relations, it remains on the books.

"We proposed an accord similar to those with other middle-level
developing countries, but the Cubans wanted something special and
unheard of. We were miles apart," a European diplomat, who had followed
the negotiations closely, said at the time.

http://uk.news.yahoo.com/exclusive-paris-club-invites-cuba-resume-debt-talks-172644580.html

MIAMI – Cuban dissidents are skeptical about the economic changes taking
place in Cuba, arguing that they are no substitute for democratic
reforms, reports El Nuevo Herald. That was the message that three Cuban
dissidents brought to Capitol Hill recently, where they discouraged the
U.S. government from making concessions to Cuba.

Normando Hernández, Regis Iglesias y José Luis García, who were among
the Group of 75 jailed in 2003 during a crackdown known as Cuba's Black
Spring, called the recent economic reforms "hollow."

Beginning Nov. 10, Cubans will be permitted to buy and sell homes
without government intervention, ending a decades-long ban regulating
the real estate market on the island. The announcement was published
last week in Cuba's official daily, Granma. The reform is part of
package of proposals initiated by Raúl Castro to boost the economy.
Castro is also proposing an increase in private enterprise and foreign
investment, as well as deep cuts to state subsidies and dismissal of
more than 1 million public employees. He has also considered decreasing
government control over private companies and expanding the legal sale
of cars.

Regis Iglesias, a Cuban exile who now lives in Spain, said that more
than buying and selling homes and cars, Cubans need elections and
respect for their freedom.

"Economic freedom does not bring liberty or democracy to people, let
alone to a country that has had 52 years of tyranny," said Miami
resident Hernández.

http://newamericamedia.org/2011/11/cubas-reforms-ring-hollow-in-miami.php

Cuba lifts ban on trade in property
By Marc Frank in Havana

Cuba has formally lifted a five-decade ban on residents buying and
selling property as the communist government of President Raúl Castro
makes its most significant move yet to liberalise the island's
Soviet-era economy.

For the first time since the 1959 revolution, Cubans will be able to
sell property to other Cuban residents without government approval. The
changes, already approved by the National Assembly in August but now
formalised, come into effect on November 10.

The easing of restrictions on property ownership is likely to reshape
Cuban cities, spur real estate development and speed renovation of
Cuba's picturesque but dilapidated housing stock. It is also expected to
reconfigure Cuban conceptions of class as some homeowners cash in their
properties and areas of Havana are gentrified.

"I hope the new law gets rid of so much paperwork, bureaucracy and other
problems that simply lead to corruption. If you can now move without
months and years of effort and paying people off, we will be content,"
said Maritza, a 35-year-old food service worker.

Previously, any Cuban who wanted to swap their home for another had to
penetrate thick layers of bureaucracy. Houses were also confiscated by
the state if a Cuban moved abroad. Now by contrast, the new rules state
that the purchase, sale, donation and trading of houses will be
recognised even in cases of "divorce, death or permanent departure from
the country".

The measure is the latest and most dramatic signal that the authorities
are serious about implementing reforms adopted this year. Last month,
the government ended another ban, also dating from 1959, on the sale of
cars. State companies have been given more autonomy, state payrolls and
subsidies have been trimmed, and retail services liberalised.

Analysts say that home sales could free up capital needed to jump-start
small businesses. Cubans living abroad, especially in the United States,
who remit some $1bn a year to the island, have proved instrumental in
financing and supplying thousands of small businesses since the sector
was liberalised last year. They are now expected to invest in housing
through their relatives, pumping millions of dollars into the local
economy and helping to renovate the crumbling housing stock.

"This change is another example of the failure of 'big bang' models to
predict the evolution of the Cuban economy," said Jose Gabilondo,
associate professor of law at Florida International University, said.
"Changes in the rules of the game are already under way."

However, the new housing law dashes hopes that the local real estate
market might open up to large domestic or foreign investment as it
continues to prohibit foreigners from owning property unless they are
permanent residents. A special exception is expected in the next few
months for golf course and other tourist developments currently under
negotiation with various foreign companies.

Every property transaction will require a notary, with payment through a
state bank, and both the seller and buyer paying a 4 per cent tax.

http://www.ft.com/intl/cms/s/0/517383b0-064b-11e1-a079-00144feabdc0.html#axzz1d3WYf5on

"The New Fever for Gold", an article written by Luis Felipe Rojas and
published on "Diario de Cuba" November 3rd, 2011.

They had planned for a coffee and ended up with a few empty beer cans on
the table. September was advancing with a wicked heat. They had
arrived in twos, without fear, and very open, but they asked me not to
record them.

Just as they showed up, they always come in pairs. They walk throughout
the Cuban East from Manati to Yateras, they go inside the luxurious
Versalles neighborhood in Santiago de Cuba and the next day they return
home to Banes, Holguin ready to dig.

They seek gold, silver, precious stones, or any other antiquity which
comes up along the way.

"10 k Gold, in scrap, has risen from 7 CUC per gram. In original
jewelry, I sell it for 15, and the one being alloyed with other metals I
sell for 12.5 CUC", says Wilbert, a corpulent tanned man who has been in
the business of buying and selling precious metals for 2 years.

Just like the others, Daniel travels accompanied by a relative of his.
He plays the role of announcer, screaming at the top of his lungs, "I
buy gold watch cases, and broken or defective golden or silver jewels. I
accept propositions." He pulls out a golden necklace, nearly 15
centimeters in length, from a small bag. "It was a woman's necklace.
Pounded gold, it's dirty, but it's 18 k, 5 grams. With it, I can
recover the investment I made last week," he happily affirms.

There are still some people who saved some of their jewels and keep them
as luxuries or relics, but there are those who keep them as a source of
money in case of an emergency. "The best I've bought has been an 18 k
wedding ring. It weighed 8 ounces. A man who wanted his son to become
a Spanish citizen brought it to me. I still have it kept away, even
though I'm not a fan of jewelry", assures Wilbert.

They claim that, in their travels, one week they go to rural areas and
the other they go to the cities. According to Daniel, "in the city we
find better trophies" and he displays content in the fact that people
cannot differentiate well between "old white gold made with Mexican
silver, which pays better".

They have buyers in bulk in Havana, Matanzas, and Holguin, but they
claim that now sales are stuck. That is why they are buying less in the
neighborhoods. "They say that a few weeks ago they scared a couple of
guys smuggling some gold in the airport of the capital. The big buyers
do not want to do business until they see what will happen", states
Wilbert's business partner, without having any of the others trying to
refute him.

"Now, we do not only face the danger of the police but also of common
criminals", points out Daniel, and assures that "you also risk your life
with this".

The danger, the dangers

In their travels they have found themselves submerged in the blackmail
of the local police. In the worst of cases they have been fined 1,500
pesos, have had their materials confiscated, and have been warned to not
return to certain neighborhoods.

In the report of Authorized Self- Employment Activities, section 109
includes jewelry repairmen, but they are specified to remain in their
homes or some other accepted location.

"There is no legal protection for buying and selling precious metals,
that is a luxury reserved solely for the government", signals Daniel,
continuing, "there are people who, when they try to sell you something
valuable, they bring up the fact that it is a jewel which was saved from
the fury of the 80′s, when Fidel Castro gathered up all the gold and
exchanged it for soap, imported shirts, or athletic shoes".

According to what these new fortune-chasers are saying, in just one good
day of selling precious metals one can make up to 60 CUC- as an average-
but then you must take lots of it in cash, which is a danger in the
event that they bump into someone who is armed. A young man from
Holguin, from the municipality of San German, died last year from
several stab wounds in a nightclub in the center of the capital. Also,
a well known buyer-seller found himself in an ugly situation and was not
able to get away unharmed when he traveled through a heavily populated
neighborhood of Santiago de Cuba.

Among the negotiators which have once again risen like a plague, there
are those who "buy jewels for themselves, to make a living, and those
who invest their money on properties or put it into circulation to try
and see it grow faster", assures one of those present.

They are all nearly too young and have not done anything but to repeat
what their parents, and the government, have already done. For a few
bucks in hard currency they take forgotten or defective jewels from
houses. "Very few people wait around with empty stomachs while wearing
a ring with an aqua jewel in the center" says one while holding a silver
buckle between his fingers. Meanwhile, another one who wraps up the
conversation assures that "in the end, we are thanking the Soviets for
dressing up the Poljot and Raketa watches of those times with gold".

Translated by Raul G.

4 November 2011

http://translatingcuba.com/?p=12493

CUBA has informed businessmen attending the Havana International Trade
Fair it has restructured its external debt and gradually regaining its
international credit worthiness.

Opening the 29th FIHAV attended by some 1,500 companies from 57
countries across the globe, Cuban foreign trade and foreign investments
minister Rodrigo Malmierca said given continued expansion of exports and
decreased imports Cuba as President Raul Castro stated before the
National Assembly in August this year would by the year-end resolve her
external debt troubles.

"We are working hard in such a way that the country gradually regains
international credibility of the Cuban economy," Malmierca said.

He said at the close of the third quarter of 2011 the exchange of the
country's goods grew by 27 per cent compared to the same period last
year and that exports indicated similar exchange growth dynamics.

Malmierca said export of professional services continued recording an
upward trend thereby helping economic growth dyanamics.

"During the first half of 2011 the economy grew by 1.9 per cent as
compared to last year and we estimate that at the close of the year we
shall obtain a gross domestic product growth of 2.9 per cent which helps
us to emphasise that even though shortages persist in certain sectors
measures are being taken to overcome errors in planning and in the lack
of an overall concept in the performance of the national economy," he said.

Malmierca said implementation of the economic reform guidelines passed
by the Communist Party of Cuba congress in April was a complex task in
which the country was currently engaged.

He said the country was in the process of drawing the legal and
institutional basis for the application of the structural, functional
and economic amendments contained in the reform report.

Malmierca said there were some 300 guidelines corresponding directly to
activities of foreign trade, debt and loans, foreign investments,
cooperation and economic integration.

He said the common objective was to achieve the greatest economic
efficiency and as such it was be necessary for Cuban companies to work
with great agility.

Malmierca said national energy saving efficiency improved, crude oil
production increased, sugar production picked up and Cuba recorded a
significant tourist arrivals.

He said in 2010, Cuba received 2.5 million tourists and expected to
close 2011 with some 2.7 million visitors.

Malmierca said Cuba was giving priority to the selling of products or
integral solutions bearing in mind "the elevated educational level of
our country and the scientific and technological growth in sectors of
high specialisation which are in demand throughout the world such as
health, pharmaceutical industry, genetic engineering and biotechnology."

He said Cuba now had conditions to export integral solutions for
treating serious health problems such as complications caused by
diabetes mellitus using a Cuban drugs.

On investments, Malmierca said Cuba would promote creation of special
economic development zones that could meet the need for increased
exports, effective replacement of imports, high technology projects and
those that contributed to creation of new job sources.

"For that reason we shall keep in mind international experiences and our
own errors in the past when establishing duty free areas," he said.

"We shall go on encouraging the participation of foreign capital as a
compliment to the national effort towards meeting short, medium and
long-term economic and social growth and for that reason we shall
improve regulations and procedures for assessment, approval and
instrumentation of participation of foreign investment gradually making
the process smoother."

Malmierca said this year FIHAV was the biggest in the last 10 years.
"We are inaugurating the 29th FIHAV edition with the presence of some
1,500 companies from 57 countries and with an exhibition area of more
than 13,000 square metres accounting for 10 per cent larger than last
year and the largest fair in the last decade," Malmierca said.

He said it was sad the large presence of foreign businessmen at the fair
show confidence in the Cuban economy and the great potential existing in
spite of the continued US blockade against the island to do mutually
advantageous business.

Malmierca said just like last year the international economic crisis had
continued to dramatically affecting Cuba's economic performance
especially because of the rise in prices of some key imports such as
foodstuffs.
He said Cuba also suffered from effects of climate change.

Malmierca said climate change had generated drought that had in turn
damaged Cuba's economy particularly agricultural production.

"The economic crisis and climate change has aggravated the problems
arising from the US imposed blockade given its extraterritorial nature,"
he said.

The Cuban report before the United Nations General Assembly that was
voted on last week on Tuesday places Cuban economic losses from the 50
years of US embargo at US $975 billion.

The direct economic damage between 2009 up to December 2010 is said to
exceed US $104 billion.

http://www.postzambia.com/post-read_article.php?articleId=23685

HAVANA (AP) — The lot in teeming Central Havana used to be the
neighborhood eyesore: The shattered ruins of an abandoned building was a
breeding ground for mosquitoes and rats, then it was cleared in favor of
a dreary parking lot and government-run food stand.

Today, it is home for independent sellers hawking brightly colored
clothing, wristbands and earrings as salsa music booms and a line of
bicycle taxi drivers forms at the gate to wait for fares.

This week's announcement establishing a real estate market for the first
time in 50 years comes just a month after a similar opening for
vehicles, and newly empowered entrepreneurs speak excitedly of the changes.

"I've been an independent worker two times, once before in the 1990s,"
said Andres Lambreto Diaz, a 38-year-old clothing seller at the Central
Havana bazaar who has seen earlier free-market openings abruptly slammed
shut when Fidel Castro reversed course. "I think this time it's for real."

Many of the reforms merely acknowledge what had long been black-market
realities, and they still fall short of the fundamental free-market
transformations seen in other communist countries such as Vietnam and
China. But collectively, the changes have loosened the government's iron
grip over all aspects of the economy.

"This is one of the most visible economic reforms, with a direct impact
on Cuban lives," said Arturo Lopez-Levy, a Cuban-born economist who
teaches at the University of Denver.

A little over a year has passed since the government declared that many
more people would be allowed to go into business for themselves and even
hire employees.

The housing and automobile laws have come on schedule, but some
announced changes have been delayed, most notably a plan to eliminate
500,000 government jobs, extend bank credits and allow for mid-sized
cooperative companies.

Other reforms that were floated are still just ideas, such as proposals
to relax travel restrictions and create a system of credit for private
businesses. And there has been little visible progress on a wholesale
market to supply entrepreneurs, though officials said from the beginning
that would take years.

Officials have shown some sensitivity to popular feedback, modifying the
tax code to make things easier for new entrepreneurs and repeatedly
changing laws to help new private restaurants be more profitable.

That kind of flexibility has been rare during Cuba's half-century-long
embrace of Marxist theory.

Agricultural reform in the 1960s redistributed land from huge farms to
medium-size ones and it enjoyed moderate success before being abandoned
by the government, said economist Rafael Romeu, head of the
Washington-based Association for the Study of the Cuban Economy.

In the 1980s a six-year experiment with private farmers markets was
scrapped, as Fidel Castro complained that unscrupulous middlemen were
buying up the food and reselling at higher prices.

Castro grudgingly allowed independent workers to begin doing business
for themselves after the collapse of the Soviet Union brought Cuba to
the brink of economic ruin, then taxed and regulated them nearly into
extinction in the late 1990s when the worst of the crisis was over.

But Fidel is no longer in charge. His brother Raul Castro has repeatedly
said that while he has no intention of scrapping Cuba's socialist model,
there's no turning back from his reforms.

Analysts say the changes so far do not do enough. For example, the
housing law's immediate aim is to help redistribute existing homes,
allowing big families crammed into tiny apartments to move into larger
spaces now occupied by just a few people.

Without significant improvements in investment, supplies of construction
materials and incentive to make money, it's not clear there will be much
new construction to solve Cuba's underlying problem: a housing deficit
estimated at between 500,000 to 1.6 million units on an island of 11
million people.

"So far there hasn't been an all-embracing change in philosophy by the
government in Cuba. What they're doing is really tinkering with
sectors," said Paul Hare, a lecturer in international relations at
Boston University who was British ambassador to Cuba in 2001-2004.

The 80-year-old Raul Castro is walking a tightrope, eager to reform the
country before it is too late, but cautious to not move so fast that the
state loses control over the process, as happened in the Soviet Union
and other Soviet Bloc nations. He has said repeatedly that Cuba will
change "without pause, but without haste."

Nonetheless, several Cuba observers said that once started, reforms tend
to snowball and could spill beyond the realm of pure economics.

"The liberalization of these markets will ignite new demands for
reforms," Lopez-Levy said. "In the long run, the question will be: How
long can the economic genie be out of the bottle without people asking
for more substantive political reform?"

___

Associated Press writer Andrea Rodriguez contributed to this report.

http://www.chron.com/news/article/Analysis-Cuba-reforms-convincing-island-s-cynics-2252339.php

Nov. 3 (Bloomberg) — Cuba's communist government lifted a half-century
ban on residents buying and selling property as President Raul Castro
eases state control over the economy.

For the first time since the country's 1959 revolution, Cubans will be
able to own their main residence and one in the country, state-run
Granma newspaper reported today on its website. The changes were already
approved by the National Assembly and take effect Nov. 10.

Easing of restriction on property ownership may spur real estate
development that is needed to overcome a housing shortage that affects
nearly 1 million people, said Jose Manuel Palli, the director of
Miami-based U.S.-Cuba Legal Forum.

"This is an important first step," Manuel said in a phone interview.
"Cuba has needed to do this for years."

Many Cuban families live in crowded, crumbling buildings and have to
trade on the black market to move to a new home, Manuel said. Even
marriage is no way to overcome the ban on property sales, as young
couples wait for years to move into their own house and even divorced
couples live estranged under the same roof, he added.

The law will not allow Cuban exiles, who had homes confiscated after
Fidel Castro took power in 1959, to buy properties as they are not
considered residents.

Ailing Economy

Since Fidel handed power to his brother in 2006, Cuba's government has
begun to open up the economy in a bid to attract investment to the
island nation of 11.2 million. Castro last year announced plans to fire
500,000 government-employed workers, about 10 percent of the workforce,
as the slowing global economy hurts tourism and reduces the price of
nickel, the country's biggest export.

Cuba's economy grew 1.9 percent in the first half of the year and is
expected to grow 2.9 percent in 2011, Granma reported Nov. 1, citing
comments by Trade and Foreign Investment Minister Rodrigo Malmierca.

On Aug. 2, Castro said that officials would further relax rules on
self-employment and make it easier for Cubans to own cars and homes.

The change in property rules announced today will also enable Cubans or
foreigners with permanent-residence status to swap and donate
properties, the Havana-based newspaper reported.

–With assistance from Nathan Crooks in Caracas. Editors: Philip
Sanders, Joshua Goodman

http://www.businessweek.com/news/2011-11-03/castro-allows-cubans-to-sell-property-as-state-control-eases.html

The Pan American Games in Guadalajara brought fresh winds to our
television programming, which had been insufferably dominated by
ideology since early October. Although our sportscasters continue to
believe that every competition is a kind of battle where to lose is to
surrender, we could ignore them and enjoy the show. It was even
surprising that, notwithstanding the attempts of the official
journalists to get the winners to dedicate their medals "to the
commander in chief," most preferred to offer them to their families,
girlfriends, mothers, happily waiting for them somewhere in the national
territory. The closing ceremony and the second place finish achieved by
our delegation cheered those still disgusted by the defeat of the Cuban
team in the Baseball World Championship. For a couple of weeks the sound
of the hit balls echoed more loudly than the slogans, and certain
everyday concerns faded into the background.

After the euphoria of victory, however, it's worth analyzing if this
second place finish really corresponds to our development as a country.
Watching this little Island facing down an emerging power like Brazil,
or a country as vast as Mexico, brings the same image to my mind over
and over. In it, a frail and toothless gentleman is showing me his
muscular arms a la Arnold Schwarzenegger. We live, undoubtedly, in a
hypertrophy similar to that of this skinny-legged man with the bulging
biceps, suffering an artificial enhancement of a sector that has nothing
to do with the economy or productivity of the nation. Should we rejoice
over the direct result of this disproportion? Or should we calmly
meditate on why this government tends to climb to the highest seats in
the international sports arena, at the cost of neglecting less visible,
or measurable, areas of our reality.

It is enough to travel Havana in search of a pool where children can
learn to swim, to ask oneself if the resources that should be reaching
many are invested in a just a few. We live on an Island and yet, a good
share of its inhabitants would drown if they fell in the water. To buy a
bicycle in a hard currency store costs as much as a year's salary, but
the women's cycling team won first, second and third place medals in
Guadalajara. The deterioration of the capital's major athletic center,
Ciudad Deportiva, is an embarrassment, while gold hangs from the necks
of dozens of Cuban athletes. My own son spent two semesters without a
P.E. teacher, because few want to work for a salary that is barely
symbolic. Sports require a physical infrastructure and not just in the
specialized schools and academies, they demand investment in facilities
for use by the public as well. Undertaking this could mean we earn fewer
medals, but it would also eliminate the hypertrophied image that today
marks our every victory in sports.

31 October 2011

http://translatingcuba.com/?p=12379

HAVANA Nov 1 (Reuters) – The Cuban government has been quietly cutting
its bloated payroll and stepping up plans to boost agricultural
production as part of reforms aimed at strengthening its socialist
system for the future.

Its long-delayed offshore oil exploration project in the Gulf of Mexico
is expected to start in January after the arrival of a Chinese-built
drilling rig now on its way from Singapore.

If oil is found, it will reduce or eliminate Cuba's reliance on oil
imports from Venezuela, whose President Hugo Chavez — the island's top
ally and economic partner — is battling an undisclosed type of cancer.
He is receiving treatment in Cuba.

ECONOMIC REFORM

Cuba has begun a government reorganization that will include replacement
of its sugar ministry with a state holding company [ID:nS1E78S0AG] and
the creation of new energy and mining ministries. Other ministries may
be eliminated.

Most state companies are controlled by ministries and lose money, but
will be given greater independence in hopes of improving their
performance. [ID:nS1E78T0I8]

Cuban media reports say there are now 338,000 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.

So far, just under 150,000 people have lost their jobs, government
insiders say. [ID:nN1E7940HC] The goal is to have a third of Cuba's work
force of 5.2 million working in the "non-state" sector by 2015, up from
15 percent in 2010.

Cuban media said many state-owned small service businesses would be
leased to employees in October to run essentially as private businesses,
an extension of an experiment begun last year with barber shops and
beauty salons. So far, there has been no announcement of the change or
evidence it has begun.

Still to be announced are reforms, promised by President Raul Castro,
that will liberalize the sale of homes and loosen restrictive travel and
immigration rules. [ID:nN1E7701VN]

Cuba has been handing out idle land for farming and, looking to increase
output, has decided to increase the maximum size of plots to 165 acres
(67 hectares), up from the current maximum of 33 acres (13 hectares.
[ID:nN1E79I0BN]

Food output is up this year but still below 2005 levels and farmers
complain reforms are slow in coming. [ID:nS1E78R08J]

Two Canadian trading companies [ID:nS1E78F16C] and a British investment
firm [ID:nN1E79F034] are under investigation as part of Castro's
campaign to crack down on corruption that he says is a drag on the economy.

What to watch:

– The pace and final version of reforms.

– The numbers and performance of the newly self-employed.

– Agricultural production.

FINANCIAL HEALTH

Cuba still is recovering from a liquidity crisis that led to a default
on payments and freezing of foreign business bank accounts.
[ID:nN24211495] President Castro said the bank accounts issue will be
resolved by year's end, but many companies say they are still owed money.

The government has said tax payments from the self-employed have
increased revenues, while its top hard currency earners — tourism and
nickel exports — have improved.

Castro has said Cuba's economy should grow 2.9 percent this year, up
from 2.1 percent in 2010. Cuba's reserves at the Bank for International
Settlements stood at $5.75 billion in March, double what they were at
the end of 2008. [ID:nN1E79U0I0]

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

The first American tourists to visit Cuba under more flexible travel
rules ordered by U.S. President Barack Obama began arriving in August.
Experts say the new rules could bring as many as 100,000 additional
Americans this year. [ID:nN1E77F13C]

What to watch:

– Resolution of bank account access for foreign businesses.

– Effects of global economic problems.

– The growth of American travel to Cuba.

OIL PLANS

A Chinese-built drilling rig, the Scarabeo 9, is expected to arrive in
Cuban waters by late December [ID:nN1E790U0], where 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 Repsol has rejected accusations it is breaking U.S. law
[ID:nL5E7KU118] and said it will let the United States inspect the rig.
[ID:nN1E79H1XN] U.S. oil companies are forbidden from operating in Cuba
by a long-standing 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.

China has signed an agreement to play a major role in increasing Cuban
oil production [ID:nN08140650] and its state oil company is said to be
considering leasing exploration blocks in Cuban waters. [ID:nN1E76C1S6]
China and Cuba are also negotiating contracts for a $6 billion expansion
of Cuba's Cienfuegos refinery and a liquefied natural gas project.
[ID:nN22266891]

What to watch:

– Arrival of drilling rig.

– Results of Repsol's exploratory well.

– U.S. pressure to stop the drilling.

– China's growing involvement in Cuban oil development.

FOREIGN RELATIONS

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 has been undergoing chemotherapy in Cuba and recently declared
himself cancer free [ID:nN1E79J13X], but his death or departure from
office would be a big blow to the island. Chavez is very close to former
leader Fidel Castro, who is 85 and increasingly frail.

U.S.-Cuba relations, which thawed briefly under Obama, have been frozen
by the imprisonment of U.S. aid contractor Alan Gross. [ID:nN24221723]
He is serving a 15-year sentence for providing Internet gear to Cuban
groups under a U.S. program promoting Cuban political change.
[ID:nN12265306]

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.

What to watch:

– Health of Chavez.

– Continued imprisonment of Alan Gross. (Additional reporting by Marc
Frank; Editing by Kieran Murray)

http://af.reuters.com/article/commoditiesNews/idAFRISKCU20111101?sp=true

HAVANA, Oct. 28 (UPI) — Cuba is easing communist rules and nudging its
agriculture toward a market economy model as part of a stepped-up
government effort to boost food production.

Imports of raw foodstuffs and processed food claimed a further 25
percent of foreign earnings, prompting Cuban President Raul Castro to
exhort Cubans to produce more and import less.

Communist Party daily Granma warned Cuba was running out of miracles and
called on Cubans to pool energies and drive for self-sufficiency.

Castro has relaxed rules on ownership and Cubans setting themselves up
as traders as part of his effort to liberalize economy in stages. A key
new departure is the allocation of larger tracts of state land to
private farming enterprises.

Farmers who can prove their productivity will be able to lease land
nearly five times the area allowed under a 2008 decree. Until now
farmers were limited to the use of 13 hectares of land.

William Hernandez Morales, a senior agricultural official in the eastern
province of Santiago de Cuba, announced on the radio that lease holders
who could demonstrate they could produce more food would be able to
increase their holdings.

Years of Communist Party haranguing prompted many Cubans to grow part of
their food requirements in any available green patch — a familiar scene
even in urban areas.

The Cuban state owns more than 70 percent of the arable land but critics
say nearly half of that area on the island is unused. State-led
agricultural production on the remainder of the land averages lower than
yields attained by private entrepreneurs.

Some estimates cited in the media said Cuba's private farmers produce 57
percent of the food on only 24 percent of the land.

Castro made increased food production a top priority after taking over
from brother Fidel in 2008. He also announced other economic
liberalization reforms, though at a slower pace than expected by Cubans.

Although about 1.6 million hectares of state land has been leased to
about 143,000 farmers since October 2008, the small plot size and other
bureaucratic hurdles continue to discourage the farmers.

The government's easing of farming policies coincided with attempts to
encourage foreign investors. Brazil, Venezuela and other neighboring
countries have already become involved in the Cuban economy as it
liberalizes.

Foreign Trade and Investment Minister Rodrigo Malmierca reasoned that
inclusion of foreign investment "guarantees the access to markets for
Cuban goods and services."

Coinciding with that shift is a renewed government effort to bring
Cuba's tourism and travel sector into the 21st century, despite the
continuing U.S. embargo.

Cuba has set sights on attracting 3 million tourists and earning at
least $2 billion this year, mainly from Spain, Italy and Canada. Chinese
tourism is also expected to rise after recent agreements between Beijing
and Havana.

The government's emphasis on growing more food is a response to
escalating costs of food imports, likely to reach $1.5 billion in 2011.

http://www.upi.com/Business_News/Energy-Resources/2011/10/28/Cuba-eases-curbs-to-boost-food-output/UPI-95121319832963/

Airlines Rev Up for Flights to Cuba

As Travel Limits Ease, Carriers Boost Charter Service in Hopes That
Full-Scale Tourism Will Return
By JACK NICAS

U.S. airlines are wading deeper into the charter business to Cuba as
travel restrictions have loosened, hoping one day to haul American
tourists to the island's unspoiled beaches.

By year-end, four of the largest U.S. airlines will operate about 25
weekly flights to Cuba for charter companies. AMR Corp.'s American
Airlines has been flying to Cuba for two decades, and JetBlue Airways
Corp. arrived last month. The world's two biggest carriers by traffic,
United Continental Holdings Inc. and Delta Air Lines Inc., are resuming
weekly service to Cuba after a seven-year hiatus.

Charter companies estimate that they will fly 400,000 people between
Cuba and the U.S. this year, up from 250,000 last year.

The surge follows President Barack Obama's January order to make travel
to the communist country easier for students, journalists and religious
groups, among others. That helped clear the way for future direct
charter flights to Cuba from Chicago, Baltimore, Dallas and 12 other
cities. Until this year, Miami International Airport, Los Angeles
International Airport and New York's JFK International Airport were the
only U.S. gateways to the island for many years.

Tourism by Americans is still barred. But under the new rules some U.S.
citizens—for example, under the auspices of news organizations or
universities—now can get permission for travel to Cuba from licensed
charter companies instead of just through the U.S. government. Others,
such as performers, humanitarians or individuals planning direct
educational exchanges with Cuban citizens, still must apply case-by-case
to the U.S. Treasury Department. As before, Cuban-Americans can make
unlimited trips to visit family.

Bobby Caballero, manager of the Tropicana Café, a Cuban eatery in Tampa,
Fla., says that with flights from Tampa to Cuba, he no longer has to
take the annual four-hour drive to Miami when he flies to visit family
on the island. "Think about it: That costs at least $120 in gas" round
trip, he says. "I'm very, very happy, brother."

The airlines provide the aircraft, crew and insurance to operate the
flights. The charter companies sell the tickets, vet travelers and run
the trips. The charter companies say they pay the airlines about $16,000
to $25,000 per round-trip flight between Miami and Havana, enough to
make the short hops over the Gulf of Mexico profitable for the airlines
but hardly gold mines.

"Carriers can't be looking at this as a money maker," says Vivian
Mannerud, president of charter operator Airline Brokers Co., who has
been selling flights to Cuba since 1982. "They have to look at this as
an investment."

Cuba is a big tourist destination for Canadians, Mexicans and Europeans
and one of the few markets with untapped potential among Americans.

Some U.S. citizens illegally vacation on the island via Canada or
Mexico. Airlines appear to be getting ready in case U.S. travel
restrictions are lifted more in coming years.

JetBlue began flying between Cuba and Fort Lauderdale, Fla., for Airline
Brokers last month. "Cuba has huge market potential and the only way we
can fly there right now is through charters," says JetBlue spokesman
Mateo Lleras. "As a side bonus, we're also gaining experience and
exposure in that market."

Before the Cuban revolution, the country was home to a thriving hotel
and casino industry. Travel by U.S. citizens has been restricted since
1963, except for five years under Presidents Jimmy Carter and Ronald Reagan.

Several major U.S. airlines flew to the island for charter companies
through the 1980s and '90s. A Delta flight carried the Baltimore Orioles
to play a Cuban all-star baseball team in 1999. When the administration
of President George W. Bush tightened the rules in 2004, Delta and
Continental halted service.

Meanwhile, AMR has expanded its market share. For several years after
2004, its regional carrier, American Eagle, operated an estimated 80% of
the flights from Miami to Cuba, charter companies say. Since 2009,
American Airlines' presence in Cuba has grown with demand, say Tessie
Aral, president of ABC Charters Inc. ABC uses American for eight flights
a week to Cuba, including the first regular flights from Tampa since
1959. "American has stuck it through thick and thin for a very, very
long time," says Ms. Mannerud, of Airline Brokers. "I think in the end
it's going to pay off."

AMR confirms it flies to Cuba for charter companies but declines to
comment further.

United Continental declines to discuss in detail its weekly flights to
Cuba from Los Angeles and Miami, which will start Dec. 6. It will run
the flights for Cuba Travel Services Inc. The charter company says it
will use the airline for charters from Houston and might add service
from Oakland, Calif.

Delta's return to Cuba, on behalf of Marazul Charters Inc., will make
the carrier one of the most frequent fliers between the island and the
U.S. By December, Delta will fly to Cuba nine times a week, including
the first-ever flights from the carrier's hub, Hartsfield-Jackson
Atlanta International Airport, the world's busiest.

Corrections & Amplifications
By December, Delta will fly to Cuba nine times a week. An earlier
version of this article reported an incorrect number of weekly flights.

http://online.wsj.com/article/SB10001424052970203752604576643452812586950.html?mod=googlenews_wsj

Those who support warmer US-Cuba ties, including lifting travel
restrictions and re-establishing diplomatic relations, are not eligible
to vote in the US, diminishing their political influence.

By Anya Landau French, Guest blogger / October 19, 2011

Florida International University has just released the results of a poll
on Cuban American attitudes on Cuba and US policies (this is their tenth
poll over the last twenty years). This latest FIU poll raises a lot of
the big questions on the table right now and gets some contradictory
answers.

Overall, a majority of respondents say they support maintaining the
embargo (56 percent), and only 39 percent are ready to expand trade and
investment in Cuba beyond current levels. At the same time, a majority
(57 percent) favors lifting all restrictions on travel, 60 percent
oppose restrictions on family travel, and 57 percent even support
re-establishing diplomatic relations with Cuba. Oh, and a whopping 80
percent of respondents believe that the embargo has "not worked very
well" or "not worked at all." Yes, you read that right.

What a mixed picture, right?

But it's not so mixed if you start to look at specific categories, like
the responses of 18-44 year-olds or of after-94'ers (those who arrived
to the US after 1994). Those categories lead the pack on supporting
engagement via diplomacy (70+ percent support), travel (75+ percent
support), food and medicine sales (75+ percent), private investment, you
name it. But what's more important is where they fall behind – in
citizenship and voter registration. Two-thirds of the after-1994 group
are either non-citizens or non-registered citizens.

So, while 76 percent of the after-1994 group opposes a law that would
limit family travel to the island to once every three years (a return to
the Bush administration regulations, as proposed by Rep. Mario
Diaz-Balart this summer), the lawmaker who proposed these restrictions
only has to worry about the 54 percent of the registered voters who say
they oppose the changes. Across the board, the decided engagement tilt
of the younger and more recent cohorts of Cuban Americans is tempered by
slightly conservative tilt among registered-citizen Cuban Americans.

Some folks argue that money talks and US policy is shaped to a large
degree by political campaign donations. No real argument here. But it's
not the only factor. Politicians do care about raw numbers. They may not
respond to how a given community as a whole feels, but they do pay
attention to how the voting part of that community feels, and what they
intend to do about it.

Does anyone really doubt that most American voters are focused on jobs
and the country's economic recovery? I'd argue that those Cuban
Americans for whom their vote is tied to Cuba weren't going to vote for
Obama anyway. But what would happen if more of the after-1994 cohort
registered to vote, and genuinely feared their travel rights being
curtailed? Maybe maintaining those rights would be so important they'd
camp outside their representatives' offices. Or maybe they'd just go to
Cuba illegally through a third country. There's really no way to know
for sure until more of them start becoming citizens and get registered
to vote.

— Anya Landau French blogs for The Havana Note, a project of the
"US-Cuba Policy Initiative," directed by Ms. Landau French, at the New
America Foundation/American Strategy Program.

http://www.csmonitor.com/World/Americas/Latin-America-Monitor/2011/1019/Majority-of-Cuban-Americans-for-warmer-US-Cuba-ties-poll-says-but

HAVANA | Mon Oct 17, 2011 5:49pm BST

(Reuters) – A British investment fund has become the latest company
swept up in an investigation by Cuban authorities of corrupt practices
among the Communist island's state businesses and their foreign partners.

Police closed the Havana offices of the Coral Capital Group Ltd last
week and arrested chief executive Amado Fakhre, a Lebanese-born British
citizen, sources close to the company said.

The offices were sealed and cordoned off with police crime scene tape
during the weekend.

Andrew Butchers, the fund's finance director, told Reuters from Coral
Capital's London office that the company had no comment now but would
release a statement soon.

A month ago, authorities shut down one of the most important Western
trading companies in Cuba, Canada-based Tokmakjian Group, after doing
the same in July to another Canadian trading firm, Tri-Star Caribbean.

The top executives of both companies and a number of their Cuban
employees and business partners were arrested.

A vice minister for sugar, Nelson Labrada, was arrested in late
September for signing off on purchases from the Canadian companies, a
source close to his family said.

Just as in the Canadian cases, the precise allegations against Coral
Capital are not known and have not been reported in Cuba's state-run
media but they are evidence that the government's corruption sweep is
widening.

Coral Capital, registered in the British Virgin Islands in 1999, is best
known in Cuba as the joint venture partner in Havana's upscale Saratoga
Hotel and another hotel complex on the resort key of Cayo Coco.

It had plans to build golf courses and related real estate developments
near Havana, for which it had begun raising equity capital, and expected
to sign a final agreement with the Cuban government by 2012.

The fund diversified into trade financing and importing heavy equipment
and other merchandise in recent years and this, rather than its real
estate ventures, may have led to its problems, foreign business sources
said.

The company represents various international brands in Cuba, among them
Liebherr Earth Moving, Yamaha Motor Corporation and Peugeot Motorcycles,
according to its Internet site. The site says Coral Capital has invested
some $75 million (48 million pounds) in Cuba, with more than $1 billion
of projects in the works.

ANTI-CORRUPTION CAMPAIGN

Cuban President Raul Castro has made fighting corruption a top priority
since taking over from his ailing elder brother Fidel in 2008, attacking
high-level graft in food processing, civil aviation and the cigar and
nickel industries.

Investigation into shipping and the communications sector are also under
way.

"In a country where small-scale but widespread corruption is the rule,
if the government is to be seen to be serious about rooting out the
scourge, it must show it is doing so at the very top and doing so in a
dramatic way," said Hal Klepak, a Canadian military historian and author
of two recent books on the Cuban military and Raul Castro.

"I do not see it as bad at all for foreign business in Cuba, probably
just the opposite in the mid- to long-term," he said. "But there is also
little doubt that it does make many jittery when the problem is such a
generalized one."

Raul Castro, a general who led Cuba's Defence Ministry for 49 years, has
cracked down on corruption in tandem with efforts to revive the sagging
Cuban economy through more market-oriented policies. He has been less
active in tackling problems such as low salaries and lack of transparency.

There is no open bidding in Cuba and officials and their employees who
handle multimillion-dollar contracts earn the equivalent of just a few
dollars 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 mission to attack corruption and a
seat on the Council of State.

http://uk.reuters.com/article/2011/10/17/uk-cuba-fund-idUKTRE79G3DF20111017

HAVANA TIMES, Oct. 14 — It's already public that the Cuba government
plans to allow foreigners to acquire properties in perpetuity in
ultra-modern golf course communities. The ultimate goal seems to be the
development of enormous residential-hotel-golf course enclaves for
tourists and the future Cuban bourgeoisie.

ON YOUR MARK…GET SET…GO!

"They told us that this incursion has the highest priority for
investment," said Graham Cooke, a Canadian golf course architect and the
designer of a project for the Guardalavaca Beach area, along the
island's north-eastern coast. The project, with an estimated value of
more than $455 million, is being promoted by a consortium of Canadian
Indian tribes whose officers supposedly entered into contract with the
Cuban government this past August.

According to Cuba's tourism minister, Manuel Marrero, the government
negotiated with several foreign companies to set up the first
joint-ventures that will construct these golf courses on the island, in
addition to other "real estate developments" related to tourism.

The company Standing Feather International (SFI) signed a memorandum of
understanding with the Cuban government in late April, and on this past
July 6 agreed to create — together with the Cuban state-owned company
Palmares Grupo — the "Cuba-Kanata Golf Ltd" company. This joint-venture
will be the first to begin construction activity, with work set to begin
in September of next year. Despite the magnitude of this project, no
information concerning it has appeared in the island's broadcast media
or written press.

It's also known that the executive director of London's Essence Group,
who has helped sponsor international golf tournaments in Varadero, plans
to develop a $300 million country club on the most famous beach in Cuba.

In late July, the British ambassador on the island, Dianna Melrose,
announced at the Cuban Foreign Ministry that her country's business
community wants to invest in Cuba's tourism sector, particularly in new
hotel and golf course projects being started.

Mexico is another one of the countries that wants to "share" experiences
with Cuba in the development of golf tourism, said Gloria Guevara Manzo,
the head of the that country's Federal Tourism Secretariat during the
FITCUBA 2011 tourism fair this past May. Consultants with the Mexican
firm "Piza: arquitectura de golf" are serving as advisors on the design
and construction of the tourist complexes for Palmares, the company
responsible for the development of golf facilities in terms of tourism.

According to statements by Mexican officials, their country is among the
top ten trading partners with Cuba, citing commercial exchange for $325
million in 2010. They went on to state that Mexican investment in the
island is approximately $730 million, adding that, "This positions us as
one of the ranking Latin American investors on the island."

In total, the four largest development projects total over $1.5 billion,
while the New York Times says that the amount of profits coming into the
Cuban government coffers will be about half.

Cuba now has three 18-hole golf courses: the Campo de Golf Capdevila and
the Havana Golf Club (both in Havana), and the Varadero Golf Club,
located at the popular tourist resort in Matanzas Province. This latter
curse was built before 1959 by the Dupont family. The current
perspective is to develop sixteen short and medium-term real estate
projects that will include courses for this sport.

During the first parliamentary session of 2011, Cuba's tourism minister
claimed that the agreement had the approval of the Council of Ministers.
The official noted that the four initial projects will be developed in
the provinces of Holguin, Pinar del Rio, Havana and Matanzas.

PROPERTY ISSUES

In its eagerness for Cuba to become an exemplary and upscale destination
in the Caribbean, the island's government has decided to promote an
elite sport like golf, apparently seeing it as a means of revitalizing
the economy.

To this end, the government has shown no reservations about offering
life leases on structures and land usufruct for 99 years. As the
Canadian consortium disclosed to the El Universal newspaper, "We're
proud to announce that the titles on the luxury properties that buyers
purchase aren't the standard 99-year leases. Instead, residential
properties are being sold with the owners having the right to own them
in perpetuity."

Such exceptions draw attention to how Cuban farmers, in accordance with
Decree-Law 259, are given land in usufruct for a limited period of just
ten years. Only recently did the government authorize the construction
of houses on land rented to small farmers, but they didn't allow the
import into the country of machinery (such as tractors) donated from abroad.

Orlando Lugo Fonte, president of the National Association of Small
Farmers, says the term of ten years of use "is a restriction and a
contradiction." The official defends the idea of ??permanent and
inheritable land rights for agricultural workers.

On the other hand, the criticisms that have historically been made by
Cuban leaders of golf courses are well known. Most of these facilities
were converted to other uses after the 1959 revolution. Known as "the
sport of the rich," golf was discouraged in Cuba by Fidel Castro and Che
Guevara, who both publicly ridiculed the sport as "bourgeois."

More recently this notion was echoed by Venezuelan president Hugo
Chavez, who has also made explicit criticisms of other excesses of the
upper and upper-middle classes in his country. With the lack of housing
that Venezuela is suffering, the South American president doesn't see
why these courses should be created on valuable land "so that only a
small group of the bourgeois and petty bourgeois can go play golf."

Among the news items that have appeared on this issue, none points to
any priority being given by any of the ALBA countries to this type of
tourism-related investment. Regional integration apparently must be
developed in isolation from economic development priorities that the
largest island in the Caribbean has designed for itself.

Nor does it seem that the possibility for participating in this sport
will be open to average Cubans on the island. There are no known public
statements by sports officials concerning this. In addition, the
proposed designs are clearly focused on upmarket international tourism,
not to mention the fact that access to such places, and the purchase of
golf sports equipment itself, is well beyond the reach of most residents
of the island.

In the margin of ideological debates, the Canadian Standing Feather
International is committed to a standard of five or six-star facilities
to compete with destinations such as the Dominican Republic, the Bahamas
or Cancun. As a bonus, residents and homeowners in SFI's "Loma Linda"
golf resort community be allowed to import their vehicles and will be
offered imported food products "exclusively" for purchase and delivery
to their homes.

The area occupied by the complex will be declared a "Special Economic
Development Zone," according to statements by El Universal, and the
Cuban government will issue the purchasers visas as "Resident Real
Estate Owners" (Spanish: Residente Inmobiliario) that will allow these
foreigners long-term residence.

All this movement of land and prospects for future prosperity entail the
redevelopment of the land and the construction of communities associated
with golf courses. Internationally, golf courses depend on real estate
activities, which lead to increasing property values.

The real profit center is precisely in these housing developments
associated with golf courses, which typically increase the value of
these units by 50 percent. Usually these homes aren't primary
residences but are bought by wealthy investors in golf courses and by
upper-middle class families who use them as second homes in "exotic
places" such as this Caribbean island.

WATER DEMAND VS. CHRONIC DROUGHT

Golf courses are traditionally suspected of having negative
environmental impacts. Each golf course uses the volume of water
equivalent to the consumption of a town of 12,000 inhabitants, with
their average daily consumption of one of these courses being close to
400,000 gallons. In addition, an average 18-holes golf course covers
100 to 150 acres.
It's easy to predict the impact of these on Cuban life, as much of the
country suffers from a drought that has no end in sight. In addition to
the watering of their fairways, another requirement is that of small
artificial lakes that are included in the designs of these courses.
These surface waters have a bearing on water lost through evaporation
and consequently result in increased water consumption.

The traditional misuse of chemical fertilizers causes major alterations
in the quality of groundwater due to increased nitrogen and phosphorus
compounds used in the revitalization of the roots of grass (these
promote their growth and give them more color). Commonly used
pesticides also cause a sharp deterioration in aquifers due to excessive
use or use in irrigated areas with rapid absorption.

Negative impacts on ecosystems are also considerable during the
construction phase of golf courses and accompanying housing
developments. The need for irrigation, drainage, slope remodeling and
design, require the moving of native soils and the use of heavy
machinery that transform the substrate for the installation of series of
irrigation channels. These are finally filled with gravel, sand and
plant mulch, and grass is planted.

Moreover, the aesthetics of golf courses represent alien kinds of
landscapes, as they were originally from other countries with different
social and environmental conditions. The implementation of this sport
involves radical transformations in native landscapes. From a visual
point of view these may represent subjective aesthetic beauty, but they
will always be foreign to the original environment.

EXTERNALIZED IMPACT

As stated, golf courses need large areas, making their construction
impossible in urban areas. This is why developers traditionally turn to
undeveloped land and areas near natural settings. This is a means to
externalize the impact.

Of course such costs don't disappear, rather they take an infinite toll
on ecosystems that lose in a few decades what it took centuries to build
and accumulate. Of course since the consequences are not visible — as
in the cases of earthquakes, landslides, spectacular collapses or with
huge chimneys dumping toxic gases into the atmosphere — to the general
public their impact is as if nothing has occurred.

After extinguishing the natural sources of freshwater and destroying
aquifers, it's necessary to redirect water from distant basins. Such
management also externalizes the impact, exporting the "drought" problem
to distant communities.

Of course obtaining environmental permits for such transformations isn't
difficult if the government wishes to substantiate the need for foreign
currency entering the country. In extensive reports they can make
promises to minimize the impacts; otherwise some paltry fine levied on
millionaires can be paid to "correct" the situation.

It wouldn't be a surprise if these properties served to foster the
return of casinos, with card games and hard betting, slot machines and
other more repugnant forms of "leisure travel," as it has been called.

For now, such upscale tourism in Cuba has failed to be developed in all
these years. Together with the extensive cultivation of transgenic soy
and corn, and export of medical services, this now appears to be an
important part of the government's commitment to Cuba's economic opening
to global capitalism.

http://www.havanatimes.org/?p=53036

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

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

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

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

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

Neither Cuba nor Vietnam have released details about the debt.

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

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

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

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

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

http://www.cubastandard.com/2011/10/08/vietnam-pressing-cuba-on-vinafood-debt/

Cuba does away with emblematic Ministry of Sugar
By PETER ORSI
Associated Press

HAVANA, Cuba — Cuba announced the elimination of its Ministry of Sugar
on Thursday in a sign of how far the symbolic crop has fallen since its
heyday, when much of the population was mobilized to the countryside at
harvest time to help cut cane.

President Raul Castro's government determined that the ministry
"currently serves no state function" and will therefore replace it with
an entity called Grupo Empresarial de la Agroindustria Azucarera, the
Communist Party newspaper Granma reported.

The goal is to "create a business system capable of turning its exports
into hard currency to finance its own expenses," Granma said. There was
no mention of any private or foreign investment.

Like coffee and tobacco, sugar is a highly emblematic crop on this
Caribbean island. Cuba used to be a world leader in sugar, annually
producing 6 million to 7 million tons.

Former leader Fidel Castro made the annual harvest a point of
revolutionary pride and regularly mobilized brigades of Cubans from
government officials and urban office workers to artists and ballet
dancers to boost output.

In 1968 he famously announced that Cuba would try to harvest 10 million
tons of cane that year, mobilizing labor from nearly the entire
workforce. That aim proved overly ambitious, though some 8 million tons
were harvested.

Later, the collapse of the Soviet Union deprived Cuba of its main buyer,
and sugar has since fallen on hard times. It now trails nickel
production and tourism as a source of foreign income, contributing about
$600 million a year.

Last year, Cuba reported its lowest harvest since 1905 – 1.1 million
tons – and fired its sugar minister. Officials have said this year's
harvest is expected to be only slightly higher.

In 2002, the government launched a restructuring of the industry due to
low sugar prices. Prices have since recovered, prompting officials to
redouble efforts to mechanize the sector and increase efficiency.

Government officials boasted last March of improving per-acre yields
during a media tour of sugarcane country in the central province of
Matanzas, showing off a revamped sugar mill and modern combines from
Brazil that strip the cane as it is picked.

Granma said Thursday that the decision to eliminate the Sugar Ministry
was announced at a Cabinet meeting over the weekend. It said 13
provincial companies will oversee the 56 sugar processing plants
operating this year – down from 156 in the 1970s.

Juan Tomas Sanchez, who contributes writings on Cuban agriculture to the
U.S.-based Association for the Study of the Cuban Economy, said the
restructuring should save money on overhead but more must be done to
improve efficiency, like overhauling transportation and replotting
fields to work better with new machinery.

"It's logical. … It has a strategic importance," said Sanchez, who
also heads a Florida exile group known as the Association of Cuban
Settlers. "But it has to be accompanied by a necessary investment of
capital."

Granma said the Cabinet ministers also assessed the progress of a
national agriculture overhaul begun in 2008 as part of Raul Castro's
program to overhaul the economy with some free-market initiatives,
including turning over fallow state land to private farmers and
cooperatives.

The ministers discussed "shortfalls" in production targets for rice,
beef and other agricultural products, Granma said..

http://www.miamiherald.com/2011/09/29/2431732/cuba-does-away-with-emblematic.html#storylink=misearch

Lawmakers warn against oil drilling off Cuba

A group of lawmakers warned a Spanish company against drilling for oil
off the coast of Cuba, saying the investment would benefit the Castro
regime.
By Erika Bolstad
ebolstad@mcclatchdc.com

WASHINGTON — Thirty-four U.S. lawmakers, led by Miami Republican Rep.
Ileana Ros-Lehtinen, on Wednesday asked the Spanish oil company Repsol
to keep out of Cuban waters, saying the company’s pending offshore
drilling plans would support the Castro regime and “bankroll the
apparatus that violently crushes dissent.”

“The decaying Cuban regime is desperately reaching out for an economic
lifeline, and it appears to have found a willing partner in Repsol to
come to its rescue,” wrote Ros-Lehtinen.

The company says it could begin exploratory drilling as soon as
December, a prospect that has the state and federal governments
scrambling to develop contingency plans for a spill even as many
Floridians have fresh memories of last year’s BP spill in the Gulf of
Mexico.

“We are working on spill response and we’re working with the federal,
state, and local agencies — very closely,” said U.S. Coast Guard
spokeswoman Marilyn Fajardo.

The possibility of exploratory drilling also has federal agencies
grappling with the international and political implications on the U.S.
embargo with Cuba.

Ros-Lehtinen, chairwoman of the House Foreign Affairs Committee, warned
Repsol in the letter that any drilling operations it conducts in Cuban
waters could provide direct financial benefit to the Castro
dictatorship. The company’s partnership with the Cuban regime could
also violate U.S. law, and may run afoul of pending legislation in
Congress, she said.

Recently, representatives from several industry and environmental groups
traveled to Cuba to check in on the country’s offshore plans. They
included Lee Hunt, the chief executive of the International Association
of Drilling Contractors and William Reilly, a former EPA administrator
and co-chair of the White House task force that investigated last year’s
BP oil spill.

The group also included Richard Sears, the former vice president of
deepwater drilling for Shell, and Dan Whittle, an attorney for the
Environmental Defense Fund.

Repsol spokesman Kristian Rix said the company has no comment on the
letter from Congress.

The company, which has U.S. operations that include leases in the Arctic
waters off the northern Alaska coastline, is in the process of bringing
a drilling rig to Cuba.

Repsol in January 2010 signed a lease contract with the Italian energy
company Saipem for drilling equipment. Repsol on its website describes
the equipment as complying “with all the technical requirements and all
the limitations established by the U.S. administration for drilling
operations in Cuba.”

The congressional letter drew bipartisan support, with South Florida
Republican Reps. Mario Diaz-Balart, David Rivera, Tom Rooney signing
onto it; they were joined by Democrats Ted Deutch, Frederica Wilson and
Debbie Wasserman Schultz. Others from Florida who signed on include
Republican Reps. Vern Buchanan, Dennis Ross and Sandy Adams.

The Republican-led House Natural Resources committee had scheduled a
hearing on drilling in Cuban waters for last week, but it was postponed
after Obama administration officials said they weren’t yet prepared to
outline their overall response to offshore drilling in Cuba.

Some Republican members of the committee have complained in the past
about Cuba’s ability to drill so close to the U.S. coastline even as a
125-mile buffer zone remains in place in U.S. waters off of most of
Florida’s coast

http://www.miamiherald.com/2011/09/28/2430004/lawmakers-warn-against-oil-drilling.html

* Letter warns Repsol chairman of risk of U.S. lawsuits
* Says investment in Cuba benefits "Castro dictatorship"
* Repsol set to drill offshore Cuban exploration wells

MIAMI, Sept 28 (Reuters) – A group of 34 U.S. Congress members has asked
Spain's Repsol YPF to drop plans to explore for oil off Cuba, saying the
company could face commercial risks and lawsuits in the United States.

Repsol's plans to use a contracted Chinese-built rig to drill
exploration wells later this year in Communist-ruled Cuba's deep waters
in the Gulf of Mexico has aroused opposition in neighboring Florida,
which is a Cuban exile stronghold.

But the Cuban oil project has also prompted calls for the United States
to cooperate with Havana to avert any possible environmental accident
similar to the massive BP oil spill in the U.S. Gulf of Mexico last year.

In a letter dated Sept. 27 sent to Repsol Chairman Antonio Brufau,
Republican and Democratic representatives led by Florida Republican
Ileana Ros-Lehtinen warned the Spanish oil firm it risked damaging its
commercial interests with the United States if it went ahead with its
oil plans in Cuba.

"We respectfully ask that Repsol abandon any of its proposed oil
drilling activities in Cuban waters," the letter signed by the 34 said.
It included the signature of Debbie Wasserman Schultz, chair of the
National Democratic Committee.

Cuban-born Ros-Lehtinen chairs the House Foreign Affairs Committee and
is a fierce critic of Cuba's communist rulers.

"The decaying Cuban regime is desperately reaching out for an economic
lifeline, and it appears to have found a willing partner in Repsol,"
Ros-Lehtinen said in a public statement accompanying the letter. "This
oil drilling scheme endangers the environment, and enriches the Cuban
tyranny," she added.

In June, Repsol, responding to U.S. concerns about its proposed Cuba
drilling activities, reassured the United States it would follow
American environmental requirements and allow U.S. officials to inspect
the drilling rig, according to U.S. Interior Secretary Ken Salazar.

The U.S. lawmakers' letter said that since any foreign investment in
Cuba required joint ownership and fiscal payments to the Cuban
government of President Raul Castro, "any drilling operations that
Repsol conducts in Cuban waters will provide direct financial benefit to
the Castro dictatorship".

The letter warned Repsol its drilling plans in Cuba could violate U.S.
law — including the complex web of sanctions that constitutes the
longstanding U.S. trade embargo against Cuba, so exposing the Spanish
company and its affiliates to "criminal and civil liability in U.S. courts".

Repsol, in a consortium with Norway's Statoil and a unit of India's ONGC
, is expected to use the Chinese-built Scarabeo 9 rig to drill one or
two wells. The rig, owned by Italian oil giant Eni SpA's offshore unit
Saipem , is on its way to Cuba.

Repsol is then expected to pass the rig to Malaysia's state-owned oil
company Petronas and then to ONGC unit, ONGC Videsh, which also have
leased offshore Cuban blocks.

Oil experts on the Caribbean island say Cuba may have 20 billion barrels
of oil in its still-untapped portion of the Gulf of Mexico, although the
U.S. Geological Survey estimates reserves are a more modest 5 billion
barrels.

Repsol drilled a well in Cuban waters in 2004 and found oil there, but
for various reasons, including the longstanding U.S. trade embargo
against the island, has not drilled again.

For Cuba, a big find will boost its struggling economy and reduce or end
dependence on oil-rich leftist ally Venezuela.

http://af.reuters.com/article/energyOilNews/idAFS1E78R1P920110928?sp=true

HAVANA, Sep 26, 2011 (IPS) – This month, the Cuban government eased up
on taxes and other legal aspects involved in self-employment. But
experts warn that there are serious limitations standing in the way of
growth of private enterprise, which is supposed to absorb hundreds of
thousands of employees slashed from the public workforce.

"There has been resistance to the changes that (President) Rául (Castro)
wants to carry out, and what is happening with self-employment is one
example," an expert who preferred to remain anonymous told IPS.

Nevertheless, the number of officially registered self-employed people –
known in Cuba as "cuentapropistas" – climbed from 157,000 in September
2010 to just over 333,000 in August 2011.

Deputy minister of finance Meisi Bolaños, quoted by the Cuban press,
said the growth in one year was higher than projected.

But according to specialised sources, around 25 percent of
self-employment permits had actually been returned as of July.

"At least in housing and room rentals, people I know have quit this
business because they were losing money," a woman in the quiet
residential Havana neighbourhood of El Vedado who rents a room in her
house to foreign tourists told IPS.

"My mother and I decided to wait and see if things get better, although
if it weren't for my son, who once in a while sends us some money (from
abroad), we would be in trouble," she said.

She added that this year the number of tourists renting her spare room
has plunged, whether it's because of the global economic crisis or
because people have lost interest in Cuba.

She admitted that the latest decrease in the monthly tax paid per rented
room "helped, although not enough. The bad thing is that payment of the
tax is compulsory, whether or not you have rented out your room," she
complained.

But Ariel García, also from El Vedado, said his experience has been
different: "Those of us who accept pesos (instead of hard currency)
always have renters; at least that's the case in my neighbourhood."

"Maybe that's because we depend less on foreign tourists," said García,
a former maintenance worker at a Havana hotel.

Economists Omar Everleny Pérez and Pável Vidal reported in a study on
the issue that the most popular permits as of the first half of this
year were for preparing and selling food, providing transportation,
workers hired by other self-employed workers and room rentals.

The first category refers to food take-out businesses, cafeterias and
small family-run restaurants, called paladares, a word taken from a
popular Brazilian soap opera. Regulations approved earlier this month
permit paladares to seat up to 50 people, up from the limit of 12 that
existed in the 1990s.

"For now I'm sticking to 15 seats. Things are going well and I'm excited
about my little business," Santiago González, owner of the "Paladar el
Lobo", told IPS. His restaurant is on the centrally-located Paseo del
Prado boulevard in Cienfuegos, 254 kilometres from Havana.

González had a video-viewing hall for four years during the 1990s. "With
the money I saved, I was able to set up my restaurant," he said,
estimating that within a couple of years he will have recovered his
investment.

"The good thing is that I did not have to borrow money from anyone," he
added.

A few months ago, the government approved bank loans for private
businesses in agriculture and other areas. It has not worked for the
self-employed, though, according to Pérez and Vidal.

"Moreover, the financial system has liquidity problems and the two
national currencies (the peso and the CUC, which circulates in the
country instead of the U.S. dollar) have limitations on their
convertibility into hard currency," say the experts, who propose as an
alternative streamlining and promoting international cooperation in the
area of microcredit.

"Although there are no precise data available, everything seems to
indicate that remittances (from Cubans abroad) are becoming a source of
capital for the new businesses that are opening up, given the absence of
nationally-available credit," the economists say in their article on
"self-employment and its limitations for increasing production."

In that respect, a January 2011 survey by two U.S. academics of 300
people who receive remittances in Cuba found that 34 percent of the
respondents were thinking about opening a small business, 23 percent
already had, and 43 percent were not interested in the idea.

The study by Manuel Orozco, senior associate at the Inter-American
Dialogue, and Katrin Hansing, associate professor of Black and Hispanic
Studies at Baruch College in New York, found that the respondents
uninterested in opening a small business listed as their main reasons a
lack of resources and start-up capital, little knowledge about running a
business or the unstable political and economic context.

The new regulations that seek to make non-state employment more
attractive include tax cuts, more flexible rules for housing rentals,
authorisation to sell goods and services to state companies or
institutions, and permission to hire workers for any of the 181
authorised self-employment trades and activities.

The ability to hire other workers turns the cuentapropistas into small
businesses, Pérez and Vidal say, noting that two of the limitations on
growth include the lack of authorisation for "the creation of small and
medium-sized businesses that can be incorporated into national
production on a larger scale, or that can generate products and services
for export."

Another obstacle is the lack of a wholesale market for necessary
supplies and inputs, something that will be hard to resolve in the short
term given the country's precarious economic and financial situation. An
opening to microcredit with international cooperation, however, would
facilitate an inflow of foreign exchange enabling the new
micro-enterprise owners to import supplies, the two economists say.

According to Pérez and Vidal, the biggest complication is the low rate
of economic growth, which along with the huge increase in unemployed
workers makes it difficult to imagine that demand for goods and services
on the part of families and state enterprises will rise to the level
needed to keep such a large number of self-employed people in business.

Self-employment was introduced in Cuba for some 150 occupations in 1993,
at the height of the economic crisis that hit the country in the wake of
the collapse of the Soviet Union and East European socialist bloc. It
was expanded last year when the government announced massive lay-offs of
public employees, which were to potentially affect one million people by
the end of 2011.

But the government has slowed down the pace of the reforms, to make them
less traumatic. Prior to the slashing of the public payroll, the
government employed more than 80 percent of the workforce in Cuba.

http://ipsnews.net/news.asp?idnews=105242

HAVANA, Sept. 18 (Xinhua) — Cuban leader Raul Castro Sunday supervised
the ongoing expansion program of the Mariel port, a main port of Cuba
with Brazil's investment, local media reported.

"The expansion work has an extraordinary economic importance," said
Castro after inspecting the port, some 50 km west of Havana.

Castro said the investment on Mariel, besides upgrading the operation
levels of the port, will provide Cuba with an important facility for a
long time in the special development zone which covers more than 400
square km.

The Brazilian investment, about 500 million U.S. dollars, is from an
international association formed by companies from Brazil and Cuba, to
guarantee a project which includes the building of a 700-meter-long dock
for deepwater ships with some 15 meters draft, as well as a large system
of highways and modern railways that lead to the port.

The expansion work of Mariel port started in February 2010 as the
current port of Havana is not deep enough to allow the entry of large
vessels, and will be finished in 2014.

http://news.xinhuanet.com/english2010/world/2011-09/19/c_131146634.htm

HAVANA, Sept 5 (Reuters) – Cuba is moving slowly on its economic
reforms, at least publicly, while keeping a wary eye on the health of
its top ally, Venezuelan President Hugo Chavez, and waiting anxiously
for a Chinese-built drilling rig on its way to explore for oil in Cuban
waters.

ECONOMIC REFORM

There has been little word of late about the progress of reforms that
President Raul Castro hopes will assure the survival of Cuban communism,
but he complained to the National Assembly about bureaucratic resistance
holding back the changes. [ID:nN1E77M0XX]

The reforms are aimed at improving productivity and prosperity by
modestly liberalizing the island's Soviet-style economy. Castro wants to
reduce the role and cost of government and has vowed to slash over the
next few years a million jobs from state payrolls in a process that has
already begun.

The government has opened up self-employment opportunities so that more
Cubans can earn their living in the private sector. It says a third of
Cuba's work force of 5.2 million will be "non-state" by 2015, up from 15
percent in 2010.

As of July, officials said 325,000 people were working in the
self-employed sector, up from 150,000 in 2009. [ID:nN1E76TO2K]

Cuban media has reported that in October many small service businesses
run by the state will be leased to employees to run essentially as
private businesses, in an extension of an experiment that began last
year with barber shops and beauty salons.

President Castro has said details of key reforms such as plans to
liberalize the sale of homes and cars will be unveiled later in the
year. Changes to give state-owned companies more autonomy have not yet
been disclosed. [ID:nN09221946]

He told the National Assembly plans were afoot to loosen up Cuba's
restrictive travel and immigration rules, also to be revealed toward the
end of the year. [ID:nN1E7701VN]

Castro is trying to raise sagging agricultural output by handing out
idle plots for planting and other measures. Nearly 150,000 people are
cultivating previously unused land, with mixed results so far.
[ID:nN1E7710FM]

State media said the coffee harvest has begun in eastern Cuba, where 85
percent of its coffee is produced. It is expected to be only slightly
better than the 6,000 tonnes last year, one of the worst in the area's
history. [ID:nN1E7810LS]

What to watch:

– The final version of reforms.

– The progress and impact of government layoffs.

– The numbers and performance of the newly self employed.

– Agricultural production.

FINANCIAL HEALTH

Cuba's finances have slowly improved from a liquidity crisis that led to
a default on payments and freezing of foreign business bank accounts.
[ID:nN24211495]

President Castro told the National Assembly the bank accounts issue
would be resolved by year's end.

The government has said tax payments from the self-employed have boosted
revenues and that its top hard currency earners — tourism and nickel
exports — have improved this year.

The island's deposits in international banks also have increased.

Castro said Cuba's economy was expected to grow 2.9 percent this year,
up from 2.1 percent in 2010, but warned that global economic problems
could darken the picture.

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

The first Americans to visit Cuba under more flexible travel rules put
in place by U.S. President Barack Obama have begun arriving. [ID:nN1E77F13C]

What to watch:

– Progress on liquidity crisis.

– Effects of global economic problems.

– The growth of American travel to Cuba

OIL PLANS

A Chinese-built rig owned by Italian offshore company Saipem and
contracted by Spanish oil company Repsol YPF has set sail from
Singapore, with arrival in Cuba expected by Nov. 1. Soon after it
reaches Cuban waters, it will begin the first full-scale oil exploration
in Cuba's part of the Gulf of Mexico. [ID:nN1E77P03U]

Malaysia's Petronas, in partnership with Russia's Gazprom Neft, will use
the rig after Repsol to drill in their offshore Cuban leases

Federal lawmakers from Florida have introduced legislation trying to
stop the drilling, saying exploration there poses environmental dangers.
[ID:nN24203352] U.S. oil companies are forbidden by the long-standing
U.S. trade embargo against Cuba from operating in the communist nation.

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.

China has signed an agreement to play a major role in increasing Cuban
oil production both onshore and offshore, although details were not
disclosed. [ID:nN08140650] State-owned China National Petroleum Corp is
said to be considering leasing exploration blocks in Cuban waters.
[ID:nN1E76C1S6] China also committed to negotiations of contracts for a
$6 billion expansion of Cuba's Cienfuegos refinery and a liquefied
natural gas project. [ID:nN22266891]

What to watch:

– Arrival of drilling rig.

– Results of Repsol's exploratory well.

– Fate of U.S. legislation on Cuba drilling.

– China's growing involvement in Cuban oil development.

FOREIGN RELATIONS

Cuba's biggest concern at the moment is the health of Chavez, who
provides 114,000 barrels of oil a day and investment to Cuba but now is
battling an undisclosed type of cancer. He has said he expects a full
recovery, but if his illness were to damage his chances for re-election
in 2012 or take a turn for the worse, Cuba would have to hope he is
replaced by someone as devoted to the island.

Chavez is very close to former leader Fidel Castro, who is 85 and
increasingly frail. Unconfirmed rumors emanating from Venezuela have
portrayed him as gravely ill. Cuban officials have said nothing, but a
pro-government blogger sometimes used to get out the government's first
reactions, has said he is fine.

U.S.-Cuba relations, which thawed briefly under Obama, have been frozen
by the imprisonment in Cuba of U.S. aid contractor Alan Gross.
[ID:nN24221723] He was sentenced to 15 years for providing Internet to
Cuban groups under a U.S. program promoting political change in Cuba
[ID:nN12265306] and Cuba's highest court affirmed the sentence in
August. [ID:nN1E77411A] (Additional reporting by Marc Frank; Editing by
Kieran Murray)

http://af.reuters.com/article/energyOilNews/idAFRISKCU20110905?sp=true

Havana — Angola is available to assist Cuba to develop its economy
through the participation of the country's private and public sectors'
investments.

The fact was expressed Friday by the outgoing ambassador of Angola to
Cuba, António José Condesse de Carvalho "Toka".

Speaking during the meeting with diplomatic and local workers and their
families, António Condesse de Carvalho mentioned the existence of
businesspeople willing to invest in Cuba.

"Apart from state investments there also Angolan businesspeople willing
to invest in the Cuban economy, as the island's government is currently
engaged in the implementation of economic reforms aimed at boosting its
economy similar to Angola which opted for market economy", stressed the
diplomat.

During the ceremony that marked the end of his mission as ambassador to
the Caribbean country, the diplomat recalled the important phases of the
history of economic cooperation ties between the two countries.

http://allafrica.com/stories/201108221490.html

For Cuba's new entrepreneurs, the tax man cometh
By ANDREA RODRIGUEZ
Associated Press

HAVANA — In Cuba, the tax man has finally arrived.

After five decades under Fidel and Raul Castro, the concept of a
personal tax is practically unknown in a society where the government
controls nearly the entire economy and salaries average about $20 a
month. Quite the opposite, islanders have grown accustomed to the
Communist government providing for them: food rations, universal
education and health care, pensions, even free lunches.

But under Raul Castro's crusade to cure an ailing economy, those basic
subsidies face cutbacks and many Cubans are being pushed out of state
jobs into the private sector, where they face tax rates that can total
more than half their earnings.

Like it or not, Cubans will have to get used to rendering unto Caesar.

"Having my own business was my dream … but in truth it frightened me,"
said Luis Antonio Veliz, who opened the Fashion Bar Havana restaurant in
his backyard last December after the government began issuing new
licenses for independent eateries.

Veliz had studied gastronomy but had no training in accounting. "I went
to the Ministry of Labor and they explained everything to me … how to
manage the books, where to pay the taxes, the bank papers to be legal.

"And after all that I was even more frightened!" joked the 33-year-old,
who by necessity has become an expert on costs, profits and red tape.

Since the new system began last year, some 178,000 private work licenses
have been issued. That comes on top of 147,000 still in use from the
1990s, when Cuba enacted a similar but narrower opening to help battle a
severe economic crisis caused by the collapse of the Soviet Union.

Officials say they expect the number of taxpaying private workers to
keep growing rapidly. The goal is to have 1.8 million of the country's 5
million workers in the private or cooperative sector by 2015.

Taxes are already on the books, 11 different kinds of them, but
officials have never applied them to the vast majority of state workers.
Since two-thirds of the island's 11 million people were born after the
1959 revolution, few have ever been asked to pay a centavo in taxes, and
the idea of starting now is a shock to many.

The new small business owners face tax rates of up to 50 percent on
personal income, 10 percent on sales and in some cases a 25 percent
social security tax. Officials have imposed a payroll tax as well,
though it has since been temporarily suspended.

The Communist Party has declared that taxes should encourage economic
efficiency and help fill the state's coffers.

But taxes under the socialist system have another purpose as well:
limiting personal enrichment and inequality, said Vladimir Regueiro,
vice chairman of Cuba's tax agency. He said in an interview with The
Associated Press that the government remains committed to enormous
public spending on social projects such as free health care and
education, subsidized food, transportation and other services.

While the private sector is growing quickly, officials expect government
to remain the dominant employer, Regueiro said. He added that the
success of the economic reforms depends mainly on making state-run
enterprises efficient.

Some rules have been tweaked, however, to soften the tax blow. Select
businesses can deduct as much as 40 percent for expenses. People in some
professions pay a fixed fee each month rather than struggling with cost
and income calculations. Entrepreneurs of retirement age no longer have
to make social security payments. However, analysts say that's not
enough to lure enough people off the state payroll and onto the tax rolls.

After an initial boom of modest cafeterias and businesses selling
bootleg DVDs, clothing, cheap jewelry and other merchandise, many
would-be entrepreneurs have begun handing in their licenses or are
struggling to survive financially. Others continue operating privately
but on the illegal, black market. Many blame the taxes.

To give entrepreneurs a fighting chance, "the Cuban authorities should
stimulate this sector with a tax system that is less complicated, less
rigid," said Rafael Romeu, president of the U.S.-based Association for
the Study of the Cuban Economy, which studies ways to transition the
country to a free market economy and democracy.

"The point of collecting taxes (from the entrepreneurs) is to bring them
into the formal sector so they can grow by establishing ties to other
small businesses and develop. A business that operates illegally has
much less margin for growth and can't get credit," Romeu added.

Finance Minister Lina Pedraza told Cuba's parliament in December that
entrepreneurs should be keeping about 20 to 25 percent of what they make.

Romeu said that would be an acceptable profit margin in the developed
world, but is hard on Cubans launching tiny businesses without the
benefit of capitalist mechanisms like a wholesale market and accessible
credit.

The dean of Cuba economy-watchers, Carmelo Mesa-Lago of the University
of Pittsburgh, said taxes "are still excessive and should be lowered
much more to create incentives for agricultural production and
entrepreneurialism."

Rafael Betancourt, a Cuban economist who works on the island with
foreign non-governmental organizations, wrote in a recent article that
businesses should have a grace period to recover their investment before
heavy taxes are imposed.

He said the current tax rules discourage people on the thriving black
market from getting a license and making their business legal.

Regueiro acknowledged that "the matter of taxes is always controversial."

"The payment of taxes constitutes a way of contributing to society, and
that is a concept that we have to recover," Regueiro said. "For many
years we have been far from that idea and now we are reviving it." He
noted that the number of taxpayers has doubled since last year.

Regueiro said officials are still not applying some taxes that are on
the books, such as those on state salaries and on property. The
possibility that freeze might be lifted appalls some.

"I have never paid taxes. After all these years, the word has
disappeared from Cubans' dictionary," said Iliana Ocampo, a 43-year-old
office worker. "It sounds more like something from a capitalist country,
and talking about taxes in Cuba is a little like (talking about)
extraterrestrials."

http://www.miamiherald.com/2011/08/12/v-fullstory/2356511/for-cubas-new-entrepreneurs-the.html

The developers of what will be the Cuban Revolution's first private golf
and residential complex are claiming a hole in one.

Sceptics have long questioned the Cuban government's reluctance to grant
full property rights to foreigners who invest in real estate. But all
these doubts have been quashed, said Chris Nicholas, managing director
of Ottawa-based Standing Feather International, which is due to sign on
a golf and residential development in eastern Cuba with the Cuban state
company Palmares.

Standing Feather had been assuming that the homes in its Loma Linda Golf
Estates project would be granted 99-year leases to the foreign owners,
already a big breakthrough for a government that espouses communism.

But now the property rights are unfettered. "The government has assured
us that the homes in our project will be granted property in
perpetuity," says Nicholas.

Not all of Cuba's competitors in the sunshine real-estate market can say
the same. Mexico, for example restricts foreign ownership of real estate
on its coasts; in practice, ownership is exercised by a trust fund,
adding to the cost and red tape of any transaction.

Including Loma Linda, about four golf and related residential
developments are on the drawing board for Cuba, with the state-owned
Palmares company as joint-venture partner in each of them. When fully
built-out, Loma Linda will represent an investment of $455 million,
Nicholas maintains.

Together, industry sources say, all four projects are likely to involve
more than $2bn. They represent part, says Nicholas, of a complete change
of the economic environment for Cuba.

For the first time since the early years of the 1959 Revolution, Cubans
are now going to be able to buy and sell their own homes. Private
enterprise is beginning to blossom, though still on a relatively small
scale.

But the government has much bigger ideas. These include the development
of a deep-water port and industrial complex at Mariel, scene of the
historic 1980 boat-lift when thousands of refugees fled to the US.

Mariel, near Havana, will be foreign-managed with thousands of hectares
for industrial development in a free-zone complex. All over the island,
privately owned apartment complexes are to be built for ownership or
rental by foreigners.

"It all means a massive change of Cuba's economic model," says Nicholas.
A change, however, that could generate internal resistance from
supporters of a very different model, hostile to foreign investment and
private ownership. Not to mention likely resistance to the removal of
payroll padding that has been the norm of state enterprises.

Palmares, the state company that is partnering the golf developments,
will have its own budget. It can decide on who and when to hire and
fire, and make its own investments. Just like the state oil companies of
Norway and Brazil, leaving the government only to impose taxes and
regulation. So says Nicholas.

If it works, the "bourgeois game" once berated by Hugo Chávez, the
Venezuelan president and Cuba's closest ally, could breath new life into
the island's economy.

The only existing 18-hole course in Cuba is state-owned and is in the
beach resort of Varadero about 85 miles from Havana. Others were
bulldozed in the early years of the Revolution, despite Che Guevara's
interest in the game, documented at this photo by the late Hungarian
photographer Alberto Korda: (foto)

The government's revival of interest in the sport began in about 1995-96
in a drive to offer more variety for foreign tourists sated by sun and
salsa. But the Eureka! moment came when officials realised that golf
alone would not be profitable. Following the well-worn track of
developments all over the rest of the world, golf and real estate had to
go hand in hand.

In the long term, the planners aims to have 16 golf and residential
developments. Such numbers will probably have to wait for a political
rapprochement with the US, however. No US companies are permitted by
Washington to invest in golf or anything else in Cuba.

The current golf and residential projects are all led by Canadian,
British and Spanish investors.

Loma Linda is under starter's orders to be the first golf course to be
built. Its location is in Holguín province on the east of the island;
the others are on the west.

In the Varadero corridor, the Carbonera Club is a venture of Esencia
Hotels & Resorts, a British-owned company that has been working for
seven years in Cuba where it already has what is rated as the country's
leading boutique hotel.

One and possibly two more are to be developed by Spanish hotel groups in
Pinar del Río, where what is rated as the world's finest tobacco is
grown. One of them is being promoted by Barcelona-based La Playa Golf &
Resorts. Leisure Canada has a project at Jibacoa just east of Havana.

Will they all make it to the 18th hole? Who can tell? And golf can be an
exasperating game. As the late wayward genius of the sport, Severiano
Ballesteros once said: "I'd like to see the fairways more narrow. Then
everyone would have to play from the rough, not just me." Just a little
bit like Cuba itself.

http://blogs.ft.com/beyond-brics/2011/08/12/cuba-let-a-hundred-golf-courses-bloom/#axzz1UukorZz3

(www.miscelaneasdecuba.net).- The early August meeting of the
Association for the Study of the Cuban Economy (ASCE), held in Miami ,
was different from some of the more recent ones. First, there were few,
if any, papers presented on the "Transition" in Cuba .

Partly because the Castro brothers rival Adenauer in longevity, partly
because there is nothing novel left to say, and partly because the
proposed governmental changes are more interesting, the academics,
retired Bretton Woods institutional staff, consultants, bureaucrats, and
others who make up the membership decided the Transition was not a
priority. Secondly, there were far more defectors, at least recent
ones, than before. It was jarring for me to encounter a Cuban who had
been head of an agricultural brigade in the People's Republic of Yemen
while I had been there on a World Bank mission.

Some Cubans sent their papers via the internet, and there was even
one–who presented an apolitical paper–who had been given an exit visa
to attend the conference. There seemed to be far better information
available on what was happening in Cuba , although the modelers and
other theoreticians continued to successfully ignore reality when
necessary.

Last November, the authorities issued some 270 "Lineamientos"
(guidelines) to be considered by the VI Party Congress. The Congress
met in April, after almost a dozen years of hiatus, and spent a whole
day reviewing and approving the guidelines. In the event, with changes
and additions, about 300 "agreements" were published, and these will
serve for the restructuring of the Cuban economy over the next few years.

Many of the agreements were hortatory–demanding better discipline, more
unity, better efficiency, etc.–and others were mildly
inconsistent–expanding the private sector (the word "private" is still
verboten in Cuba; it is called the "non-state sector") while increasing
taxes on it massively–so the more sensible presenters (and I)
concentrated on the few that might make a difference.

For years; indeed, shortly after the departure of Fidel from the scene,
the ASCE consensus has been that Raul Et. Cia. would produce very little
change in the Cuban economy. This has been true since 2005; very little
has indeed changed. Things may (I say "may" with reason) change in the
future, but not really because of the VI Congress agreements.

There are some important decisions among the trivial.

First, the decision to downsize the public sector workforce by 500,000
has been validated by the Congress. While the timeline of March 2011,
has not been met (only about 250,000 have been shed), the new timeline
of end-2011 has been agreed to by the Congress. Indeed, further
downsizing was also agreed, with a total of 1.8 million to be shed by
end 2014. While all sorts of barriers can be foreseen–military
objections (the military now run the majority of public enterprises),
slow generation of non-state jobs, bureaucratic obstacles–the Cuban
regime has decided that government employment will not be the answer.

Secondly, while the famous 178 "own account" non-state activities were
expanded to almost 200, and even within their context expanded (e.g.,
"paladares" (private restaurants) can now have places for up to 50, from
12), and non-family members can be employed in some activities
(particularly private agricultural ones), there was no permission
granted for establishing small, private businesses. Hence, most private
sector expansion must be in small service activities (small restaurants,
barber shops–which the state has now turned over the barbers,
entertainment activities, beauty shops, taxis, etc.) and not in even
relatively (say, 50 employees) small businesses. Even the
professions–law, accounting, etc.–remain verboten for the private
sector. It is hard to see how this can generate sufficient employment
for over one third of the public work force to be downsized by 2014!

Thirdly, the Congress agreed to allow private ownership of housing; this
to begin by the end of this year. This will obviously have a major
effect, since mortgages, inheritance expectations, and construction will
be massively affected if (IF!) the housing decision is liberally
interpreted. Stay tuned for this one.

Finally, the Congress validated and encouraged an acceleration of
"usufruct" standing for farmers, whereby they can decide what, when, and
how to produce on land they are granted tenure for. But there was no
decision to grant title to the farmers, and the need to accelerate the
turnover stems from the desultory process used so far. (One speaker
asked how you translate "usufruct" into plainer English; I suggested
"sharecropper" since the resemblance to that is amazingly close).

Pari passu with these output changes, there are others that will greatly
affect Cubans. The Tea Party has hit Havana ; government expenditures
are being greatly curtailed. The ration book has been greatly
condensed; many cheap products are now only available on the "market" or
black market. Many state firms had canteens to feed the workers; most
are being closed. Pensions will not be nominally increased; they have
been declining in real terms for years. The education budget has been
cut, and the need for foreign exchange has led to many doctors being
sent abroad. While Raul promised recently to expand medical education
and focus more on domestic medical services, they are now so abysmal
that hospital patients are dying of neglect and even malnutrition.

But not all the Tea Party program has arrived; taxes have been
increased. Many Cubans pay one third of their income in taxes, and "own
account" workers pay far more. (The minimum salary–which is relatively
close to the average– is now about US$17-18 a month!)

The Congress was also an obvious attempt by Raul to institutionalize
what has been so far a family-run dictatorship. Party procedures have
been restored, empty positions filled, and new faces abound (Raul
recently replaced all of the provincial governors with younger
stalwarts). By keeping 70 percent of the public sector management
within the military, Raul probably also expects he can force
implementation of his changes more quickly; he publicly stated he wants
to move from chaos to socialism. (Where has he been the past 52 years?)

Now, on the face of it, these changes are both partial and
disappointing. While Cuban data continue to show a relatively buoyant
economy, independent estimates indicate per capita income is still below
that of 1989, the fiscal position is abysmal, and the external situation
even worse. Cuba 's recent sugar harvest, for example, was the worst in
a century. Tourism, the chief export earner, has been relatively
stagnant for three years, as has Venezuela 's financial support. In
spite of the agricultural reform–begun two years ago–food production
remains stagnant. Cuban debt arrears continue to grow, and the country
is "off cover" for all but the Chinese, Brazilians, and Venezuelans.
The only growth item comes from Obama's decision to allow unlimited
remittances and visits by Cuban Americans.

The economy confronts three major structural problems: the state
enterprises are mostly dysfunctional; Cuba has extremely low, overall
productivity; and gross investment–after years of being negative on a
net basis–is still barely above depreciation levels. No sane person
expects "taking in each other's laundry" will reverse these, let alone
generate enough productive jobs to absorb the over third of the public
workforce being fired over the next three years.

But. But I believe change (or "informal" reforms) may accelerate.
First, one has to realize that Cuba is no longer a "hard state" when it
comes to economics. Corruption is rampant; so rampant that virtually
every head of a foreign-linked sector—Cubana airlines, tourism, tobacco,
rum–has been convicted of corruption. Even Pedro Alvarez, once the
all-important head of ALIMPORT who used to negotiate deals with US farm
groups and state Governors, has been tried and convicted. (Like most
Cuban officials, on release from prison he headed for the US ; he now
resides in Tampa .)

To understand how irrelevant the VI Congress is, simply click on
www.revolico.com and note the many homes "for trading." While you can
barter homes for homes, it is illegal to include cash or other payments
in the deal. This is done openly with no (yet) punishment. Given the
tax burden on "own account" workers, few register or pay taxes; or
rather they pay only nominal sums to the block warden of the "Committee
for the Defense of the Revolution." Tips are now illegal in resorts
patronized by foreigners. This is treated as a joke. Prostitution
abounds; crime is rampant; education, health, and other vaunted public
services are often provided only after bribes.

Pandora's box is now open. Recent foreign observers quickly note that
there is less obedience of even the most sacred laws; folks openly
disparage the government; and there seems to be greater economic freedom
than ever. Understandably, while–as noted above–the formal statements
still genuflect to Marxism, there is far less rhetoric about the glories
of socialism as the social safety net is reduced, public workers are
fired, and 52 years of that persuasion have ended in economic disaster.
Fidel is now history. Alive, occasionally writing columns on world
events, and trotted out to embrace Chavez (and visiting US Senators), he
is otherwise ignored on policy issues. All those linked to him and of
less loyalty to Raul are now gone.

A cynic would remind us (and one did) of the reforms of 190-85, and of
1993-95, when the economy confronted disaster. As soon as the
challenges were ameliorated, the "reforms" (far more timid than those
now underway) were reversed. But there now seems no savior in sight.
Whatever happens to Chavez or Venezuela , it is obvious that Venezuelan
subsidies will not increase. The state enterprises remain among the
least productive in the world. The authorities have recently increased
taxes on tourism. The declining infrastructure and desultory service
mean that Cuban tourism sites are now fairly uncompetitive with other
Caribbean spots, let alone the now cheaper Florida options. In spite of
the agricultural reforms, including the closure of two-thirds of the
(inefficient) sugar mills, agricultural production continues to fall.

Thus, I–for one–believe the move towards a market economy is now
irreversible. The corruption combined with the desperation of Cubans
will quickly expand the private activities from legal to illegal
micro-enterprises (already occurring) and then to small and medium-sized
firms. One example; a recent traveler to Cuba noted that one private
restaurant had valet parking, a singer, and other ancillary attractions.
All are still illegal. Timid house ownerships regulations, when they
come at the end of the year, will likely lead to a total freeing of the
housing markets. Banks may now lend directly to people; while they have
yet to do so, I expect this to accelerate once the bankers receive the
appropriate incentives–bribes.

Then there is the recent and massive increase in immigrant remittances
and travel by US citizens to Cuba . I did not write "Cuban-Americans"
because it is clear the Obama Administration will let anyone travel to
Cuba . In the last year of the Bush Administration there were 1500
citations sent to Americans for illegal travel to Cuba . Since Obama
took office there have been 19. One of the student papers presented
included anecdotes from a recent tourist trip to the island. Foolishly,
I commented to some Cuban-Americans that the student must have been
Canadian since she was not of Cuban origin and her trip was–as
noted–pure tourism. I was immediately deluged with example after
example of travel by ordinary Americans as simple tourists; the travel
agencies which package the tours are often forgetting to include the
"research" or other legal reason for the trips. Canada has replaced
Spain and Italy as the most important tourist provider as Cuba
increasingly deters "immersion" tourism (ie, city-tourism, where
linguistically capable Italian and Spanish tourists can mingle with
ordinary Cubans) and concentrates on resort tourism. And the US is fast
becoming one of the top five tourist providers.

Since the US already ranks fourth in Cuban merchandise trade and
provides two thirds of the remittance flows, you can quickly understand
how the "blockade" is working. And these flows have led to some
interesting results. Micro-credit is now available to Cubans; a system
has arisen by which a family member in the US guarantees the credit and
the Cuban then receives the loan. Remittances were the source of over
half the "own account" activities surveyed last year. And illegal
housing purchases are often made by proxies of Cuban Americans buying
retirement homes. Farmers expanding their new "usufruct" activities
often can do so only because of immigrant remittances.

While all this will lead to steadily deeper and more helpful "reforms"
(actually, the expansion of the informal economy, with legality
hopefully following after a lapse), there seems little reason to expect
a major or significant shift quickly. Chavez' health, the continued
role of state enterprises, the uncompetitive nature of the overall
economy, remain.

Cuba is very likely to find significant deposits of oil. A Norwegian
fifth-generation drilling vessel costing $750 million was launched in
Singapore recently and hired to drill north of Havana by Repsol and
other European (and Chinese) firms. It cost $450,000/day and will
likely make five to seven attempts. You don't spend that kind of money
unless you are reasonably certain something will turn up. But even the
most optimistic estimate of Cuba's possible reserves indicates Cuba
might become self-sufficient (it consumes under 150,000 bbl/day) in the
longer term; and if oil is found next year it will be five years before
it becomes available. The Venezuelans and Chinese are building two
150,000 bbl/day refineries: one on the south coast near Cienfuegos
(actually, this is being renovated and expanded), another on the north
coast for processing Chinese crude from South America . These, however,
are projects that will both take a few more years to complete and offer
few jobs and little foreign exchange (refining is the least profitable
of petroleum activities; and off-shore ones are notoriously parsimonious
to their hosts). Cuba now has agreements with over 90 countries to
provide medical professionals. From Pakistan to South Africa , from
Qatar to Bolivia , Cuban doctors and nurses labor at Cuban salaries
(about $20/month) while the host governments pay 10 times or more to the
Cuban government. (This, of course, violates a series of ILO
agreements, but as usual the "international community" ignores it.)
Most–probably 30,000 out of 50,000–are in Venezuela and likely
ensuring Cuba receives free oil (in fact, Venezuela should charge
$27/bbl, but since Cuba never pays it is free). Given the effect
exporting doctors and nurses has had on the domestic health scene, Raul
has announced he will be expanding Cuba 's doctor-training capacity to
100,000/yr. (This compares to about 2/3 that in the US , and is
probably as credible as the 10 million to sugar harvest attempted years
ago!) Nevertheless, this income will likely grow in the future,
although it will depend on finding new markets for the doctors/nurses…

Finally, the usual cautionary note. While I am quite convinced the move
towards economic markets is virtually irresistible, if chaotic and
"illegal" in most cases, I have no crystal ball on its effect on Cuba 's
political scene. Raul continues to beaver away, institutionalizing the
dictatorship in the hope it will last when he and Fidel are entombed.
The military remains strongly in control of both the economy and the
government, if complemented by some younger civilians in provincial
posts. And Cuba 's police remain as effective as ever–using access to
education, other social services, rationed food, etc.–in controlling
most dissent before it becomes public. The Arab Spring has not hit
Havana . But the desperation of Cubans, the increasing policy conflict
between downsizing public work forces and limiting the growth of
alternative, private work alternatives, and the likely departure of
Chavez, Fidel and Raul from the scene could lead to a revolution. An
ex-Diplomat privately noted that the political scene seemed far more
fragile today than it was when the USSR withdrew its support. We'll
simply have to wait and see what happens…. Paul Meo

*************

One question: Was concrete information presented in the conference
showing that indeed 250,000 workers have been dismissed from the public
sector? The last I have heard is that they have punted and extended the
deadline for reducing the public sector payrolls a few years down the road.

The "punting" was over the 500,000 downsizing target, which was
supposed to be achieved by end-March 2011. The even more massive
target–1.8 million–is supposed to be achieved by end-2014. One
presenter noted that by the VI Congress (April 2011) the authorities had
indicated only 200,000 to 250,000 had been downsized, so the timeline
for the half-million was extended to end-2011

http://www.miscelaneasdecuba.net/web/article.asp?artID=33266

The United States embargo is relative. If Cuba had fulfilled its
economic duties, it could buy merchandise in any other place without
worrying about the shipping freight cost.

In spite of the embargo, Raul Castro can afford the luxury of buying
Humvee jeeps – a United States army vehicle – to travel Cayo Saetía's
virgin prairies, in Holguin province, when the top brass goes hunting.

Therefore, who suffers the consequences of the embargo most is the
average Cuban, not their rulers. Right now, the Cuban-American political
lobbyists are exerting strong pressure in order to enforce the embargo
restrictions.

As in any conflict, there are supporters and detractors. There is a
phenomenon associated with the embargo of the utmost importance. It is
the future compensation or restitution for those affected as a result of
the massive nationalizations of American companies and Cuban citizens by
Fidel Castro's "olive green government" in the first years of the
Revolution.

According to the Helms-Burton Act, even if there is a future democratic
government in Cuba, the embargo would continue until the victims of the
expropriation have been compensated. For many, it's something simple.
They naively believe democracy is a magic wand that will turn into gold
all the shit accumulated after 52 years of economic disasters.

But it is not like that. See for yourself: Cuba owes money to everybody.
We are the most indebted country in the world on a per person basis. To
Russia we owe 25 million rubles. To Spain, China and the Paris Club,
billions of dollars.

Add a few more billions to the Cubans, now U.S. citizens, who lost their
properties. In fact, there are a significant number of legal suits in
the United States on the issue of compensation.

It is known that the Castro brothers are not going to pay. Therefore,
the huge debt will fall on the shoulders of a future democratic
government. The more time it takes, the more money will be accumulated.
And the Cuban government will have to pay. Or sit down and negotiate.

The changes in the island can be delayed from ten to fifteen years, but
they will come. The design drawn up by the current government is based
on military corporations that accumulate large investments. They have
been distributing the nation among themselves. A real pinata.

A future administration will be bankrupt. Even with deep cuts in social
services, encouraging foreign investment or implementing flexible laws
and low taxes, it won't be able to accumulate enough capital to pay the
national debt.

Antonio Rodiles, economist, from one of the think tanks who resides in
Havana, has looked deeply into the subject and addresses the issue in an
article entitled "Liberalization of vacant land and dilapidated
properties, a necessary step to initiate a recovery process". It's
founded on the experience of the Eastern European communist countries.

According to Mr. Rodiles, a future Cuban democratic government could
compensate by selling bonds, businesses, lots and vacant land to foreign
companies or citizens affected by expropriation.

In this article, Oscar Espinosa Chepe, dissident economist, rationalizes
that "in regard to the refunds, the Cuban reality advises other methods.
With regard to housing, we are in favor of a massive granting of these
properties, along with all the responsibilities inherent to the current
onerous usufructuaries."

Espinosa Chepe believes that the fairest approach could be the return of
these properties to their former owners. "But because of the time
elapsed and the transformations of these properties, some of them
already destroyed; the best solution would be to pay the original
owners, which could be done through bonds".

To undertake the payment of the debts incurred by the Castro brothers, a
future government would have to auction the businesses and draw up a
severe adjustments plan. Wilfredo Vallin, attorney at law, believes it's
probable that many countries, the United States among them, will forgive
the Cuban national debt.

But a real policy is not articulated on the basis of assumptions. It
wouldn't be a profitable strategy for a new government in Cuba to
disburse huge expenses to pay for an inherited debt due to Castro's
economic anarchy.

If the Castro brothers, as it's supposed, have no intention whatsoever
of compensating the property owners, then it would have to be negotiated
with a future transitional government. Lifting the embargo now is a good
way to save time.

The businesses and economically affected citizens should be financially
compensated, without affecting Cuba's development, and without fiscal
adjustments that provoke social unrest. After five decades, plus any
extended delay to end Castro's dynasty, it is not advisable to require
more sacrifices from the people.

Now, without another word, Cubans have to make a new holes in their
belt. But when they get used to living in freedom, at the first change,
outraged, they will throw themselves to protest on the streets. Those
are the benefits of a democracy.

Video: Cay Saetia. Located in the Bay of Nipe, north of the province of
Holguin. Despite being considered Raul Castro's "private island," the
town lives off of tourism, which it is controlled by Gaviota S.A, a
group run by the military. One of the main attractions are the safaris,
where tourists can see camels, deer, antelopes, water buffaloes, boars,
horses and parrots among other species.

Translated by: Adrian Rodriguez

July 27 2011

http://translatingcuba.com/?p=11278