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Articles, Opinions and Papers

August 2017
Marriott International is still pursuing plans to renovate and manage the historic Hotel Inglaterra on the fringe of Old Havana and is actively looking for other hotel projects throughout Cuba.
PINAR DEL RIO, Cuba — Calle Marti is a modest half-mile boulevard split by a simple winding flagstone path that's bracketed by green grass, pine trees and curving blue cement benches.
As the Trump administration rewrites the rules on Cuba’s economic sanctions, President Raul Castro and other senior officials addressed Cuba’s National Assembly on the economic challenges their country faces. Castro reviewed progress on the “lineamientos,” or guidelines on Cuban economic reforms he launched after he was elected president in 2010. The guidelines are a document of the Cuban Communist Party proposed by himself and other top party leaders to rescue the Cuban economy from the Marxist-Leninist orthodoxy imposed by former president Fidel Castro that replicated the economic system of the former Soviet Union.
HAVANA (Reuters) - Cuban trade with socialist ally Venezuela has fallen 70 percent since 2014 due to the South American oil producer's inability to meet delivery contracts and purchase goods as it struggles with low oil prices and a resulting economic meltdown.
It was almost two months ago that President Trump announced he was closing down some of the opening to Cuba begun in 2014 by President Obama.
HAVANA (Reuters) - The Cuban government said on Monday the freeze on new licenses for some private-sector occupations would not last years, in an attempt to reassure citizens worried about an apparent pause in the liberalization of the economy.
HAVANA — Cuban authorities have ordered the closure of one of the island’s fastest-growing cooperatives, days after announcing that they would stop issuing new permits for some private enterprise.
HAVANA, Cuba - Authorities from the Port of Houston signed a deal with Cuban officials Wednesday in Havana.
First, Cuban authorities hauled out tables and chairs from several private restaurants on the island. Then, they put a hold on issuing permits for a range of new ventures citizens had hoped to launch — from home rentals to agricultural endeavors.
HAVANA (Reuters) - Communist-run Cuba said on Tuesday it was suspending issuing new licenses for certain private-sector activities from bed-and-breakfasts to restaurants until it had implemented new measures to curb wrongdoing such as tax evasion.
July 2017
A Coral Gables business consultant watched one day in June as Cuban authorities carried out chairs, tables, plates, sound systems and bottles of imported liquor from a popular private restaurant near the U.S. Embassy in Havana.
As the Trump administration continues to work on rules to implement its new Cuba policy, Treasury's Office of Foreign Assets Control issued clarifications Tuesday on the U.S. interim policy.
HAVANA — Hanging in the office of a mechanics garage in central Havana, where Julio Álvarez has made a living off of renovating classic American cars and chauffeuring tourists around the island, a round yellow sign reads: “We use genuine Chevrolet parts.”
Cuba’s historic cities, vibrant culture and sandy beaches were the star performers of the economy in the first half of the year, pulling in 23.2 percent more visitors than the first six months of 2016.
MINAS DE MATAHAMBRE, Cuba (Reuters) - A new lead and zinc mine in northwestern Cuba is on track to start production in October as part of the Caribbean island's attempt to breathe fresh life in its mining sector, the joint venture Emincar overseeing the project said this week.
For decades, George Borjas, 66, has toiled in what was generally the quiet field of immigration labor econonics. His wonkish work was filled with dense mathematics that made him a leader in his field and led to a professorship at Harvard, while being completely unknown to the general public.
HAVANA — All around Havana, local Cuban entrepreneurs refer to the day President Trump unveiled his new policy toward the country simply as “June 16.”
HAVANA (Reuters) - Cuba's two-year-old financial crisis worsened during the first half of this year, and the country is having difficulty obtaining trade credits due to late payments to suppliers, according to Cuban Economy Minister Ricardo Cabrisas.
HAVANA, CUBA--Ileana Sánchez searched meticulously through her worn purse for cash to buy a small blackboard for her 7-year-old granddaughter, who dreams of being a teacher when she grows up.
HOUSTON/HAVANA (Reuters) - Venezuela's crude and fuel deliveries to Cuba have slid almost 13 percent in the first half this year, according to documents from state-run oil company PDVSA viewed by Reuters, threatening to worsen gasoline and power shortages in the communist-run island.
Cuba plans to produce 54,500 tonnes of nickel and cobalt sulfides this year, state-run television said at the weekend.

HAVANA--For a dollar, Cuban podiatrist Serafin Barca will spend a half hour cutting the corns off a senior citizen’s foot, or nearly an hour removing a stubborn wart.
Nidialys Acosta handles the booking for a loose association of vintage car owners who have banded together to offer transportation for visiting dignitaries and other groups. Clients have included a New York business delegation led by Gov. Andrew Cuomo and one of the founders of Airbnb.
Cuban authorities have made a move to reignite citizens' sex lives by reintroducing a series of state-run pay-per-hour motels which they hope will "diversify the options for love", the country's official trade union weekly Trabajadores announced on Monday.
June 2017
As President Trump announced the administration’s new policies on Cuba, I worried that Afro-Cubans would be the main losers. They have been losing for some time. The timid economic reforms implemented by the Cuban government in the past two decades have resulted in a growing gap between those with access to capital and those without it.
President Donald Trump's new policy on Cuba travel has winners and losers: Group tour operators hope to sell more trips, but bed-and-breakfast owners in Cuba say they're losing business.
Some U.S. executives that do business with Cuba breathed a sigh of relief after President Donald Trump outlined his new Cuba policy in Miami because it won’t have much impact on their companies. But others have pressed the pause button until they see how the new regulations implementing the changes are written.
HAVANA (Reuters) - Minnesota's government and businesses will continue to engage with Cuba in the areas they can, like agricultural trade, despite U.S. President Donald Trump's partial rollback of the detente, Lieutenant Governor Tina Smith said on Thursday.
HAVANA — When Julia de la Rosa heard President Trump's speech restricting Americans' ability to visit Cuba, she immediately started calculating how many workers she'll have to fire.
Several prominent free market advocates sent a letter to President Trump Wednesday discouraging the anticipated announcement to add travel and trade restrictions with Cuba.
President Donald Trump is expected to visit Miami Friday, where he will announce what is already highly anticipated to be a tightening of the rules on trade and travel enacted under former President Barack Obama.
Towering cranes dot the Havana skyline as communist-run Cuba races to build luxury hotels, amid indignation among some residents and concern that U.S. President Donald Trump might reverse a detente that fueled the tourist boom.
Cruise lines and airlines stand to lose $3.5 billion and more than 10,000 jobs over the course of President Donald Trump’s four-year term if the administration fully rolls back all of the United States’ Cuba regulations, according to a report by nonprofit Engage Cuba.
HAVANA (AP) — A handful of entrepreneurs have quietly formed communist Cuba's first private small business association, testing the government's willingness to allow Cubans to organize outside the strict bounds of state control.
May 2017
U.S. President Donald Trump may find it hard to walk back his predecessor’s historic rapprochement with Cuba, now that various businesses are invested in revived relations with Havana.
As the internet becomes more widespread in Cuba, online start-ups are emerging. But the problems many of the companies hope to address are also a reminder of how far the island has to go.
As Cuba becomes more accessible, entrepreneurs there are finding new ways to reach users and build businesses. Today at TechCrunch Disrupt NY, we got the perspective of a trio of Cuban entrepreneurs to learn about the challenges they face in building businesses as the country gradually opens up to the outside world.
In the heart of the capital of a nation founded on ideals of social equality, the business arm of the Cuban military has transformed a century-old shopping arcade into a temple to conspicuous capitalism.
The first Cuban chef with a Michelin star, and the chef — and owner — of the private paladar where former President Barack Obama dined during his trip to Cuba, have something more in common than love of cooking: Both represent snippets of success that Afro-Cubans can find in the emerging private sector on the island.
April 2017
HAVANA – Refineries have gone dark. Gas rations have been slashed for hundreds of thousands of state workers. Construction materials are nearly impossible to find.
April 26 (UPI) -- The necessary components for an accelerated drilling program for oil prospects in Cuba may already be in place, Australian energy company Melbana said.
Pedro Betancourt (Cuba) (AFP) - A sweet smell of treacle used to fill the air in the village of Pedro Betancourt -- but like the workers from the derelict Cuba Libre sugar refinery, it has dispersed.
Economic performance in the Caribbean will be uneven this year: Some economies will grow by 5 percent or more, but others will be lucky to eke out even negligible economic growth.
Seven-year-old Havana resident Jennifer Alvarez loves school. Her favorite subject is math, but “sometimes it’s complicated,” she says. Alvarez is a sweet little girl, being raised by a single mother. It’s not just math that’s complicated, the second-grader says. Life is too.
TOURISTS whizz along the Malecón, Havana’s grand seaside boulevard, in bright-red open-topped 1950s cars. Their selfie sticks wobble as they try to film themselves. They move fast, for there are no traffic jams. Cars are costly in Cuba ($50,000 for a low-range Chinese import) and most people are poor (a typical state employee makes $25 a month). So hardly anyone can afford wheels, except the tourists who hire them. And there are far fewer tourists than there ought to be.
March 2017
NORBERTO MESA, a 66-year-old grandfather, stands in the hot sun 11 hours a day, six days a week, guiding cars in and out of the parking spaces in front of a bustling farm stand. The 4,000 Cuban pesos ($170 at the official exchange rate) he earns each month in tips is more than ten times his monthly old-age pension of 340 pesos. Without it, the retired animal geneticist could not afford fruit and meat, or help his children, who work for low salaries, to feed his four grandchildren.
The tourists are still jamming Havana’s Cathedral Square and jostling to get into the popular private restaurants. But not too much is going right with the rest of the economy, and in the last year of his presidency, Raúl Castro faces a variety of economic challenges — that he may or may not take on.
WASHINGTON — A rare poll of Cuban public opinion has found that most of the island’s citizens approve of normal relations with the United States and large majorities want more tourists to visit and the expansion of private business ownership.
Swiss firm Nestle is close to reaching a deal with Cuba on forming a new joint venture to build a $50-million to $60-million factory to produce coffee, biscuits and cooking products, company Vice President Laurent Freixe said on Wednesday in Havana.
In Havana’s iconic Bacardí building, teams of computer programmers are working for U.S. companies with the tacit permission of the Cuban government.
Cuban entrepreneur Liber Puente is working on a master’s thesis about communication among “non-traditional friends,” so what better place for some research than Miami.
No matter how much you warn visitors to Cuba that they'll be offline during their stay, they often won't believe it until they actually arrive in Havana.
February 2017
They say necessity is the mother of invention and nowhere is that more true than in Cuba, where tech startups are popping up across the island nation despite very low internet connectivity. That intrepidness is on display with the visit of some young high-tech entrepreneurs to Silicon Valley. Jessica Aguirre reports.
From buses and trucks to a $500 million golf resort, China is deepening its business footprint in Cuba, helping the fellow Communist-run state survive a crisis in oil-benefactor Venezuela and insulate against a possible rollback of U.S. detente.
January 2017
HAVANA, Cuba—Cuba’s private-business owners, having profited from a growing flow of funds and tourists from the U.S. under the Obama administration, are facing uncertainty the influx—and their hard-won gains—will continue.
The Obama Administration has said that trade with Cuba could reach up to $6 billion under its new policies, but U.S. companies in fact exported barely $380 million worth of goods to the island since the beginning of the thaw in bilateral relations two years ago.
December 2016
MIAMI - Venezuela's economic collapse continues to weaken Cuba's economy.
Cuba's economy shrank 0.9 percent this year in tandem with the crisis in key trading partner Venezuela, President Raul Castro told the National Assembly on Tuesday in a closed-door speech, predicting a slightly brighter outlook for 2017.
Alex Romero was delighted when President Barack Obama came to Havana in March bearing the promise of a bright new future.
According to authorities in the Czech Republic, the government of Cuba has proposed resolving a Cold War-era debt by paying the Czechs in a treasured Cuban commodity: rum.

Cuba, in Clothes

December 13, 2016

Deep in Bauta, a sleepy Cuban town 17 miles southwest of Havana, past rows of billboards painted with portraits of national heroes and narrow streets lined with colorful Spanish colonial houses, sits an abandoned factory on a plot of lush, overgrown farmland.
Republican and Democratic U.S. lawmakers joined Cuban entrepreneurs on Wednesday to urge President-elect Donald Trump to continue President Barack Obama’s engagement with Havana, despite Trump’s threat to end detente with the island.
MELBOURNE, Dec. 6 (UPI) -- A Cuban-focused oil company said it was taking a closer look at the business climate there with the goal of accelerating its drilling program next year.
November 2016
The death of Cuban leader Fidel Castro has investors starting to salivate about the possibility of big U.S. companies soon being able to do a lot more business in Cuba.
In the wake of Fidel Castro's death all eyes are on what the future holdsfor the Cuban economy. The hope is another revolution will be sparked: a push by the populace for a more open market economy. President Obama's agreement to normalize relations with the communist island nation has proved to be a catalyst for change. It remains to be seen if the Trump administration will continue to maintain detente with Cuba, or reverse course.
MIAMI — A powerful coalition of U.S. companies is preparing to appeal to President-elect Donald Trump's business instincts and drop his vow to reverse one of President Obama's signature achievements: renewed relations with Cuba.
In the small Burner Brothers Bakery in downtown Havana, an engineer decorates cookies while a lawyer ices a cake. The co-owner of the bakery, Sandra Camacho Rodríguez, a dentist, greets customers.
Since the mid-1970s when he was a graduate student in international economics, Richard Feinberg, now a professor at the University of California San Diego, has been fascinated by the challenges of reforming centralized economies.
This year’s Cuba trade fair is the largest ever, with 73 countries and 3,500 exhibitors present.
HAVANA--Despite the Obama administration's efforts to build a new business relationship with Cuba, U.S. companies were far from center stage at the 34th Havana International Fair.
HAVANA - For a while Saul Berenthal and Horace Clemmons were the 70-something poster boys of U.S.-Cuba detente.
October 2016
South Korea and Cuba discussed ways to boost bilateral ties Monday, holding their first economic cooperation dialogue in 57 years.
HAVANA – Cuban and French officials on Wednesday held an initial meeting in this capital to define potential investment projects French companies could carry out on the Communist-ruled island.
If the old real estate adage holds true — it's all about location, location, location — then about 100 miles off the tip of Florida, it's boom time. The real estate market in Havana, Cuba, is roaring.
The Obama administration's decision last week to again loosen trade restrictions between the U.S. and Cuba means it will soon be easier to enjoy a fine Cuban cigar and savor a swig of that island's flavorsome rum.
HAVANA (AP) — Like so much else in Cuba, shopping for clothes isn’t easy.
Cuban-American entrepreneur Marcelino Alvarez jokes that he never expected he would end up more connected to his family’s homeland living in Portland, Ore. than he was when he grew up in Miami — but that is exactly what happened when he co-foundedIncúbate, the first collaboration incubator between the U.S. and Cuba.
Nowhere in Cuba are the effects of the continuing US economic embargo more apparent than the countryside, where farming cooperatives rely on outdated tools and processing plants can't obtain spare parts, Will Grant reports.
Havana, Cuba - Sparks fly and drills roar, but the restoration of the Manzana de Gomez, an ornate and imposing building to the east of Central Park in Old Havana, is well behind schedule.
September 2016
CIENFUEGOS, CUBA--Throughout the day, the artists come and go from a crumbling mansion that sits across from José Martí Park.
CIENFUEGOS, CUBA--Residents of this small city on Cuba’s southern coast awaken every other Thursday to the Fathom Line’s MV Adonia looming in the bay, but the 704-passenger cruise ship’s visit is fleeting.
WASHINGTON--A handful of experts urged the House Committee on Agriculture on Wednesday to loosen restrictions on farm trade with Cuba, as legislators further contemplate U.S.-Cuba ties.
Algeria is sending crude to Cuba for the first time to help offset lower supplies from Venezuela, hit by production problems due to low oil prices, sources with direct knowledge said.
August 2016
Progress in international talks over who owns a piece of the Gulf of Mexico has raised the specter of a Deepwater Horizon tragedy along local shores.
Cuba on Tuesday published policy guidelines for the next five years that signal no new domestic initiatives although it upgraded foreign investment to "fundamental in certain sectors."
HAVANA — Ramses Fernandez’s most cherished possession is barely larger than a refrigerator, with the legroom of an economy airplane seat and a little more horsepower than a riding lawnmower.
When South Florida banking consultant Fernando Capablanca recently spoke about the Cuban banking system — the pre-1959 Cuban banking system — he was surprised at the compliments he received.
HAVANA — More than 2 million tourists have visited Cuba this year, state media said Wednesday, putting the country on track for a record number of visitors bringing badly needed cash to an economy facing a sharp reduction in subsidized oil from its chief ally, Venezuela.
July 2016

Cuba: Open for Business?

July 26, 2016

The recently published book by Richard E. Feinberg provides a good opportunity to revisit the economic prospects of Cuba. In the book’s title the question is omitted, so it echoes the official slogan that the Cuban government has been using to signal that something has changed. The content of the book, however, does include much to warrant a question mark.
The crisis in Venezuela has spread to its closest ally Cuba, with Havana warning of power rationing and other shortages that some fear could mark a return to the economic austerity that traumatised the island nation after the collapse of the Soviet Union.
French construction group Bouygues (BOUY.PA) is employing more than 100 Indian laborers to work on a hotel it is building in Cuba, breaking a taboo in the Communist-run country on hiring foreign labor in order to meet increased tourism demand.
Cuban ruler Raúl Castro may have ruled out a return to the “Special Period” — the devastating economic crisis sparked by the loss of Soviet subsidies in the early 1990s — but he was clearly somber earlier this month when he confirmed that the island faces a grim future.
Sofía's living room is covered in clothes. Stacks of t-shirts and shorts line a faded plaid couch. Dresses are strewn across the counter, and an armchair cradles a small mountain of shoes. You can't see the floor.
HAVANA--Cuban authorities warned Friday that they will pull the licenses of private taxi drivers who raise fares, amid recently announced energy restrictions that have many islanders bracing for difficult months ahead.
The Cuban economy minister has been removed from his post following President Raul Castro's warning last week that people would have to tighten their belts amid the continuing economic crisis in Venezuela.
HAVANA, Cuba—Though the U.S. embargo still officially bars them from hitting Cuba’s beaches as tourists, Americans are nevertheless shaking up the country’s tourism industry and communist economy as they flock to the island.
When relations between Cuba and the United States were in the deep freeze, few American companies viewed the island as a potential consumer market.
More than half of the Cubans who use the island’s Nauta internet service provided by the national telecommunications monopoly ETECSA, have to travel up to three miles to get to a wifi spot.
MEXICO CITY — During the economic turmoil of the early 1990s, power cuts in Havana were so routine that residents called the few hours of daily electricity “lightouts.”
Despite the U.S. trade embargo on the island of Cuba, many Cuban-American families are supporting the economic recovery and growth of their relatives through remittances.
Cuba has quietly opened a first-of-its-kind store specializing in bulk goods in Havana: Zona +, a high-ceiling space with racks stacked with large tins of tomato sauce, toilet paper and cooking oil by the gallon.
Japanese trading house Mitsubishi Corp (8058.T) is scouting for business opportunities in Cuba including infrastructure projects at its Mariel special development zone, a top executive said on Friday.
HAVANA — Cubans face tough times in the energy sector in the coming months, official media warned Tuesday amid orders from authorities to implement power-saving measures and some state-run entities reducing hours of operation.
HAVANA — Cubans face tough times in the energy sector in the coming months, official media warned Tuesday amid orders from authorities to implement power-saving measures and some state-run entities reducing hours of operation.
MIAMI — It’s a hot Saturday morning and the crowd is churning at Nooo! Que Barato!, the sprawling discount store where many Cuban Americans buy cheap goods for their relatives back home. But lately, shoppers at the store, whose name roughly translates to Wow! That’s Cheap!, are exhibiting more discerning tastes.
Starwood Hotels & Resorts this year became the first U.S. hotelier to ink a deal in Cuba in nearly six decades. Marriott International quickly announced plans to do the same, and a number of big-name competitors have since expressed interest in expanding to the island nation.
June 2016
HAVANA – Starting Monday, Havana ATMs will accept MasterCard cash advances, including those from Stonegate Bank, the first U.S. bank authorized to provide this service on the communist island, and the Banco Popular de Puerto Rico, the Cuban Central Bank, or BCC, said.
A "sit-in" by Democratic lawmakers on Capitol Hill to push for gun control legislation, forced a delay of votes on various proposals related to Cuba that was included in a draft budget for financial services and other government spending slated to before the House of Representatives Wednesday night.
The development of production facilities and supplies of products are the key sectors of Russia’s cooperation with Cuba, according to Deputy Industry Minister Georgy Kalamanov.
The car was a Detroit classic on a Havana street, a pink and white 1956 Chevy Bel Air with a nickname out of a rock 'n' roll song: "Lola."
The barriers to founding a tech startup in Cuba are high. For starters, hardly anyone has access to internet connections faster than dial-up.
Twenty years ago a Canadian developer won the right to build golf courses and condominiums across 2.5 miles of lush green ridgeline and crescent beaches lapped by the emerald waters of the Florida Straits just 40 miles (65 kilometers) from Havana.
A new study on Cuban consumers finds that their purchasing power is about 25 percent higher than official statistics indicate, but they still spend a high percentage of their income — 50 percent — on basic needs such as food and clothing.
April 2016
Cuba on Friday will lower the price of some basic household goods at thousands of state-run hard currency stores, employees of two retail outlets in Havana said on Thursday.
MIAMI — A U.S. talent agency signed a contract in Havana on Monday to work with a Cuban entrepreneur, a seemingly simple deal that marks a big change in the relationship between the two countries.
A coalition of investor and entrepreneurship organizations announced the formation of 10x10KCuba, a competition for Cuban entrepreneurs, on Thursday evening during the AngelSummit Americas conference in Miami.
Cuba announced on Tuesday that some cooperatives offering food and other services will be able to buy supplies directly from government producers and wholesale outlets for the first time, part of a wider but so far cautiously implemented market reform program.
HAVANA (Reuters) - The ubiquitous fridges that dispense beer in Cuba's bars, cafes and gas stations are running out of the island's favorite Cristal and Bucanero brands in recent weeks, as a surge in American tourists and new private watering holes strain the main brewery.
Victor Rodriguez imagines a future Cuban economy that will let him import large quantities of thread, export the women's clothing he designs and keep him from worrying about obtuse regulations such as where he can place items on his small retail stand.
HAVANA — Cubans sometimes joke that of all the lessons living under three generations of communism has taught them, by far the most important is learning how to wait.
March 2016
Rubén Valladares just might be one of the most important entrepreneurs in Cuba. No, he’s not a tourism tycoon. He’s not a tech titan. Truth is, he makes…paper bags.
HAVANA — It's fair to say President Obama has learned at least one word of Cuban Spanish since normalizing relations with communist Cuba 15 months ago.
A unit of telecoms multinational Verizon Communications signed a direct interconnection agreement with the Cuban state monopoly Etecsa, expanding on existing roaming services in the Caribbean country, Etecsa said in a statement on Monday.
Cuba has not yet made a request for membership of the International Monetary Fund, the fund's chief said on Sunday, adding such a request would be considered in accordance with its rules.
"Viva Cienfuegos! Viva the refinery! Viva Fidel!" shouted Venezuelan President Hugo Chavez into the microphone. It was December 2007.
HAVANA (AP) — "This is a conversation between two children," Graciela Lage Delgado tells a rapt class of third-graders, tightly enunciating each English word from a textbook called "Welcome to America."
February 2016
President Obama’s planned visit to Cuba next month marks the first time a U.S. president has made a state visit to that nation in 88 years.
HAVANA (Thomson Reuters Foundation) - As warming relations with the United States bring new money and tourists to Havana, some black Cubans like Miguel Campuzano Perez say racial inequalities are widening and they are being left out of a potential capitalist boom.
January 2016

The American Invasion of Cuba

January 29, 2016

ELLEN GAMERMAN AND KELLY CROW

The U.S. invasion of Cuba has begun. Following President Obama’s steps to ease travel and trade restrictions on Cuba last year, the island has been overwhelmed by cultural visitors on the hunt for the next exotic destination.
Cuentapropista (a Cuban entrepreneur) is a term that up until a few years ago would not have been used to describe a large sector of Cuba's centralized and still heavily planned economy. But despite heavy odds, I have recently witnessed the proliferation of Cuban entrepreneurship and its positive effects on the Island.
HAVANA, Jan 20 (Reuters) - Cuba is backtracking on some key agricultural reforms and experimenting with restoring price controls in the face of public demands that the government tame rising food costs.
HAVANA—U.S. citizens still aren’t allowed to invest in Cuba, but American cash has been nurturing the Communist-ruled island’s nascent capitalists, a few dollars at a time.
I was 10 years old when Fidel Castro launched the economic battle he called the "rectification of errors and negative tendencies." The Maximum Leader's rage fell, at that time, on private farmers and on the intermediaries who marketed their products.
December 2015
HAVANA (AP) — President Raul Castrois warning Cubans to prepare for tough economic conditions in 2016 despite the warming of relations with the United States.
Cuba has forecast economic growth at 2 percent in 2016, down from 4 percent this year but still favorable considering the world economy, Economy Minister Marino Murillo said on Tuesday.
HAVANA - Little over a year since the United States and Cuba began restoring diplomatic ties, the Christmas spirit is sweeping through Havana.

Investing in Cuba's Future

December 15, 2015

Don't break out your Montecristos just yet, but the U.S. and Cuba just started talks on compensation claims for expropriated property and damages. It's a promising moment for both sides -- and more is at stake than the sums directly involved.
PARIS (AP) — Cuba has reached a landmark agreement with foreign creditors over billions of dollars in unpaid debt dating back 25 years.
Cuba’s future is looking up as its relationship with the U.S. warms even as flows of Venezuelan cash decline, Moody’s Investors Service said.
Ric Herrero from U.S. group "Cuba Now" says Cuba's "DIY ingenuity" is creating more innovative products despite limited resources.
November 2015
HAVANA — Imagine block after block of buildings as grand and historic as the Cuban Club in Ybor City, except the verandas, balustrades and high-arched windows are crumbling and boarded up from age and neglect.
Next time you start complaining about an app update taking ‘forever’ to download, consider this: in Cuba, smartphone users who want to update their Conoce Cuba app?—?an entertainment guide featuring restaurant reviews, nightlife listings and more?—?need to take their jailbroken device to a neighborhood phone shop and manually update the app in person.
Cuba is seeking $8.2 billion of foreign investment in 326 projects ranging from the production of rum to an entirely new venture creating high definition, pay-per-view television.
October 2015
On his worst days, Rafa, a Cuban taxi driver, makes $60 from all his rides. A doctor in Cuba makes around $45 in a month. The colossal disparity between these two salaries is one of the many perplexing realities of the Cuban economy.
Howard Kass, Ubaldo Huerta and Hiram Centelles already are doing business in Cuba. They hope to do more next year as relations thaw and the Communist island opens itself up to more commerce with the United States.
Low commodity prices, a drought at home and Venezuela's economic crisis have created a cash shortage for Cuba's Communist government, restricting its ability to trade just as it could be taking advantage of an economic opening with the United States.
SANTIAGO, CUBA- When the communist island began allowing citizens to buy and sell their homes almost four years ago, it was a godsend for Nieves Puig Macías.
"Necessity is the mother of all invention" goes the old proverb, and few countries in the world have tested its saliency quite like Cuba.
September 2015
Dr. Marlén Sánchez Gutiérrez of the Center for the Study of the World Economy at the University of Havana analyzes the costs and benefits of Cuba's potential return to the IMF and World Bank.
For a country operating outside traditional business markets and business practices, answers to the most basic business questions aren’t so obvious.
For the Cuban economy to keep making progress on the Lineamientos adopted in 2011 by the 6th Communist Party Congress and to make good on the island's vast potential, its leaders must address some vexing challenges, including reforming its complex monetary system. Two problems stand out that will almost certainly result in a devaluation of the national peso.
When Carlos Fernández-Aballí and his fellow Cuban entrepreneurs were hatching a business plan, they knew they wanted their product to be sustainable, technology-driven and a substitute for something the island currently imports.
CUBA'S growing ranks of the self-employed will be able to apply for unsecured loans of up 10,000 pesos ($A535) under a new program devised by state-owned savings bank BPA, the official AIN news agency said Wednesday.
August 2015
Yovanni Cantillo started Ya, Cuba’s first fast-food drive-through, last year. Every six weeks since, he travels overseas to haul back suitcases full of soda cups with lids, thick straws for milkshakes, and small plastic cups for ketchup—items Cuba’s state-owned stores don’t carry.
An analysis of Cuba's system of imports by Omar Everleny Perez Villanueva of the Center for the Study of the Cuban Economy at the University of Havana.
SANTIAGO, Cuba (AP) - This 500-year-old city smells of fresh paint and varnish. Residents stroll along a recently completed harbor promenade under gleaming new streetlights, enjoying sea breezes while relaxing on newly installed metal benches.
The four surgeons in the video, masked and somber, bend over their patient, a vital-signs monitor beeping in the background. “Screwdriver,” says one. “Pliers.” Then finally, in relief, another surgeon whispers, “I think it’s good.” One more surgery with a happy ending. Except the patient is not human. It’s a cellphone...
HAVANA- Niuris Higueras jokes that her spouse calls Atelier — the Havana restaurant she started with her brother — her real husband.
July 2015
The Cuba Study Group will release a study today conducted in collaboration with Northwestern University’s Kellogg School of Management’s Risk Lab titled: “Supplying Growth: Purchasing Challenges and Opportunities for Cuban Entrepreneurs.” The report will be released at a public event at the Center for Strategic & International Studies in Washington, DC at 4pm.
HAVANA- Julio Alvarez Torres started business with a single refurbished 1955 Chevy Bel Air that had been in his family for decades and put it into service in 2010 driving tourists around the city.
June 2015
For most Americans, Cuba is an isolated third-world island country with a backward economy and a regrettable political and human rights record. After 56 years of the Castro regime, this reputation has been well-earned, but there was a time when Cuba represented something quite different.
HAVANA, June 22 (Reuters) - The Cuban economy will grow 4 percent in the first half of 2015, in line with official forecasts on the strength of increases in sugar production, manufacturing, construction and trade, Economy Minister Marino Murrillo said.
May 2015
CARACAS, May 28 (Reuters) - The Development Bank of Latin America (CAF) aims to be the first multilateral lender present in Cuba, its executive president said on Thursday, as the communist-run island seeks foreign investment amid a diplomatic opening to the United States.
When Cuban bikini maker Victor Rodríguez visited Miami this month, he was on a pilgrimage – not so much for bathing suits but for bandwidth.
Early on a recent Friday morning, four entrepreneurs visited the Greater Miami Chamber of Commerce to give a briefing on their business journeys. But the chamber breakfast in Miami, capital of Cuban exiles, was a bit unusual: All four were from Cuba, members of the island’s growing private business class.
Let others consider the national and global political implications of the thawing relations between the United States and Cuba. Ruben Valladares looks at the small paper tray for french fries as he’s having lunch at a Pollo Tropical and wonders aloud how he might produce them back at his shop in Havana.
Cuba has the most potential of any country in the world to flourish given the right vision, said Carlos Gutierrez, who was Commerce secretary under George W. Bush.
An analysis of Cuba's tax system for self-employed workers by Saira Pons Pérez of the University of Havana's Center for the Study of the Cuban Economy.
April 2015
An analysis of Cuba's financial system by Jessica León Mundul, professor at the Center for the Study of the Cuban economy at the University of Havana.
CAF-Development Bank of Latin America plans a small overture toward Cuba later this month that could be a stepping stone toward the island rejoining the international financial community.
HAVANA — With a castoff pizza oven churning out pies, Marialena Perez aspires to be the Domino’s of Havana one day, with lofty dreams of a chain of stores, maybe even a branch in the United States.
Nico has a problem. The small, turquoise bungalow he runs as a B&B in the far east of Cuba is not getting noticed. Bought last year by Canadian benefactors for Nico and his wife to run – and the Canadians to use as a refuge from the harsh Calgary winter – the business in Baracoa needs promoting.
Dr. Julio A. Diaz Vazquez of the University of Havana's Center for the Study of International Economics analyzes Cuba's foreign investment law and its implications for worker's compensation.
March 2015
A Mexican meat processing firm has become the first international company to get approval for an investment project in Cuba's first special economic development area, Mexico's foreign ministry said on Saturday.
MIAMI — After an initial wave of enthusiasm following President Obama's decision to re-establish relations and expand trade with Cuba, American businesses are hitting the brakes.
February 2015
When the U.S. State Department announced new rules for products that independent Cuban entrepreneurs could sell in the United States, it published a broad list detailing they couldn’t sell. That left many people scratching their heads over whether much of anything now produced by Cuba’s cuentapropistas would be allowed.
HAVANA (AP) — Rolling toward customs with a 60-pound suitcase filled with clothing and electronics for friends, my stomach clenched when a female agent in a light green uniform approached. As a former longtime Cuba correspondent returning after nearly six years, I thought I knew what would come next: a search of my luggage by stoned-faced military men, a scolding, maybe even a fine.
(Reuters) - The United States on Friday eased restrictions on imports of goods and services from private Cuban entrepreneurs as part of Washington's rapprochement with Havana after more than half a century of enmity.
January 2015
HAVANA-Private restaurants in Havana are exploding in number and soaring in quality, providing a treat for visitors and a surprising bright spot in a nation better known for monotonous food and spotty service.
HAVANA, Jan 15 (Reuters) - Cuba will circulate higher-denomination peso bills starting in February as the communist-run nation works toward unifying a dual monetary system that has been in place for the last two decades, official media said on Thursday.
On a sunny day this past summer, two entrepreneurs met in South Beach to talk about artisanal soaps. They exchanged stories about how they became interested in the soap-making business and discussed their favorite places to buy supplies and how to develop their favorite scents. What makes this seemingly routine meeting between entrepreneurs different is that Ricardo is a Cuban-American with an established soap-making business in Miami and Sandra is one of Cuba’s half a million nascent entrepreneurs and sells her soap out of a storefront in Old Havana.
HAVANA — Joan Perez-Garcia has tried just about everything to find a decent-paying job in Cuba's state-run economy. He became an elementary schoolteacher, but it only paid the equivalent of $6 a month. He became a train mechanic, and that increased his salary to $10. Working as a construction worker and barber were no better.
Cuba has made some important market-oriented changes, but much remains to be done to revive the island's anemic economy.
Cuba’s dual-peso system, in place for 20 years, will soon be no more and cigar maker Brascuba is ready for the currency’s unification.
December 2014
Alfonso Morre has spent nine years studying mechanics and civil engineering in order to become -- a Havana taxi driver. Following President Barack Obama’s decision to ease the embargo on Cuba, he is hoping for something better. Driving a 26-year-old Russian-made Lada through the cobbled streets of Cuba’s capital, Morre says he needs his engineering degree just to keep the car on the road. That may be about to change.
With glasses raised, some Cuban have kept up the ritual toast “Next Year in Havana” as the clock strikes midnight on New Year's Eve. It has gone on for decades, ever since the 1959 Cuban Revolution brought Fidel Castro to power. Now, for the first time in a long time, things may be quite different in their homeland in the coming year — just not in the way many expected. For some, it will hardly be a cause for celebration. They had envisioned a joyous, triumphant party as the dictator died, democracy returned to the island, and the U.S. and Cuba once again became friendly neighbors...
HAVANA, Dec 24 (Reuters) - Cuba released more information on its fragile external finances this week than it has in over a decade, as it seeks foreign investment and credit following its sudden improvement in relations with the United States.
An analysis by Rafael Betancourt and Omar Everleny Perez of the portfolio of opportunities created by Cuba's new Foreign Investment Law No. 118.

Building the new Cuban economy

December 16, 2014

Just a couple years ago, tourists who wanted to sample one of Cuba’s paladares were on their own. A bus from state tour operator Havantur wouldn’t think of stopping to allow visitors to dine on roast pork or grilled red snapper at one of these small private restaurants.
Unifying Cuba’s cumbersome dual-currency system tops the list of reforms the government says it will carry out, but analysts say other changes — from measures to speed up foreign investment to a new tax structure — are critical to deepen and expand the reforms.
In July 2007, while serving as acting president as his brother underwent medical treatment, Raúl Castro delivered a startling indictment of the Cuban economy when he railed about the inefficiencies of the dairy industry. His description of the onerous and expensive mechanism to get milk from cows to dinner tables was old news to Cubans, who have been subjected for decades to a centrally planned economy that is among the world’s most dysfunctional and anomalous. It soon became clear that Mr. Castro’s unexpected candor that day signaled the start of a transformational era for the island’s economy.
November 2014
For almost two decades, I have watched entrepreneurship explode across Latin America and the Caribbean, empowering citizens, transforming economies and changing lives. In sectors ranging from restaurants and small manufacturing to high tech, entrepreneurs are changing the economic and social landscape of the region. Perhaps most important, they are also generating jobs. Across the region, 60 percent of employees work for businesses with five or fewer employees. In Mexico, 72 percent of employment comes from micro-, small- and medium-size businesses. In Brazil, small enterprises create two out of every three jobs.
Nov 13 (Reuters) - They have already earned a place in the firmament of the world's best chefs. Now Basque chef Andoni Luis Aduriz and Mexico's Enrique Olvera have set their sights on one of the world's toughest markets: communist-run Cuba. The island has seen a restaurant boom in recent years, fed by market-style reforms enacted under President Raul Castro, though ingredients can be scarce.
In an attempt to jumpstart Cuba's economy and shed unprofitable state enterprises, the government is converting select businesses into cooperatives. It's an adjustment for many Cuban workers.
HAVANA-Cuba asked international companies on Monday to invest more than $8 billion in the island as it attempts to kick-start a centrally planned economy starved for cash and hamstrung by inefficiency.
Foreign Commerce Minister Rodrigo Malmierca Diaz announced a list of 246 potential projects that would cost $8.7 billion to build, from a pig farm to an auto plant. The menu of possible investments is a key step in a push for foreign capital that includes the relaxation of investment restrictions and the creation of a special trade zone around a new deep-water port west of Havana.
October 2014

How Business Can Change Cuba

October 17, 2014

Yamina Vicente has lived in communist Cuba her whole life. But it didn’t take her long to learn one of capitalism’s handier skills: creating market demand. Baby showers were practically unheard of in Cuba until last year, when Vicente started an event planning company called Decorazón. She learned about the gift-giving parties from American women visiting Cuba, then persuaded some of her clients in Havana to throw their own.
Cuba’s plan to replace the 20-year-old dual-currency system with a single, unified peso currency is a critical task in the process of preparing the economy for the global market, the country’s central bank chief said.
September 2014
(Reuters) - Cuba offered to free jailed Canadian executive Cy Tokmakjian in return for $55 million and company assets, his company said on Monday, but the deal fell through because the firm didn't have the money and the businessman wanted to clear his name.
HAVANA (AP) — Cuba's state-run tourism industry is increasingly doing business with the country's new class of private entrepreneurs, trying to improve quality of food and lodging while maintaining a grip on the sector's biggest sources of foreign exchange.
A Miami-based publication says it is launching a new effort to measure Cuba’s economic pulse. The Cuba Standard Economic Trend Index, compiled by a team of Cuba-born economists, will offer a monthly outlook on Cuba’s economy by using an “independent measurement,” according to a statement released last week.
The Cuban Domestic Trade department put the number eateries being privatized at 9,000 -- compared with 1,261 private family-run restaurants already operating. The state will still own the land the restaurants sit on.
The Cuban government approved 498 non-agricultural cooperatives since the first 124 were created a year ago as a new model of economic enterprise, Cabinet secretary Homero Acosta said.
(Reuters) - Cuba's experiment with free-market reforms has unintentionally widened the communist-led island's racial divide and allowed white Cubans to regain some of the economic advantages built up over centuries.
August 2014
MIAMI – Cuba is a land that remains a mystery to most Americans. Are the economic changes instituted in recent years by President Raul Castro working? Can the dissident movement ever gain enough traction to overthrow the Communist government? Just how good is its acclaimed but flawed health care system? How many superstar baseball players are left down there? But when looking to the future of the island – a post-Castro period that is often contemplated by American government officials, business owners eager to explore that market and Cuban-Americans curious about their role in the island's future – one question intrigues me most: What kind of human capital is left in Cuba?
When you’ve spent your entire life on a communist island where staples like eggs and chicken are rationed, lunch in Miami can be overwhelming. Ask Sandra Aldama, a Cuban mother and former special education teacher who made her first visit to the United States this month. Settling into a downtown Italian restaurant as waiters whizzed by with plates of fettuccine alfredo and veal parmesan, Aldama was almost certainly reminded of what the average Cuban can’t get at home.
What the administration can do is remove obstacles to the incipient Cuban private sector. Let’s start with the Internet. The United States should do everything we can to facilitate Internet access for Cuban citizens. Ordinary Cubans wait for hours to purchase Internet time at Cuban telephone company offices, the closest thing there is to Internet cafes.
If a journey of a thousand miles begins with a single step, perhaps a significant economic and social opening might gain footing in Cuba with the success of Sandra Aldama’s soap micro-business, or Marianela Pérez’s Pizzeria Nella.
A fledgling private sector is taking root in communist Cuba. Last week a group of Cuban entrepreneurs made an unprecedented visit to Miami to learn how to run a business -- and to convince Americans they’re the real deal.
One of the Cuban women makes fancy soaps. Another is a party planner, and a third owns a combination beauty parlor-gym. One owns a restaurant; another dreams of expanding her pizza parlor “to the rest of Cuba and more.”
July 2014
HAVANA — Cuban parliamentarians met Saturday in one of their twice-annual sessions, with the country’s limping economy and the 2014 budget foremost on the agenda.
June 2014
When you arrive at the Jose Marti International Airport in Havana, you're greeted with a barrage of billboards with the popular Cuban government slogan promoting tourism: "Cuba, where the past and the present converge."
April 2014
The Moody’s credit rating firm has dropped Cuba’s low ranking even further, saying that the island is vulnerable to an “elevated risk” of an economic collapse in Venezuela as well as “abrupt and disorderly” changes at home.
(Reuters) - Cuba's slow, cautious reforms to revive its state-run economy suddenly burst into life at businesses like Karabali, a Havana nightclub owned by a 21-member cooperative.
March 2014
HAVANA, March 21 (Reuters) - Cuba announced sweeping wage increases for its 440,000 healthcare workers on Friday, including those sent abroad, citing the billions of dollars they earn for the country and the need to improve local services.
(Reuters) - Cuba is laying plans to move to a single currency, a reform that many feel is one of the toughest challenges facing President Raul Castro as he tries to kick-start the Communist country's moribund economy.
HAVANA, March 4 (Reuters) - For the third consecutive year Cuba's reorganized sugar industry is failing to perform up to expectations, increasing pressure on the government to open up the once proud sector to foreign investment.
December 2013
November 2013

Non-agricultural cooperatives in Cuba

November 7, 2013

A new way to unleash the forces of production?

University of Havana economist Yailenis Mulet explores the recent emergence of non-agricultural, urban cooperatives in Cuba.
October 2013
Alberto Trejos examines the Costa Rican development experience over the last 30 years and offers the most salient elements of its success for consideration in forming Cuban economic policy.
May 2013
HAVANA – Cuban customs authorities starting on Monday authorized individuals to import electric appliances and mopeds in a resolution eliminating the prohibition on such imports that had been in force since 2005.
April 2013
HAVANA (Reuters) - On weekend nights in Havana, young hipsters fill the sidewalks at a busy intersection near the seafront and spill into the park below, passing rum bottles between them, smoking cigarettes and playing guitars.
Change and Cuba. After 54 years the world is holding its breath. Fidel Castro said in 1959, “This time the revolution is for real.” In 2013 is change for real? Cuban blogger Yoani Sánchez’s message, delivered repeatedly during her recent presentations in the United States and Europe, is that, yes, it is true.
March 2013
HAVANA (Reuters) - At an informal housing market on Havana's historic Paseo del Prado, Renaldo Belen puts the hard sell on a prospective buyer under a tree hung with hand-lettered signs advertising homes for sale.
February 2013
Havana, Cuba — In this once spectacular tropical city, three buildings collapse from neglect every single day. There has been little infrastructure investment in 50 years and the average worker earns $20 a month. By almost any economic measure, socialism under Fidel Castro has been an abject failure.
December 2012
Cuban President Raul Castro said that economic growth will be at an "acceptable" 3.7 percent next year as the communist government eases control over businesses and employment.
Cuban Economy Minister Adel Yzquierdo Rodriguez said the island's economy would grow 3.1 percent this year, trailing earlier forecasts of 3.4 percent, after the government failed to complete construction projects on time.
November 2012
Dr. Juan Triana of the University of Havana analyzes the recent expansion of the self-employment sector and its impact on the cuban economy.
HAVANA -- Cuba's government will begin renting state-owned restaurants to workers who want to run them independently, authorities announced Friday in the latest step of President Raul Castro's economic overhaul.
Dr. Antonio Romero, profesor of the Center of the study of the International Economy at the University of Havana, analyses Cuba's reinsertion into the international economy.
October 2012
Mexico - Los gobiernos de México y Cuba celebraron esta semana la primera reunión ?para la profundización comercial? bilateral que podría modificar el acuerdo que mantienen desde 2001, reveló hoy la Secretaría (ministerio) de Economía mexicana.
Nathan Sandler, founder of Ice Canyon, a $2 billion hedge fund based in Los Angeles, is leading a lonely crusade against one of the toughest departments in the U.
September 2012
HAVANA (Reuters) - Cuba's failure to encourage more foreign investment is crippling its economic performance and putting its goal of sustainable growth in danger unless changes are made, local experts and diplomats said this week.
August 2012
HAVANA - Cuba says 22 percent of the island's workers were employed in nongovernmental jobs last year, up from 16 percent in 2010.

The increase in nongovernmental employment was most noticeable in agricultural cooperatives and in self-employment, both areas that are growing because of President Rau
Posted on August 30, 2012

HAVANA (AP) - Twenty-two percent of Cuban workers were employed in non-governmental jobs last year, up from 16 percent in 2010, according to statistics released Thursday.
HAVANA — The scene at the park in Havana’s Vedado district is typical enough, with a handful of boys kicking a soccer ball through trees while dozens of gray-haired seniors bend and stretch to the urgings of a government-employed trainer.
Cuba faces a difficult economic situation despite Raúl Castro’s reforms, and a military-led economic transition appears more likely than a Vietnamese or Chinese model of change, Cuba analysts said Thursday.
July 2012
Cuban bank assets deposited in an international group of financial institutions showed a second stunning plunge in a row, with the total nose diving from $5.65 billion on Sept. 30 to $2.8 billion at the end of March.
HAVANA, July 26 (Reuters) - Cuba adopted a new tax code this week and said it would loosen regulations on some state companies while turning others into cooperatives, as one of the world's last Soviet-style economies moves in a more market-friendly direction.
Cuba’s communist government will set aside $100 million to help establish private cooperatives as President Raul Castro takes further steps to boost economic growth on the island.
HAVANA -- Cuba's economy czar said Monday that plans are in place to begin an experimental phase of non-state cooperatives in sectors ranging from food services to transportation by the end of the year.
HAVANA - Cuba's National Assembly is gathering for a twice-a-year legislative session, with the country's economic reform plans on the agenda.

Communist Party newspaper Granma says lawmakers are also considering a new tax system and the budget.
HAVANA — Cuba’s economy czar said Monday that plans are in place to begin an experimental phase of non-state cooperatives in sectors ranging from food services to transportation by the end of the year.
Cuban small businesses, most of which work with goods that arrive with travelers or in shipments from the United States, are experiencing higher import fees from the government, which the businesses intend to pass along to customers.
HAVANA - Cuba is implementing stiff new import taxes on merchandise entering the country.

Starting in September, Cubans who travel abroad more than once a year will have to pay $10 a kilogram ($4.
HAVANA - Cuba is implementing stiff new import taxes on merchandise entering the country.

Starting in September, Cubans who travel abroad more than once a year will have to pay $10 a kilogram ($4.
HAVANA — Nearly two years into the Cuban government’s economic overhaul aimed at slashing public payrolls and bolstering private enterprise, the reforms have slowed so much that many Cuban entrepreneurs and intellectuals are questioning the aging leadership’s ability — or will — to reshape one of the world’s last Communist systems and shift nearly half of the island’s output to private hands.
Miami Herald

Cuban bank assets deposited in foreign financial institutions that belong to an international reporting system showed a stunning plunge of $1.
The drop of $1.55 billion in the last quarter of 2011 has raised eyebrows
June 2012
HAVANA (AP) - For decades there's been no such thing as a commercial radio or TV spot in Cuba. Ditto for billboards, website banner ads, and newspaper classifieds.
Associated Press

HAVANA - For decades there's been no such thing as a commercial radio or TV spot in Cuba. Ditto for billboards, website banner ads, and newspaper classifieds.
May 2012
(CBS News) HAVANA -- As Cuba restructures its economy, the limited private sector is claiming more public space, even making it into the new edition of the state-owned phone company's Yellow Pages.
HAVANA (Reuters) - Cuba's reform plans to attract more overseas investment are off to a slow start as the government focuses more on regulating existing foreign joint ventures than encouraging new ones, businessmen and diplomats say.
Booking a room at a "casa particular," a Cuban bed and breakfast, is a way to see the island through the eyes of the people
April 2012
Entrepreneurship is no longer illegal in Cuba, but business owners on the island still face difficulties
HAVANA - Cuban exports of goods and services generated $9 billion in income in 2011, a 20 percent increase over the previous year, a high-ranking government official said Tuesday.
SANTIAGO, Cuba -- SANTIAGO , Cuba As Denia Ojeda Oliva combs a sable tint into a customer’s hair at the Ibis beauty salon, she laments the high cost of beauty supplies.
March 2012
(CBS News) Pope Benedict XVI began his second day in Cuba with prayers near Santiago, at the shrine of the country's patron saint.
February 2012
HAVANA — As fixer-uppers go, Carmen Martínez’s derelict shotgun house is no cakewalk. The living-room roof collapsed 15 years ago, and the porch soon followed suit, leaving two teetering columns with nothing to hold up. The bathroom is a squalid privy, and the kitchen consists of a sink with no taps and two oil drums full of water.
January 2012

Lessons for Cuban business

January 30, 2012

President Raúl Castro wants the recent liberalisation of small businesses to bolster Cuba’s sagging economy and absorb the 1m state workers he says will eventually be laid off.
As Raul Castro calls a rare National Conference of Cuba's Communist Party, an army of entrepreneurs is desperate to do more business. But does their energy outstrip the slow pace of reform?
(Reuters) - For the first time since they were nationalized in the 1960s, Cuba has opened the door to private management of some state-run cafes and food service outlets, often scorned for bad service and poor food.
(Reuters) - Hundreds of handwritten signs stuck on doorways and in windows announce "se vende" or "for sale" in provincial cities and towns across Cuba as the island's nascent housing market begins to bloom.
HAVANA — Cuba is launching a plan to subsidize the construction and repair of private homes, an effort the communist government hopes will lead to better use of limited funds and stimulate private enterprise. Under the program, citizens will be eligible for as much as 80,000 Cuban pesos ($3,300) in aid to build a family home, though most will get far less.
It has been nearly four years since Cuban leader Rául Castro announced plans for a series of reforms to raise Cubans’ living standards and tie personal gain to individual work and initiative. Change came at a glacial rate for the first few years.
December 2011
HAVANA, Dec. 29 (UPI) -- As seismic shifts go, Cuba's embrace of a socialist-coated market economy is going ahead in full stream as if it was the most natural thing for its authoritarian government to do in between Communist Party conferences and populist pep talkathons.
HAVANA (AP) - A year at the vanguard of Cuba's economic revival has not brought Julio Cesar Hidalgo riches. The fledgling pizzeria owner has had his good months, but the restaurant he opened with his girlfriend often runs at a loss.
HAVANA - Cuban banks have begun offering bank credits to people hoping to redo their home or invest in a private business, continuing a series of free market reforms pushed by President Raul Castro.
Banks in Cuba have begun offering loans to individual citizens, in the latest free-market reform in the communist-run island.
An old joke I heard for the first time more than 20 years ago in Havana says that the three biggest achievements of the Cuban revolution are health, education, and low infant-mortality rates, and that its three biggest failures are breakfast, lunch, and dinner.
November 2011
(Reuters) - The Cuban government will begin contracting out some services to the private sector next year in a break from the state-dominated past aimed at helping small business develop, government insiders said on Monday.
HAVANA — Cuba announced a new credit system Thursday that will offer loans to small-business owners, private farmers and other citizens beginning next month, and established rules for paying independent contractors who do business with the state.
Small businesses in Cuba began to spring up about a year ago, after the government launched a programme of free market reforms aimed at kick-starting the island's socialist economy.
HAVANA (AP) — Cuba announced Thursday it will allow real estate to be bought and sold for the first time since the early days of the revolution, the most important reform yet in a series of free-market changes under President Raul Castro.
October 2011
Few times, if any, in Cuba’s modern history has there been such an opportunity to help fuel the seeds of change on the island. The process of economic reforms put in place by Raul Castro, though limited and often contradictory, provide a window of opportunity help thousands of Cuban entrepreneurs succeed in starting and operating their own, independent businesses.
September 2011
HAVANA — Cuba legalized the sale and purchase of automobiles for all citizens on Wednesday, another major step in the communist run island’s economic transformation and one that the public has been clamoring for during decades.
'There has been resistance to the changes that (President) Raul (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.
Since Cuba's communist government loosened its grip on the economy, thousands of small private businesses have sprung up. It's a new frontier for budding capitalists, but competition is fierce and advertising is still tightly restricted.

Get used to it

September 17, 2011

WHEN Raúl Castro, Cuba’s president, announced last year that the government would cut its payroll by up to 20% and promote self-employment, state media hailed the birth of a “tax culture”. As most Cubans had never paid income tax, the Communist newspaper published a guide to the concept. Government economists predicted a 400% increase in tax revenue from individuals.

Taxes in Cuba: Get used to it

September 17, 2011

WHEN Raúl Castro, Cuba’s president, announced last year that the government would cut its payroll by up to 20% and promote self-employment, state media hailed the birth of a “tax culture”. As most Cubans had never paid income tax, the Communist newspaper published a guide to the concept. Government economists predicted a 400% increase in tax revenue from individuals.
HAVANA, Cuba — On this island of constant shortages and scarcities, the latex condom has uses that stretch far beyond the bedroom.
Mr Obama, speaking to Spanish-language correspondents in Washington, said Cuba remained a "throwback" to the 1960s.
HAVANA, Sept. 10 (Xinhua) -- New decrees and regulations approved last May to ease self-employment restrictions came into force Saturday, according to the Official Gazette of the government.

Cuba: The times are changing

September 2, 2011

At the beginning of this year, the Cuban government took a dramatic step away from its socialist policies of the past to break new ground: it began privatising its economy to create private sector jobs and issued thousands of licences for its citizens to start their own businesses.
August 2011
After decades of having to try to keep 1950s American cars running, Cubans may finally get to a chance to buy new cars.
University of Havana Profesorr and Economist Omar Everleny Perez Villanueva examines the updating of Cuba's economic model.
Her son pulled on her skirt asking for candy, while the guard demanded the ticket from the cash register and someone asked, insistently, for the purse-check ticket. In the midst of all this madness, she made the mistake of not checking her change for the purchase, a little over 6 CUC that had to last until the end of the month. When she got home she discovered that hidden among the coins was one with the face of Che Guevara, who, with his majestic gaze, tried to make himself pass for a one convertible peso coin.

Is Cuba Going Capitalist?

August 15, 2011

Who says dictators don't have a sense of humor? Cuba's Castros have an undeniably comic side, as evidenced by the regime's announcement earlier this month that it plans to provide agricultural advice to 14 Venezuelan states. It sounds like a bad joke. Would you take technical assistance from a government that has turned the chicken into an endangered species in its own country?
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.
HAVANA TIMES, August 11 — For years, many people have gotten by “por la izquierda” (literally “on the left,” or doing business under the table). Some have had to do it because they don’t make enough on their government wages, others because they prefer the freedom of earning a living without having to account to anyone else.
HAVANA — Daily for the past five months, Yusdany Simpson has been at her street-side cafeteria under its gleaming white parasol, doing her part in Cuba's economic makeover by churning out mayonnaise sandwiches at 12 cents a pop.
Reporting from Havana—They began with a hose and a few rags when Amilcar Santa Cruz and his 30 siblings and cousins set up a carwash in Havana's Miramar district, a little family business to help make ends meet.
HAVANA — Production of Cuban cigars and tobacco leaf are on the rise after falling on hard times in the country famed for its "puros" due to smoking bans and the international financial crisis, according to local reports.
HAVANA — Cuban authorities have ordered cuts of up to 60 percent in prices for agricultural equipment and other farm items to stimulate newly authorized private farmers who are cultivating state land under an economic overhaul.
MOSCOW, Aug. 1 (UPI) -- Russian oil company Gazprom Neft announced it was moving to develop four oil and natural gas blocks off the Cuban coast in the Gulf of Mexico.

Drill, Bebé, Drill

August 2, 2011

Sometime over the next three months, if all goes according to plan, Cuban workers on a Chinese-built, Spanish-owned rig will start drilling for oil in the mile-deep waters just off the north coast of Cuba, 70 miles from the Florida Keys.
July 2011
Cuba’s struggle toward a more efficient economy continues “without a truce” but its advances remain meager, Vice President José Ramón Machado Ventura said Tuesday on the anniversary of the birth of the Castro revolution.
HAVANA -- Each morning before the sun rises too high, Cubans gather at a shaded corner in central Havana, mingling as though at a cocktail party. icebreaker is always the same: "What are you offering?"
HAVANA — Cuba has more than 900 agricultural experts advising farmers in Venezuela, an official Cuban news agency said Wednesday.
HAVANA — Want some paprika-infused chorizo sausage? How about a bit of buffalo mozzarella?

Or maybe you just need more cooking oil this month, or a homemade soft drink you can afford on paltry wages. Perhaps you are looking for something more precious, such as an imported air conditioner or some hand-rolled cigars at a fraction of the official price.
HAVANA — Cuba is lowering bulk prices for goods ranging from marmalade and mayonnaise to tools and CDs to support newly independent workers and small businesses that lack a wholesale market, official news media said Monday.
In one of her rounds through the streets of Havana, Yoani Sánchez once again confirms that “we Cubans are thirsty for change.” The hustle and bustle of small kiosks selling fruit shakes and other snacks on the most centric avenues of the city show that its inhabitants have set their hearts into achieving a certain degree of prosperity amid cracked pillars and balconies on the brink of collapse.
CARACAS, Venezuela — President Hugo Chavez said for the first time Wednesday that he expects to undergo chemotherapy or radiation treatment, providing the clearest picture yet of his prognosis three weeks after undergoing surgery that removed a baseball-sized tumor.

The Cuban Grapevine

July 13, 2011

Somehow I’ve ended up helping to cater a party in Havana, and a burly, jovial architect called Rafael is asking me whether I’ve heard of Radio Bemba.

Basically it’s the Cuban grapevine: “Bemba” is a slang word for big lips, and the expression has its origins in the way Fidel Castro communicated with his men in the 1950s when they were holed up in the Sierra Maestra building the revolution. Today, in a nation where the only official media are state-controlled, Radio Bemba has become shorthand for the word-of-mouth information network, which is by far the quickest (and often the most reliable) way to find out about anything from baseball chat to celebrity gossip to news of the latest defection to the United States.
HAVANA — Cuba says it has extended more than 13,000 farm credits under an agricultural overhaul launched by President Raul Castro.
HAVANA — When Raul Castro acknowledged recently that it was time to hand over power to younger leaders, few were expecting the 80-year-old president to name somebody even older than himself as his No. 2.
HAVANA — Want some paprika-infused chorizo sausage? How about a bit of buffalo mozzarella? Or maybe you just need more cooking oil this month, or a homemade soft drink you can afford on paltry wages. Perhaps you are looking for something more precious, such as an imported air conditioner or some hand-rolled cigars at a fraction of the official price.
Cuba would plunge swiftly into chaos if Venezuela’s ailing President Hugo Chávez is replaced by someone less willing to subsidize Havana to the tune of $3.5 billion this year, analysts said Friday.
Cuba will authorize limited housing and car markets by 2012, the Communist party newspaper Granma said on Friday, a move awaited by local residents since the early 1960s when home and most auto sales were banned.
June 2011
For over 50 years, US policy toward Cuba has had the single aim of isolating Cuba from the outside world and forcing the collapse of the island nation’s economy in hopes of bringing about regime change. Other than a small, vocal group in Miami and Washington, the rest of the world now acknowledges the obvious truth that US policy has been a categorical failure. It is less often recognized, however, that US policy may actually have made change on the island less likely. An amendment last week proposed by Florida Rep. Mario Diaz-Balart, a longtime defender of the status quo in US policy toward Cuba, is the most recent evidence of this fact.
'Until about a year and a half ago, you practically couldn't talk about this issue, but now the situation is different,' a European diplomat told IPS. He preferred not to be identified, to avoid undermining progress on the issue, which has its own particular complexities in the case of Cuba. 'The idea of microcredit went from being almost sacrilege to something interesting,' he noted.
Cuba’s feared “Lady Anti-Corruption” has reported a setback in the fight against malfeasance in Havana — a top priority of Raúl Castro’s government as it tries to overhaul the island’s foundering economy.
HAVANA, June 2 (Reuters) - More Cuban farmers are opting to grow sugar cane due to higher prices and other incentives being offered by the Sugar Ministry as part of plans to revive the depressed crop, industry sources said this week.
May 2011
HAVANA (Reuters) - The salvation of socialism in Cuba is taking some odd turns, with words like "competition," "marketing" and "opportunity" being heard for the first time in decades on the communist-led island.
HAVANA — Cuba says 310,000 people have become licensed independent workers as the government tries to lift a foundering economy by allowing some private-sector activity.
The Cuban government has agreed to expand the types of private businesses allowed to hire non-family members as employees, in an apparent attempt to speed up the push to create new jobs for the 1.3 million public employees it plans to lay of
Havana, Cuba (CNN) -- The Cuban government has agreed to allow all private businesses to hire employees, something previously restricted to a limited number of occupations, state media said Tuesday.
HAVANA -- Ramon Menendez went to his grave in the 1980s believing that his family grocery, shut down by Fidel Castro's revolution, would one day rise again. In January it finally happened.
Cuba’s ruling Communist Party finally published its pie-in-the-sky list of proposed economic reforms on Monday, raising both high hopes for a more efficient economy and deep questions about exactly how that would be achieved. The 313 “guidelines” proposed expanding the sale of homes and cars and the ability of Cubans to travel abroad as tourists, creating production cooperatives and slashing state subsidies and payrolls, among many other changes. Endorsed last month at a Communist Party Congress, the proposals are designed to rescue a crisis-plagued economy by opening the doors to private business activity without totally abandoning Cuba’s half-century of Soviet-styled central controls. But the proposals published in the Granma newspaper, the official voice of the party, provided few details on how those changes would be carried out, leaving optimists and pessimists alike to read whatever they wanted into the list. Cars already can be bought and sold if they were manufactured before 1959 — the year that Fidel Castro’s guerrillas seized power — and houses can be legally exchanged in a complicated system of “permutas” or swaps. Cubans already can travel abroad as tourists — as long as the government grants them “white cards” — the coveted permissions to leave the country, and return without being considered permanent émigrés who loses all their properties on the island. Dissident Havana economist Oscar Espinosa Chepe said he was still analyzing the guidelines but considered it “very positive” that they recognized the need for various forms of production, including cooperatives and what Cuba calls “self-employment” — micro enterprises such as family restaurants and party clowns. But he added that guideline 265 — “to study a policy that would make it easier for Cubans to travel abroad as tourists” — could easily create chaos because “a lot of people would leave for good because of the economic conditions that we face.” Though officially only “guidelines,” their sensitivity is reflected in their history. Raúl Castro first proposed 291 items that closely matched his own thinking on reforms late last year, then threw it open to a national debate. By the time the Communist Party Congress opened April 16, more than 40 items had been dropped, one-third had been reworded and the total had grown to 311. And when the government announced Sunday that they would be published on Monday, they had grown to 313. They are expected to be put into effect by either government decrees or laws approved by the National Assembly of People’s Power, which usually meets only for two brief sessions a year. The latest list of 313 proposals was not available outside Cuba as of late Monday, but news agency reports from Havana noted some of the details mentioned or left out of the items. The section on buying and selling home, for example, made no mention of what kinds of taxes or fees will be charged on the transactions, according to the Associated Press. Blogger Yoani Sanchez told journalists that she was skeptical about item 265 because it made no mention of lifting the need for the “white cards.” Many Cubans already now receive permission to travel abroad, for tourism or family reunions, to any country that would issue them visas, though the “white cards” are often denied to dissidents, physicians, minors and members of the military. One proposal on foreign investment described it as needed but noted that it should bring with it advanced technologies and management methods as well as new export markets in order to create skills and capital for new jobs. Mid-sized government enterprises could be spun off as cooperatives run by their current employees, according to the news reports, and would be allowed to sell their products on the open markets. But there was no word on who would set the prices for the goods produced. Some state-owned buildings could be turned into private residences to ease Cuba’s critical housing shortage, according to an Associated Press report. The government also wants to eliminate the country’s burdensome two-currency system and legalize the sale of construction material at unsubsidized prices. Other guidelines calls for the continued shrinking of the ration card, which provides all Cubans with a basic basket of food and personal items per month at highly subsidized prices, and replacing it with a system of subsidies for poor families only. One big issue now is whether any reform enacted will have the desired impact in a country where tight government controls mean that few things can be done legally — but almost anything can be done illegally — Espinosa Chepe told El Nuevo Herald. Cubans have been illegally buying and selling cars and homes for decades, often paying bribes to the very government officials who were supposed to be blocking or catching and punishing such deals. “Now comes the strong fight over these points,” Chepe said, “truly the most profound changes in 52 years but one could argue that not enough for the level of crisis that we face in Cuba.” Read more: http://www.miamiherald.com/2011/05/09/v-fullstory/2209271/cuba-publishes-list-of-proposed.html#ixzz1LxRNF9Gi.
HAVANA (Reuters) - Cuba published on Monday economic reform guidelines approved by the ruling Communist Party that include proposals for the sale of homes and cars and possible changes to make it easier for Cubans to travel abroad.
MEXICO CITY — For the first time since the Communist revolution 52 years ago, Cubans will be allowed to buy and sell houses and newer automobiles, and they may be able to travel abroad as tourists more freely, under policy changes announced Monday that are intended to shake up the country’s foundering economy.
MIAMI - Ernesto is a 26-year-old mechanical engineer turned entrepreneur. Laid off, he chose a new profession among the list of nearly 200 new private businesses legalized by the Cuban government. He decided to become a locksmith, because a relative recently brought the required machine from Italy. But he still needed cash to buy blank keys. "When you start a business, you need money," said Ernesto, who spoke by phone from Havana and asked that his last name not be published. "Money is something not too many people in Cuba have." Ernesto borrowed $50 from two friends, tapping into an informal credit economy that is surging as the backbone of massive new reforms the Cuban government hopes will help it shed 1.8 million workers in the next three years. But experts say there's only so far fundamental changes to the Cuban economy can go as long as small-business owners have to rely on friends and family to finance their endeavors. A lack of access to capital, crushing taxes and improvisation from the government on a system it has little experience testing are among the daunting list of challenges that test Cuba's economic future. "The Cuban government started off with a bomb by saying, 'We have to lay off 500,000 people,' " said economist Carmelo Mesa-Lago, a professor at the University of Pittsburgh. "They should have begun by saying, 'We are going to create 500,000 new private jobs,' then, once successful, announce the layoffs. They put the solution before the problem." The Cuban Communist Party met last month for the first time since 1997 and just the sixth time in its history. Nearly 1,000 delegates from around the country met in Havana to tinker with a long list of so-called "guidelines" aimed at fixing a troubled economy. Back-to-back hurricanes, falling commodities prices and a bloated work force finally forced the Castro regime to tap into what it had long avoided: a market economy. Nearly 180 new businesses were approved, and for the first time made it legal for Cubans to hire employees. The party congress made changes, but the revisions have not yet been published. Among the details experts are waiting for are updates to item No. 51, which says the Cuban government will create a credit system for new businesses, considered key to the program's success. "I guess loans would be welcome here, but you would have to know if your business is going to pay off," Ernesto said. "There are a lot of new businesses and a lot of competition. Are we going to make enough to pay the loans back - with interest?" The informal loans he received were interest-free favors. A lot is at stake. The Cuban government doled out huge swaths of unproductive land to peasants in the past few years, but acknowledges that much of that land is still idle. Farmers faced too many unexpected obstacles, including being unable to purchase required supplies. "This is a major issue," said Gary Maybarduk, a former U.S. diplomat in Havana. "The tiny guy on the street maybe doesn't need a lot of capital, and they say there's a lot of money under mattresses in Cuba. But if you want to do anything significant - make something, hire five people - it takes money." Although the Cuban government's party guidelines said it would "provide necessary banking services," it did not say how. The cash-strapped Cuban government already has a heavy debt load. "Where are they going to get the money for this?" Mesa-Lago said. "They did not say when they are going to do this, or how." The European Union, Spain and Brazil have offered to finance micro-lending projects, but the Cuban government hasn't said whether it will accept the offers, Mesa-Lasgo said. The Cuba Study Group, a U.S.-based organization that advocates better relations between the two countries, recently announced a plan to raise $50 million for a micro-loan fund - if the Cuban government ever allowed such a thing. "It's not possible under Cuban law to distribute the money, so no sense having it pile up in banks," said Carlos Saladrigas, who heads the Cuba Study Group. "We believe it's more important than ever to assist the Cuban entrepreneur. Given the lack of liquidity, the mortgages process will likely be slow and fraught with problems." A recent report commissioned by the group suggested websites such as [1]http://www.kiva.org - where people donate or loan money to small-business owners around the world - could provide the solution. It also suggested that the Obama administration further increase the amount of money Americans can send to people on the island, currently capped at $2,000 a year. Americans send $1 billion a year to Cuba, and much more financing is expected during the 380,000 visits that U.S. residents make there annually. But that dependence on relatives abroad could pose problems for the island's large Afro-Cuban population, which has far fewer family members in the United States. "Blacks have the most to lose as government subsidies dry up," Saladrigas said. Cuban business owners also lack the training in accounting, financing and marketing to make their ventures work, he said. Mesa-Lago stressed that financing may not be the most serious of the new business owners' problems. The proposed guidelines levied several different taxes and fees on the self-employed at rates that increase as the number of employees grows. "That's killing the goose before it lays the golden egg," Mesa-Lago said. "It's clear to me that taxes are very high, must be studied and corrected." Cuban economist Pavel Vidal Alejandro, a professor at the Center for the Study of the Cuban Economy in Havana, said he and other colleagues had recommended fewer taxes and a grace period to pay them. Speaking at a recent conference in New York, Alejandro noted that there could be more minefields ahead. About two-thirds of the 171,000 new business licenses granted so far this year went to people who were already out of work, suggesting that the vast reforms may not be enough of a safety net for the half-million people who are expected to soon be out of a job. "If those business licenses were intended for people who are now getting laid off, and they are being occupied by people who did not have jobs," he said, "then you could have a gap there." The Cuban government has said the changes may have to be delayed for up to three years to work out the kinks. "This started three months ago; all these things can't be answered yet," Cuban economist Omar Everleny Perez said at the City University of New York Graduate Center conference. "But there's a decision to change the country, and that's what's important." .
HAVANA (AP) — Cubans will get a first look Monday at the text of highly anticipated economic changes approved at last month's Communist Party Congress.

Will the proposed economic reforms in Cuba succeed?

May 5, 2011

Yes: Omar Everleny Pérez; No: José Antonio Ocampo

In this issue:

These reforms will update the Cuban model and spur economic growth.

The reforms do not go far enough to jump-start the economy and protect the vulnerable.
April 2011
GUIRA DE MELENA, Cuba, April 28 (Reuters) - A solitary man trudges through a palm-lined corn field in the Cuban countryside, pulling behind him a rickety contraption that President Raul Castro would love.

Smoked out

April 29, 2011

ONE of the reforms approved at this month’s Congress of Cuba’s ruling Communist Party was a change in the treatment of the country’s 3,000 or so state-owned enterprises. Their management will enjoy more autonomy, but they will be subjected to thorough audits. That follows a trickle of corruption scandals. The latest involves Habanos, the state cigar monopoly.
HAVANA, April 26 (Reuters) - Rising food and fuel prices and fears that an active hurricane season looms have Cuba tightening its belt, according to government leaders and local economists.
Ernesto is a 26-year-old mechanical engineer turned entrepreneur. Laid off, he chose a new profession among the list of nearly 200 new private businesses legalized by the Cuban government. He decided to become a locksmith, because a relative recently brought the required machine from Italy. But he still needed cash to buy blank keys.

Cuba libre?

April 25, 2011

Rummaging round the Communist party’s central committee headquarters building in Havana, Raúl Castro finds an old lamp. Curious, he gives it a rub. A genie emerges and offers two wishes. “Only two?” asks Cuba’s president. “Yes,” replies the genie. “Times are tough. We’ve cut back.”
Microfinance Focus April 25, 2011: The Cuba Study Group in collaboration with Americas Society/Council of the Americas and the Center for Financial Inclusion at ACCION International, recently released a whitepaper titled ‘Supporting Small Business in Cuba: Recommendations for Private and Public Sector Leaders.’
Former Cuban leader Fidel Castro made an unannounced appearance at the closing ceremony of a watershed Communist party conference on Tuesday, which adopted plans to reform the country’s economic model and refine the one-party system he had built.
HAVANA - Communist Party delegates gave their blessing to a sweeping slate of economic changes designed to breathe life and a bit of free-market spirit into Cuba's moribund economy, and also voted in a new party leadership at a historic summit Monday.
Havana, Cuba (CNN) -- With a few taps of the hammer and some expertly placed glue, Elio Mendoza can extend the life of even the most well-worn shoes. Now, he hopes the Cuban government can do the same for the country's sagging economy when it holds the first Communist Party Congress in nearly 14 years, starting on Saturday.
HAVANA (Reuters) - Cuba's pace of economic reform is expected to pick up after a congress of its ruling Communist Party that begins this weekend and whose main agenda item is "modernizing" the socialist economy.
HAVANA — There was no colorful bunting to mark the grand opening, and no way to advertise in the local press. There was not even money to hand out fliers in this decaying Havana neighborhood of potholed streets and crumbling one-story homes. So when the freshly painted front window of the tiny pizzeria swung open on the most important afternoon in Julio Cesar Hidalgo's life, nobody noticed at first.
Cuba’s decision to allow more private economic activity is an opportunity for the U.S. government and others to support the growth of small and micro enterprises on the island, according to a report made public Thursday. “An orderly, market-oriented economic reform process is decidedly in the best interests of Cuba, the United States and the region,’’ said the 48-page report by the Cuba Study Group (CSG), led by centrist Miami businessman Carlos Saladrigas.
Washington – The economic revitalization of Cuba is going through a phase during which small and medium private businesses are being empowered by Havana and obstacles imposed by Washington on Cuban economic growth are being relaxed, the Cuba Study Group said Thursday.
MIAMI (AP) — A coalition of U.S. business leaders and economic experts on Thursday advocated new efforts to spur private enterprise in Cuba and help its residents. The Washington-based Cuba Study group and several nonprofits laid out a proposal including websites to match independent Cuban businesses with donors, and programs to allow people in the U.S. to take out loans on behalf of relatives on the island. It also favors allowing limited imports from independent workers and cooperatives in Cuba.
March 2011
HAVANA — The Cuban government has authorized local banks to offer credit to private small business owners and agricultural producers as part of a sweeping economic overhaul announced last year.
HAVANA — President Raul Castro has named a new economy minister, and put the outgoing minister in charge of implementing economic reforms that will be hammered out at a Communist Party Congress.
(Reuters) - Cubans, speaking out in citizen meetings leading to a Communist Party congress in April, have given officials an earful about their economic worries and said the government must do a better job, people close to the process said this week.
HAVANA — For years, Cubans trying to eke out a living have had one small comfort: that whatever income they managed to scrape together was entirely theirs. That's about to change. With 50 years of government paternalism coming to an end, Cubans will soon be introduced to the tax man.
February 2011
HAVANA — Yordan Rodriguez hasn't showed up for work in four months, but he still has a job — for now at least. The 25-year-old ironworker was told not to bother coming in anymore because the state-owned construction outfit he works for doesn't have any iron. Since then he's been doing odd jobs at home, drawing a salary, and waiting anxiously.
BAUTA, Cuba — Marisela Álvarez spends much of the day bent over a single electric burner in her small outdoor kitchen. Her knees are killing her. Her red hair smells of cooking oil. She hasn’t felt this fortunate in years.
With up to one million state workers moving off the government payroll in the next year, President Raúl Castro and the Cuban leadership seem committed to strengthening the microenterprise and small business sector—with self-employment now the certain future of so many Cuban workers.
January 2011
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.
(Reuters) - Across Cuba, new farmers are tilling fertile fields abandoned for decades and city streets are abuzz with market stalls as private businesses sow the seeds of what many hope will be an economic revival.
Cubans are waiting in new lines at government offices these days—but not to buy rationed food, the latest Chinese appliance, prepaid cards for their cell phones, or the new booklet that previews April’s Communist Party Congress.
For a country that claims to want to open its economy after five decades of communism, Cuba has chosen an unlikely poster child for its efforts to attract foreign tourists: Che Guevara.
(Reuters) - Cuba began the process of laying off thousands of workers on Tuesday, according to a top union official, as one of President Raul Castro's central reforms to the communist island's economy picked up steam.
December 2010
Ray Suarez and the NewsHour Global Health Unit kick off a three-part series from Cuba with a report from Havana on how the country's economy is adapting to the gradual economic reforms of President Raul Castro -- while maintaining a tradition of socialism.
HAVANA (Reuters) - Cash-strapped Cuba achieved some of its economic goals in 2010, but will have to improve its performance if it wants to emerge from its chronic economic funk, a top government official said on Wednesday.
Rising debt charges are forcing Cuba to reshape its Soviet-style economy, with leading creditor China among those cheering on the changes. A Cuban Communist party congress, scheduled for April, will discuss and likely ratify policies that are already starting to be implemented. These include cutting 20 per cent of state workers, cutting social benefits, eliminating state subsidies, improving Cuba’s trade balance and liberalising rules for small business and foreign investment.
HAVANA | Some worried aloud about the elimination of government subsidies that keep food on the table. Others blamed red tape for the island's crippling inefficiency. One man complained he simply could not make ends meet on wages of less than $20 a month.
HAVANA — A newly released confidential U.S. diplomatic cable predicted Cuba's economic situation could become "fatal" within two to three years, and detailed concerns from other countries' diplomats – including China – that the communist-run country has been slow to adopt reforms.
Cuba has launched a public debate on plans to transform its socialist economy by reducing the role of the state and boosting private enterprise. Ordinary Cubans are being encouraged to discuss the changes so their views can be taken into account at a ruling communist party congress next April.
November 2010
MEXICO CITY and HAVANA —Antonio Santana and Marina Suarez are children of Fidel Castro's revolution – born into the communism that swept across this island of mambo and mob ties in 1959.

China group’s Cuba oil deal

November 24, 2010

China National Petroleum Corp has won a bid to expand a Cuban oil refinery in a deal that could be worth as much as $6bn, making it one of the communist island’s largest investments to date.
Just down from Plaza Vieja, in the historic district, I entered Bodega La Caridad. The shelves were mostly empty save for some small bags of raw and refined sugar, cooking oil in a reused plastic water bottle, a stack of cigarette packets and boxes of matches. On the wall was a chalkboard listing foodstuffs, the state-subsidised price and entitlement per person. A month’s ration of rice (3kg), for example, costs less than the equivalent of five pence but many products were unavailable.

New reforms another masquerade

November 22, 2010

The VI Congress of the Communist Party of Cuba — now scheduled to meet April 2011 to ratify Gen. Raúl Castro’s economic directives, including the firing of 500,000 state employees — is viewed by some with hope that finally Cuba is moving toward a market economy, by others with substantial skepticism and by Marxists with horror as a betrayal of communist orthodoxy. So where is Cuba headed? Most likely, nowhere fast. Ironically, the official announcement of the firings was made by the Cuban Workers Union (CTC) — the Communist Party-controlled labor union. Anywhere but in repressive totalitarian regimes, an announcement dismissing 10 percent of the government’s workforce would have been met with the massive protests and international indignation usually associated with reforms required by the International Monetary Fund or the World Bank. In Cuba, there was nary a peep on the streets. Add to this Fidel Castro’s apparent Freudian slip that the “Cuban model doesn’t even work for us anymore,” and you have a textbook recipe for ideological bewilderment, bureaucratic paralysis, opportunism, uncertainty, incongruous policymaking and more. In the Cuban version of Orwellian doublespeak, the dismissals are labeled as an “actualization of socialism,” where government will grant permits for those fired to seek to make a living “outside the state sector.” It is unspeakable to talk of a private sector. The firings reveal changes anchored not in a desire for political-economic reforms to help the Cuban people, but rather focused on the regime’s survival. In an economy with developed private competitive markets, employees dismissed from one firm have a fighting chance of securing employment in another. But in Cuba’s economic system, there is no private sector to absorb the unemployed. Where will they find employment? Perhaps most bizarre is that the dismissal measure seems to assume that everyone is suited to be an entrepreneur and able to make a living in fields that may be far from their work experience and professional training. The Cuban government is betting on the resourcefulness and entrepreneurship of the Cuban people to somehow make up for the inefficiencies of the state sector and to do so without access to cash, credit, raw materials, equipment, technology, or any of the inputs necessary to produce goods and services. Ironically, the likely source for these inputs will be the Cuban diaspora, eager to help their jobless relatives and friends. Cubans will somehow make do, but in terms of actual economic development, these measures will not work; they are not designed to. Allowing Cubans to read tarot cards or to make paper flowers — two of the now permitted activities — are not serious economic development measures. But just in case, the government is ready to collect onerous taxes of 25 percent for social security and up to 40 percent on income depending on the activity (e.g., food production will be taxed at 40 percent, artisans at 30 percent, and so on). If the intentions of the Cuban government were truly to undertake a major shift toward a market economy, it would not seek to limit the permitted economic actions to some 178 mostly individual activities (fruit-peeling, shoe-shining, etc.) and then impose stifling regulations and taxes. It requires a vivid dreamer’s imagination to see in this announcement by the Castro government a move toward a free-market economy. One lesson to be learned from the transitions of former Soviet-bloc countries is that the success of reforms hinges on placing individual freedoms and empowerment front and center. This is not where Cuba is headed with its “actualization of socialism.” For now, the firings only highlight the dismal state of the Cuban economic model succinctly depicted by the old Soviet joke that described their centrally planned economic system as one in which “we pretend to work and they pretend to pay us.” The bankrupt Cuban system cannot even pretend to pay its workers anymore. So it is now changing its maquillage to make-believe capitalism. José Azel is a Senior Research Associate at the Institute for Cuban and Cuban-American Studies, University of Miami. He is the author of the recently published book, “Mañana in Cuba.” Read more: http://www.miamiherald.com/2010/11/21/1935727/new-reforms-another-masquerade.html#ixzz161T5zWnq .
MOSCOW — The Russian energy giant Gazprom has joined a growing list of companies that plan to drill for oil in the waters off Cuba, close to the United States but out of reach of its safety regulators.
Cuba's Raúl Castro says the island ``has no alternative'' but to embrace the economic changes he has proposed, and claimed they are based on brother Fidel's ideas, according to the Granma newspaper.

Raúl the pragmatist

November 12, 2010

SHORTLY after he took charge of Cuba from his ailing brother, Fidel, in 2006, Raúl Castro declared that his country’s moribund communist economy needed to change. But his failure to make anything more than marginal adjustments disappointed hopes that he would follow Chinese and Vietnamese communist leaders in combining capitalist economics and growing social freedom with continued party control.
Cuba's food rationing card will be eliminated. Private economic activity and foreign investments will be allowed to expand, and the government will reduce controls of agriculture and state enterprises.
Cuba has moved to shake up its complacent labour force, with President Raul Castro putting in place the framework for a rudimentary jobs market and a small-business sector.
Cuban President Raul Castro urged union leaders to explain the need for massive layoffs to the country's labor force, and warned them not to hide the deep economic problems facing the cash-strapped island.
October 2010
Cuba has made official the grand economic changes it announced last month, publishing nearly 100 pages of rules and regulations for small businesses in the government Gazette on Monday.
(Reuters) - Cuba unveiled on Friday a new tax code it said was friendlier for small business, signaling authorities are serious about building a larger private sector within the state-dominated economy.
HAVANA — Cuba has laid out details of a sweeping tax system for the newly self-employed — a crucial step in the socialist state’s plan to convert hundreds of thousands of state workers into self-employed businesspeople.
In an interview with Cuba Standard, Executive Director Tomás Bilbao, a former assistant of Senator Mel Martinez, explained the group’s microloan initiative, its attitudes regarding U.S. regime-change efforts on the island, and its proposal for U.S. economic engagement in Cuba.
Monday, October 11th, 2010.HAVANA, Oct 11 (Reuters) " Some European countries are quietly working to bring hard-currency loans to Cuban farmers, an idea Cuba has traditionally resisted but now looks ready to accept to help its economic reforms. A small flow of Spanish money for credits in Cuba is set to start up in 2011 and there are hopes it can grow as Cuba modernizes its state-prevailing socialist economy. The first loans will be financed by Spain’s Agency for International Development Cooperation, which next year will donate 490,000 euros ($680,000) for agriculture, a priority for the Caribbean state dependent on food imports. “We are trying to help create a financial instrument currently nonexistent in Cuba to provide the agriculture sector with credit in hard currency,” said Juan Diego Ruiz, local coordinator of the Spanish government aid agency. Cuban officials have for long been wary of “microcredits” " first developed in the 1980s to provide financial services to the poor in Bangladesh " because they worry the small loans to groups of individuals could undermine the country’s socialist principles, especially if coming from abroad. But Western diplomats say Cuba’s government now appears ready to give such financing a try, even though it does not want to talk openly about “microcredits”. Hard currency loans would allow groups of Cuban farmers, who lease land from the state, to buy the imported supplies, ranging from irrigation systems to seeds,they badly need to increase production, Ruiz said. Cuban President Raul Castro has made a series of reforms aimed at boosting agricultural output and he unveiled plans last month to lay off 500,000 state workers in the next six months. The government says many of those being laid off will be allowed to enter the private sector in the boldest reform since Castro succeeded his older brother Fidel Castro in 2008. Those changes have made Cuba more appealing for European policymakers and Ruiz said the hard currency small loans “could eventually become an instrument linked to the ongoing process of economic adjustments.” OUTSIDE HELP Spain has offered 4 million euros ($5.5 million) to finance potential future loans for microcredit in Cuba under very favorable terms that take into account the island’s current acute liquidity shortage. The 27-nation European Union also has been discussing providing up to 2 million euros ($2.8 million) for credit. “The European Commission is willing to accompany or facilitate the process of economic reforms at the request of the Cuban government,” said the EU representative in Cuba, Javier Nino-Perez. Brazil’s Foreign Minister Celso Amorim recently offered Castro the South American giant’s expertise in developing small and medium enterprises. Western diplomats say Cuba’s resistance to microcredits in the past seems to have eased following sharp economic shocks in recent years. The island was battered by three hurricanes in 2008, which did an estimated $10 billion in damage and dragged down the already struggling economy. The global financial crisis that followed delivered another blow. Traditionally, the government blames the long U.S. trade embargo against Cuba for most of its financial woes. When last month’s ground-breaking labor reforms were announced, state media said the central bank was studying the idea of offering credits to small private enterprise, but specifics were not spelled out. Because of the political sensitivities, diplomats said the loans will not go directly from foreign providers to individuals. Instead, the initial Spanish funds will be channeled through the state-owned Bank of Credit and Commerce to groups of farmers leasing land from the state. But Cuba would have to allow microcredit recipients to open bank accounts in hard currency. Cuba does not belong to multilateral financial institutions such as the International Monetary Fund or World Bank, so its success in microfinancing will depend on credits from friendly nations. “The main challenge is scale. Microfinances only work when there is sufficient scale to have an impact, and in order to reach that, external financing is critical,” said Sergio Navajas, an expert with the Inter-American Development Bank in Washington. Experts say Cuba appears headed down a path taken by its communist ally Vietnam,which has developed a market socialism often seen as a model for Raul Castro’s current reforms. Microfinances played a key role in the Vietnamese economic transformation. “At first, Vietnamese authorities were also cautious,” a Western diplomat in Cuba said. Read more: http://www.cubaheadlines.com/2010/10/12/27115/cuba_looks_ready_to_allow_small_loans_for_reforms.html#ixzz129Cze7mJ Original article here! .
Cuba's tacit admission that its communist economy is failing marks the end of an era. It follows the eclipse of similarly stultified economies in three other lands of lingering communist persuasion – China, Vietnam, and North Korea. All have either moved, or appear to be moving, to free, market-based economies while retaining a communist structure to continue harsh political control.
Oct. 5 (Bloomberg) -- Fidel Castro Diaz-Balart, scientific adviser to the Cuban government and son of former President Fidel Castro, said Japan’s economic development provides an example as his country encourages more private enterprise.
Until Sept. 1, Lara, a retired Havana teacher, boosted her meager pension by reselling the four cigarette packs she bought each month with her government-subsidized ration card. Lara, 73 and a non-smoker, bought them for 11 pesos and sold them on the street for 31, a 20-peso bump to her 260-peso retirement income -- roughly $10.83 a month.
September 2010
Raul Castro announced that 10 percent of Cuba’s state employees, half a million people, will be dismissed from their public sector jobs and free to pursue work in the private sector. The near-fiscally bankrupt state no longer can afford to pay inefficient workers. But the Cuban leadership remains a reluctant reformer. We Americans have a vested interest in facilitating a deeper market transition 90 miles off shore.
MEXICO CITY — Cubans learned on Friday the details of what they would soon be able to do as budding entrepreneurs, including renting spaces for their businesses, hanging out a shingle, and if things go well, hiring a few employees.
Like many Cubans on and off the island, Mr. Gomez has been scrutinizing the Cuban labor federation’s announcement last week that 500,000 public sector workers would soon be laid off and expected to find jobs in small private enterprises, possibly reshaping Cuba’s state-dominated economy. That declaration, though, was not yet enough for Mr. Gomez; not enough to offset the memory of previous economic openings that Fidel and Raúl Castro later slammed shut.
Brazil's foreign minister says his country has offered to help Cuba develop small and medium businesses as part of a drive for economic growth. Celso Amorim was quoted as describing Cuban plans to lay off half a million public-sector workers in the next six months as "very courageous". He said Cuba could learn from Brazil's successful experience in fostering entrepreneurship.

Towards a mixed economy

September 21, 2010

EVER since Raúl Castro took the reins of power in Cuba in 2006, he has seemed to hint that he wants to reform the island’s moribund centrally planned economy. But the changes he has introduced have been either limited or almost inconsequential, such as giving more freedom to farmers, allowing self-employment for barbers and letting Cubans have (unaffordable) mobile phones. Until now. On September 13th the government announced, through the mouth of the official trade-union confederation, that more than 1m people—a fifth of the workforce—will be made redundant from state jobs, half of them by April 1st 2011
Fidel Castro, 84, may have failing eyesight but he has noticed something: "The Cuban model doesn't even work for us anymore." So, the secret is out. And there is no joy among the alumni, if any still live, of the golden days of Les Deux Magots.

Cuba's tailspin into the `free' market

September 19, 2010

OUR OPINION: Castro's latest desperation move won't work

As Cuba's failed economy struggles after a half century of quashing individual creativity and entrepreneurship, the regime has come up with a plan to lay off a half-million workers -- 10 percent of its workforce. They are being encouraged to open small businesses, instead. Sounds like ``capitalism-lite'' to us.
British companies could be among the first foreigners to buy land in Cuba since Fidel Castro's revolution in 1959, following a delegation to the communist state next weekend. Up to 25 British companies are aiming to strike deals that could allow them to develop hotels, golf courses and renewable energy projects.

Cuba Resets the Revolution

September 19, 2010

For first-time visitors, one of the most striking things about Cuba is the lack of advertising on the landscape. The Socialist government has billboards bearing Fidel Castro’s likeness and his most quotable quotations. But one does not see roadside signs pitching much else
Is this the beginning of the end for the Castro brothers in Cuba, and if so, what should Washington do? The announcement Monday that, over the next six months, Cuba will fire more than 500,000 workers -- or fully 10 percent of the workforce in a country of 11 million people -- is a far more radical change than any of the island's past free-market flirtations and an extraordinary admission of failure.
Fidel Castro claims his ironic quip about how “the Cuban model doesn’t even work for us any more”, was misunderstood. Coincidence or not, soon afterwards Cuba’s sole trade union announced a raft of economic reforms that makes Margaret Thatcher look like a leftist radical. Over the next six months, 500,000 workers will be cut from the state payroll – about 10 per cent of the labour force. Delicious irony: in Britain, trade unions pledged the same day to fight UK budget cuts with strikes. Whatever happened to solidarity?
Raúl Castro is presiding over the dismantling of big brother Fidel's legacy, a leading Cuba expert said Wednesday at the Americas Conference. Monday's announcement that the Cuban government plans to lay off 500,000 workers -- 10 percent of its workforce -- is not so much a step toward political reform but a fight for survival, El Nuevo Herald columnist Carlos Alberto Montaner said. It's an assault on Fidel, who in 1968 closed small and medium-sized businesses in a big step toward central control of the economy.
Quick, name the source of the following statement, issued on Monday: "Our government cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls [and] losses that hurt the economy."
HAVANA -- An internal Communist Party document envisions a radically revamped Cuban economy, with a new tax code, freshly legalized private cooperatives and a state payroll no longer shackled by the need to support at least a half-million idle or unproductive w
Cuba's announcement that it will try to shift nearly 500,000 workers from state payrolls to the private sector has raised an obvious question: Can the island's communist system really do that? Maybe, if Cuban ruler Raúl Castro abandons the onerous controls, taxes and other fees that blunted previous attempts to grow private economic activity under Fidel Castro, several analysts said.
As a layoff notice, it was more blunt than what even corporate America puts out these days. But it's hard to sugarcoat letting half a million workers go — which is what Cuba's communist government, via its official labor union, announced on Monday. "Our state cannot and should not continue maintaining enterprises with inflated payrolls, losses that pull down our economy and make us counterproductive, generate bad habits and distort worker behavior," said a statement by the Cuban Workers' Central (CTC), making it known that some 500,000 government jobs will be eliminated by next spring. It also suggested something fairly anathema to socialism's collectivist dogma: how the unemployed find their way after the mass dismissal "depends in large part on the private management and initiative of the individual."
MEXICO CITY — In perhaps the clearest sign yet that economic change is gathering pace in Cuba, the government plans to lay off more than half a million people from the public sector in the expectation that they will move into private businesses, Cuba’s labor federation said Monday.
Havana, Cuba (CNN) -- Cuba announced on Monday it would lay off "at least" half a million state workers over the next six months and simultaneously allow more jobs to be created in the private sector as the socialist economy struggles to get back on its feet.
HAVANA – Tobacco is being removed from the Cuban ration cards starting Wednesday, just as potatoes were removed in 2009 within the framework of the “updating of socialism” process whereby President Raul Castro intends to put an end to the excesses of the island’s welfare state.
August 2010
HAVANA – Cuba has issued a pair of surprising free-market decrees, allowing foreign investors to lease government land for up to 99 years — potentially touching off a golf-course building boom — and loosening state controls on commerce to let islanders grow and sell their own fruit and vegetables. The moves, published into law in the Official Gazette on Thursday and Friday and effective immediately, are significant steps as President Raul Castro promises to scale back the communist state's control of the economy while attempting to generate new revenue for a government short on cash. "These are part of the opening that the government wants to make given the country's situation," said Oscar Espinosa Chepe, a state-trained economist who is now an anti-communist dissident. Cuba said it was modifying its property laws "with the aim of amplifying and facilitating" foreign investment in tourism, and that doing so would provide "better security and guarantees to the foreign investor." A small army of investors in Canada, Europe and Asia have been waiting to crack the market for long-term tourism in Cuba, built on drawing well-heeled visitors who could live part-time on the island instead of just hitting the beach for a few days. It may also help the country embrace golf tourism. Investment firms have for decades proposed building lavish 18-hole courses ringed by luxury housing under long-term government leases. Cuba currently has just two golf courses nationwide, but the Tourism Ministry has said it wants to build at least 10 more. Endorsing 99-year property agreements might be a first step toward making some golf developments a reality, but also makes it easy to imagine a Cuban coastline dotted with timeshares, luxury villas and other hideaways that could serve as second homes. "I think this is huge. This is probably one of the most significant moves in recent years relative to attracting foreign investment," said Robin Conners, CEO of Vancouver-based Leisure Canada, which plans to begin construction next year on a luxury hotel in Havana and also wants to build hotels, villas and two championship golf courses on a stretch of beach in Jibacoa, 40 miles (60 kilometers) to the east. Cuba has allowed leases of state land for up to 50 years with the option to extend them for an additional 25, but foreign investors had long pressed tourism officials to endorse 99-year deals to provide additional peace of mind to investors. The longer leases also mean lower interest rates on international banking mortgages. John Kavulich, a senior policy adviser for the U.S.-Cuba Trade and Economic Council in New York, said Mexico has used similar leaseholds to encourage foreign investment despite restrictions on non-Mexicans owning coastal property — but that the similarities end there. "I don't think it's going to open a floodgate. I think it may turn on a tap so that people know there's water," he said. "Certainly it's an improvement. However ... making one change isn't a panacea to solving the issues that companies have in evaluating their opportunities in Cuba." But developers cheered the move, including Andrew Macdonald, CEO of Britain's Esencia Hotels and Resorts, which is awaiting Cuban government approval to start construction on the Carbonera Country Club, a $300 million beach development outside the resort of Varadero. "It's exceedingly good news," Macdonald said. "It's been a long road. But having said that, it's very important for the country that they get each step right and this is a very big step for them." After so many setbacks in green-lighting the project once and for all, Macdonald said he has stopped predicting when construction will begin, but "we hope the approval process will happen very quickly now." The island's ever-weak economy has been rocked by the global financial crisis and a sustained drop in prices of the country's chief natural resources. Cuban officials have tried before to balance their drive for an egalitarian society with an appeal to foreigners seeking to own a piece of paradise. Scrambling for revenue in the late 1990s, the government authorized private foreign ownership of posh apartments in Havana and even signed a $250 million deal for beachfront apartments and timeshares with a Canadian company. Many of those projects stalled, however, failing to draw enough foreign investment. Meanwhile, some overseas businessmen bought Havana apartments but allowed Cubans to live in them — violating rules barring islanders from doing so. The government eventually bought out most of the residences it had hoped would be owned by foreigners. The decree allowing expanded sale of farm products, meanwhile, could have far greater impact on ordinary Cubans. It authorizes them to produce their own agricultural goods — from melons to milk — and sell them from home or in kiosks. They must pay taxes on any earnings. The decree is the first major expansion of self-employment rules since Castro said in an address before parliament Aug. 1 that the government would reduce state controls on small businesses — a big deal in a country where about 95 percent of people work for the state. Chepe, who was jailed for his political beliefs in 2003 but later paroled for health reasons, said the decree would stamp out inefficiencies that plague the state farming system, calling it an "intelligent move." "In Cuba, the problem has not only been production, but also distribution," he said. Cubans already sell fruits, pork, cheese and other items on the sides of highways, fleeing into the bushes when the police happen past. Friday's measure would legalize such practices, while ensuring the state takes a cut of the profits. The new rules are consistent with other efforts by Castro's government, which has allowed minor free-market openings while also seeking to eliminate black-market income. Authorities have approved more licenses for private taxis while getting tough on unauthorized gypsy cabs. They also made it easier to get permits for home improvements and increased access to building materials, while more strictly enforcing prohibitions against illegal building.
Preparations for full-scale oil exploration are gaining momentum in Cuba’s Gulf of Mexico waters just 50 miles from the US, testing the limits of the trade embargo on the Caribbean nation. Cubapetroleo, the state oil monopoly, says seven exploration wells are scheduled for the Cuban waters up to the end of 2012. A new Chinese deep-water rig, owned by Saipem, a unit of Italian oil company Eni SpA, is scheduled to leave its shipyard by the end of 2010 for the two-month trek to Cuba. The rig was built to get around the 10 per cent limit on US technology demanded under the US trade embargo of Cuba. Preparatory work is moving ahead at Mariel, a port west of Havana, the staging area for drilling operations, diplomatic and industry sources said, and some companies have opened bidding for well casing. “It is ridiculous that Repsol, a Spanish oil company, is paying an Italian firm to build an oil rig in China that will be used next year to explore for oil 50 miles from Florida,” Sarah Stephens, executive director of the Center for Democracy in the Americas, said. Ms Stephens, whose Washington-based organisation opposes US sanctions, led the first US energy-related fact-finding mission by congressional staff and experts to Havana in July. They concluded Cuba was determined to sink wells and with them the embargo. Embargo opponents in Washington are backing legislation that would allow US groups to participate in Cuba’s offshore oil development, while proponents plan legislation that would impose sanctions on the foreign groups that do. Florida politicians, who have banned drilling off their coast, and Cuban-American lawmakers, have raised fears of an accident such as the one on BP’s Deepwater Horizon rig. According to industry and diplomatic sources, companies from Spain, India, Norway and perhaps Malaysia – all US allies – have already contracted the rig, while others, from Vietnam, Venezuela and Brazil are not far behind. Russian and Chinese companies are negotiating to obtain offshore blocks or partner with the other companies. Repsol drilled the only offshore well in Cuba’s waters in 2004. It said at the time that it had found hydrocarbons, but not in a commercially viable amount. Since then, according to Manuel Marrero Faz, oil adviser to Cuba’s Ministry of Basic Industry, extensive seismic work has revealed 15 sites with a high probability of oil. Mr Marrero estimates Cuba has up to 20bn barrels of oil in its offshore areas, while the US Geological Survey puts the figure at a more modest 4.6bn barrels and 10,000bn cu feet of gas. Cuba currently produces about 60,000 barrels of oil per day, all from onshore wells. It imports about 115,000 b/d from ally Venezuela on favourable terms. The Obama administration has refrained from denouncing Cuba’s drilling plans and appears to favour limited co-operation. The administration recently said it would allow US companies that handle and clean up oil spills to operate in Cuban waters should the need arise and granted approval for executives from the Houston-based International Association of Drilling Contractors to visit Cuba last week. Lee Hunt, association president, told the Financial Times he was impressed by Cuba’s preparations and regulatory regime, which included measures his group had proposed to the Obama administration after the BP disaster. He added: “There is one Gulf shared by three countries. We are promoting co-operation between their industries to insure the unfortunate events that occurred in Mexico and more recently in the United States do not happen here”. Jorge Pinon, an energy fellow at the Center for Hemispheric Policy at the University of Miami, said more should be done to wean Cuba from energy dependence on Venezuela and insure safety. “The United States should enable oil companies working in Cuba access to equipment and technology that would allow the monetisation of Cuba’s hydrocarbon resources in a safe and responsible manner,” Mr Pinon added.
MAX MARAMBIO, a Chilean businessman, can claim an unusual consequence of his friendship with Fidel Castro. It made him rich. A guerrilla in the 1960s and then a bodyguard of Chile’s socialist president, Salvador Allende, Mr Marambio set up one of the earliest business joint-ventures with Cuba’s Communist regime. For the past two decades this company, Rio Zaza, enjoyed a near-monopoly on sales of packaged fruit juice and milk across the island. Mr Marambio, dubbed in Cuba “the potbelly” because of his portly figure, became a multimillionaire. That apparently did not offend Mr Castro. Neighbours at the businessman’s grand 1950s home on the outskirts of Havana recall that the Cuban leader was a frequent evening guest (the home itself is believed to have been a gift from Mr Castro). But now the house lies empty, its rolling lawns unkempt. Mr Marambio is a wanted man. Cuba’s government, led now by Fidel’s brother Raúl, ordered him to return to the island by August 23rd for questioning about bribery and fraud at Rio Zaza. Mr Marambio, who denies all the allegations, declined the invitation. His fall from grace began two years ago. Faced with an acute shortage of foreign currency, the authorities imposed strict limits on the amount foreign businesses could withdraw from their Cuban bank accounts. Rio Zaza was unable to gain access to some $30m dollars of revenue. Mr Marambio was furious. But he had no one to turn to. Fidel Castro stood down as Cuba’s leader in 2006 with an intestinal illness, and was still too unwell to receive calls. Instead, the Chilean is said to have vented his frustration on officials at the Central Bank. Their reaction was to launch an investigation against him. They accuse Rio Zaza of supplying food to Cuba’s large black market, of overcharging its state-owned joint-venture partner and bribing Cuban managers to look the other way. Rio Zaza was shut down earlier this year. In April Robert Baudrand, another Chilean who was the firm’s managing director, was found dead in his Havana apartment. The Cuban government said that his death was a coincidence, possibly the result of a drug overdose. Others say it was hastened by hours of intensive interrogation. His body was cremated in Chile, without a thorough post mortem. Other foreign joint ventures in Cuba cut corners, but Rio Zaza’s alleged misdeeds involved particularly large sums of money. It was also linked to the illicit use of planes belonging to Cubana, the national airline, a scandal which cost several senior officials their jobs earlier this year. In addition, there has been speculation that the Castros were annoyed that Mr Marambio financed the presidential bid of Marco Enríquez-Ominami, a maverick socialist, in Chile’s election last year. The effect of his candidacy was to help Sebastián Piñera, a conservative, end two decades of rule by a centre-left coalition. Whatever the reason, as a foreign businessman in Havana puts it, “occasionally we are all reminded who’s the boss here”. Although Mr Marambio faces no charges outside Cuba, and he settled in the island to escape the dictatorship of Augusto Pinochet in Chile, in other ways his case evokes memories of Robert Vesco. An American financier, Vesco fled to Cuba to evade fraud charges in the United States. He lived in great style in Havana for many years until he too was accused of trying to swindle his hosts. Vesco was imprisoned, then released, and was reported to have died from cancer in 2007. But the demise of Rio Zaza may say more about Cuba’s shifting, uncertain, times. For Raúl Castro, tackling Cuba’s moribund economy and vast black market is a priority. Whereas Fidel saw illegal private enterprise as an evil which could be overcome by teaching Cubans to be more revolutionary, Raúl seems to take a more pragmatic approach. He is quietly legalising chunks of the informal economy: Cubans can now legally buy building materials and mobile-phone connections, and sell services such as hairdressing and building work. But even as it loosens the iron grip of the state, the government is redoubling its efforts to be seen to remain in charge of Cubans’ everyday lives by cracking down on corruption. Military police patrol the island’s main roads, looking for stolen goods, and checkpoints have been set up at all the main entrances to the capital. Cubans rely on the grey economy and some worry how far such a clampdown might go. Yoani Sánchez, a blogger, reports that since the demise of Rio Zaza, where the warehouses were notoriously prone to theft, the black-market price of milk and other staples has doubled. Cuba’s government may find it easier to charge Mr Marambio than to replace him.
HAVANA, Aug 17 (Reuters) - Cuba plans to drill seven exploratory oil wells in its Gulf of Mexico waters over the next two years, according to a U.S. organization that visited the Communist-ruled island to discuss energy development. Sarah Stephens, executive director of the Center for Democracy in the Americas, said meetings between energy experts she brought to the island in July and Cuba's state oil monopoly Cubapetroleo (CUPET) left no doubt about the Caribbean nation's determination to develop its offshore oil reserves. "Repsol, a Spanish oil company, is paying an Italian firm to build an oil rig in China that will be used next year to explore for oil off the shores of Cuba," she told Reuters in a written response to questions. "Whether it's available in commercially viable amounts we do not yet know. We were told by sources in Cuba that seven such wells will be drilled over 2011-2012. If this drilling finds significant oil, you could have production taking place as early as 2014 and as late as 2018," Stephens said. Her non-profit group, based in Washington D.C., says it works to improve U.S. policy toward the Americas including Cuba. It opposes existing U.S. sanctions against the island. Cuba's government has declared its interest in developing the country's offshore oil resources but rarely gives details of its plans in public. The energy analysts on the trip to Havana included Michael A. Levi, Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations, Ronald Soligo from Rice University, and Lisa Margonelli, Director of the Energy Policy Initiative at the New America Foundation. Cuba estimates it has up to 20 billion barrels of oil in its offshore areas, but the U.S. Geological Survey has estimated a more modest 4.6 billion barrels and 10 trillion cubic feet of gas. Mexico and the United States, which share the Gulf of Mexico with Cuba, have been producing oil and natural gas from under its waters for decades. Cuba currently produces about 60,000 barrels of oil per day (bpd), all from onshore wells. It receives about 115,000 bpd from ally Venezuela on favorable terms. OIL EXPLORATION MOVES Speculation about Cuba's deep water exploration plans and statements concerning imminent drilling have increased since Repsol YPF (REP.MC: Quote) drilled the only offshore well in Cuba's untapped waters in 2004. It said at the time it had found hydrocarbons, but not in a commercially viable amount. Industry sources blame delays in further oil development on problems with financing and fear of sanctions under Washington's 48-year-old trade embargo on Cuba, which also put a 10 percent cap on use of U.S. technology on the island. But they say it appears serious exploration will finally get under way next year. Part of Cuba's Gulf of Mexico zone is within 50 miles (80 km) of Florida, where U.S. politicians have raised fears that Cuban drilling could lead to an accident like the huge BP (BP.L: Quote) (BP.N: Quote) oil spill off the Louisiana coast. Norway has been training Cuban personnel for offshore oil exploration for a number of years. U.S. President Barack Obama's administration has said it would allow U.S. companies that handle accidental oil spills to operate in Cuban waters should the need arise. The China-built drilling rig is expected to arrive in Cuban waters early next year and companies have begun preparations to drill once the Scarabeo 9 rig gets to the island. Preparatory work was moving ahead at the port of Mariel, just west of Havana, the staging area for drilling operations, diplomatic and industry sources said. Cuba has divided its share of the Gulf into 59 blocks, 21 of which are already under lease to seven companies. Repsol has announced that its consortium with Norway's Statoil (STL.OL: Quote) and ONGC Videsh Ltd (ONGC.BO: Quote), a unit of India's Oil and Natural Gas Corp, will drill at least one well early next year. The Indian firm has started accepting bids to sink another well on two blocks it is exploring separately. Diplomats in Havana have said Malaysia's Petronas (PETR.KL: Quote) is also planning to use the China-built rig. Petronas, which has four Cuba exploration blocks, has conducted seismic work and built offices for a battery of employees who will come to Cuba for the project. Venezuela's state oil company PDVSA has said it plans to sink its first exploratory well in Cuba's offshore next year. Other companies with blocks there are Vietnam state oil and gas group Petrovietnam and Brazil's Petrobras (PETR4.SA: Quote), while firms from Russia, China and Angola are in the process of negotiating exploration rights. (Editing by Pascal Fletcher and Jim Marshall) .
Cuba is opening stores in the countryside where farm supplies are being sold freely for the first time as the Communist government moves to reform and revitalize long-centralized agriculture, farmers said. The reforms by President Raul Castro, who took over the presidency from his elder brother Fidel Castro in 2008, are also preparing to scuttle a decades-old state farm produce contracting system in a bid to increase food output and reduce costly imports, according to at least one senior official. Raul Castro, who has also opened the door to more private initiative in retail and small manufacturing, has made food security a signature issue in his cautious efforts to revive productivity in Cuba's stagnated and battered economy. The Caribbean island, badly hit by 2008 hurricanes and the global economic downturn, imports 60 per cent of its food, a huge burden on its economy, while export crops from sugar to coffee and citrus are in tatters. Farmers in Cuba's interior said the new direct-sale supply stores were just starting up. "There are only eight to 10 items at the moment, but I was told eventually there would be 80," Alberto, a farmer in central Camaguey province who bought two machetes and a sharpener at one of the stores, said in a telephone interview. The stores -- with their current offerings of picks, hoes, shovels, machetes, work clothes and gloves -- are basic in their range of goods and a far cry from hardware shops in many countries, reflecting both Cuba's poor manufacturing and lack of foreign exchange to purchase supplies abroad. "What's important is that they are beginning. I hope that little by little we will be able to purchase the indispensable equipment and supplies that we need," said Alberto, asking, like other farmers, that his last name not be used. In Cuba's long-centralized agriculture system, farmers must produce certain crops or livestock to sell back to the state at fixed prices in exchange for state-assigned supplies. Farmers and consumers complain the cumbersome system sometimes results in rotting crops and farmers going without timely supplies of animal feed, pesticides and fertilizer. Some Cuban economists say the state's monopoly over farm supplies and output holds back production because it does not reward better farmers and penalize unproductive ones, providing little incentive for development or improvement. They have called for more market mechanisms to provide farmers with timely supplies and distribute farm products. Castro has already opened stores where farmers can purchase rudimentary tools and supplies with state coupons they receive in exchange for their products, but these will apparently be replaced by the new outlets where anyone can buy goods at will in the local currency. Family farmers and private cooperatives are by far the largest private sector in the country where the state controls the bulk of economic activity. These 500,000 farmers, who account for 70 per cent of the food produced using just 41 per cent of the land, have pushed for more freedom to sell their produce and obtain supplies.
July 2010
Cuban president Raul Castro has shocked the nation by saying about one in five workers may have to be made redundant. Facing a severe budget deficit, the government hinted at restructuring or trimming its bloated workforce. But the warning has caused tension in a country where guaranteed employment was a building block of the 1959 revolution that swept Fidel Castro to power. Details are sketchy on how and when such pruning would take place. Raul Castro warned however that "hundreds of thousands of unnecessary workers" may have to go. Cuba's workforce totals 5.1 million, in a population of 11.2 million.
April 2010

Raúl Castro admits that island has one million excess jobs

April 12, 2010

Juan Tamayo, Miami Herald

The stunning figure was revealed by Cuban leader Raúl Castro himself: The Cuban government and its enterprises might have more than one million excess workers on their payrolls. That's more than one million unproductive workers, out of what official Cuban figures show is a total of 4.9 million people working in formal jobs in a country of 11.2 million people. And that's part of the explanation, several economists said, for a calamitously over-centralized and unproductive economy that, for example, forces a tropical island to import an estimated 60 percent of the food its people consume. The Cuban government has historically insisted on keeping people officially employed, even in unproductive jobs. Unemployment was last reported at 1.6 percent by the National Statistics Office (ONE). About 95 percent of the jobs in Cuba's formal sector are with the government -- ministries, their agencies and enterprises -- though salaries are so low, averaging about $20 a month, nationwide, that many Cubans also have off-the-books work to make ends meet. But the figures on excess jobs in the government and its enterprises mentioned by Raúl Castro surprised even some Cuban economists. ``We know there's an excess of hundreds of thousands of workers in the budgeted and enterprise sectors (and) some analysts calculate that the excess of jobs is more than one million,' he said Sunday in a speech to the Cuban Communist Youth. There are ``inflated payrolls, very inflated payrolls, terribly inflated payrolls,' Castro said before adding a reassurance: ``The revolution will not forsake anyone. I will fight to create the conditions so that all Cubans have honorable jobs.' It was not the first time that Cuban officials have publicly acknowledged the government has far too many employees. The commerce and restaurant sectors alone in Cienfuegos, Cuba's smallest province, have 1,400 too many employees, according to a recent report in the newspaper Trabajadores, run by the government-controlled Cuban Confederation of Workers (CTC), The province's education sector also is overstaffed by 1,025, and the sports sector by 500, the newspaper added, quoting Marlén Jiménez, a provincial official of the CTC. `INHUMANE FORMULAS' What's more, public health facilities like hospitals and clinics in eastern Granma province alone have 3,000 unnecessary employees, the newspaper quoted Luis Muñoz, a member of the CTC's provincial secretariat, as saying. ```All will remain in their jobs, but depending on the possibilities many will be reassigned to useful and productive jobs,' the newspaper noted. ``Cuba will never resort to the easy and inhumane formulas of neoliberalism, based on massive dismissals.' Gary Maybarduk, who served as counselor for political and economic affairs at the U.S. diplomatic mission in Havana from 1997-1999, said Castro's comments indicate that he's aware of the massive problems facing an economy battered by the global crisis, three hurricanes and its own massive inefficiencies. ``The government is beginning to recognize its problems, but isn't ready to do anything about it yet because it has neither the capital nor the ability to create significant numbers of new jobs,' he said. ``It indicates an incapacity to generate productive jobs that is Olympian, Guiness Book of Records,' said Jorge Sanguinetty, former president of the Association for the Study of the Cuban Economy. ``But that's been the Cuban government's problem since 1962.' ``And that's why underemployment is ridiculously high there,' said Archibald Ritter, a professor at Carleton University in Ottawa who specializes in the Cuban economy. Many day-care centers and even some two-star hotels in Cuba have their own nurses and doctors -- not on call, but full time -- Ritter said in a telephone interview. What's more, when the government shut down more than 70 sugar mills beginning in 2002, their 100,000 employees kept 40 percent of their salaries while they trained for other jobs, said Jesús ``Marzo' Fernandez, a former top Cuba government economist now in Miami. LIQUIDITY CRISIS Fernandez added that while he was initially surprised by Castro's one-million figure, it made sense in light of recent reports that some Cuban enterprises have shut down because of the lack of foreign supplies needed for production. Cuba has severely cut back imports in the past year because of a liquidity crisis sparked by drops in its main sources of hard currency -- remittances, nickel exports and tourism. Maybarduk noted that Cuba's own statistics show that employment in the ``communal, social and personal sector' -- not further defined -- rose from 951,000 in 2000 to 2.1 million in 2008. ``This appears to be the government soaking up all the people out there who were not in formal-sector jobs, maybe working in the black market,' he said. Sanguinetty said the island's government has always kept as many people as possible on official salaries -- in part to be able to proudly report very low unemployment figures, in part to keep an eye on them. ``Fidel (Castro) always wanted to have people at work, to control them,' said Sanguinetty. ``They don't want people on the streets, so they sacrifice economic efficiency for political efficiency.' Though Raúl Castro told the young communists that no one would be left without a job, he also made it clear that the economic crisis Cuba faces these days requires sharp cutbacks in government spending. ``To continue spending beyond the income means eating our future,' he said, ``and putting at risk the survival of the revolution.' .
March 2010

Havana food production fails to meet expectations

March 4, 2010

AP, Miami Herald

HAVANA -- Production of fruits and vegetables in Cuba's capital and surrounding farmlands is 40 percent lower than expected so far this year, as the island's agricultural sector continues to founder despite a series of reforms. The Communist Party newspaper Granma said Havana province, which includes the city of the same name, fell short of its targets through the end of February largely because of government ineptitude. It reported that authorities failed to provide farmers with seeds in a timely manner and said fertilizer and other nutrients to bolster crops were also slow in coming. The result was less food for sale at heavily subsidized state farmer's markets. "The frequently semi-empty stalls at the markets are signs of these failures and the difference between what is produced in the countryside and what is sold," the newspaper said. Shortages of all kinds of basics, from lettuce to potatoes to peanuts, are common in Cuba, though some items have lately been even more difficult to find than usual. President Raul Castro has made improving food production and slashing expensive imports a top priority since taking power from his brother Fidel - first temporarily, then permanently - in 2006. The government shifted much of the control of government-run farms from Agricultural Ministry officials in Havana to local farming boards in hopes of boosting productivity. It also put far more idle state land into the hands of private farmers. Still, the government continues to provide seeds, fertilizer, gasoline and other supplies to farms and buys up nearly all of what they produce. Problems at any point in the supply chain can cause lengthy delays and hurt production.
February 2010

Cuban cigar sales plummeted 8 pct in '09

February 23, 2010

Will Weissert- AP, Miami Herald

HAVANA -- Cuban cigar sales tumbled 8 percent to $360 million in 2009 and have fallen by more than a tenth in the past two years as the demand for luxury goods around the world has plunged. Government-run tobacco company Habanos SA said Monday that sales were most sluggish last year in Spain, the top market for the island's coveted stogies, but one also ravaged by recession and rising unemployment. A drop in international travel also hurt sales at airport duty free shops in Cuba and elsewhere, which account for as much as 23 percent of the company's total business, said Habanos Vice President Manuel Garcia. "This is not what we were expecting, not what we hoped for anyway," Garcia said during a news conference kicking off Cuba's five-day annual cigar festival. Garcia said economic turmoil has decimated demand for all kinds of finer things, from cognac to luxury convertibles to cigars. Habanos sales slumped 3 percent in 2008, when a financial crisis sent stock and commodities prices plummeting around the world. "It's been a series of negative factors," Garcia said. He would not say how many cigars Habanos sold in 2009. France, Germany and Cuba itself are also top Habanos markets. Washington's trade embargo against Cuba turned 48 this month and it prohibits Cuban cigars from being sold in the U.S. Like wine, the taste of top tobacco depends on the soil and climate in which it is grown. Sun-drenched plantations in the humid, western province of Pinar Del Rio, especially in its famed Vuelta Abajo fields, have made Cuban cigars famous for centuries. The vast majority of stogies produced on the island are hand-rolled and destined for premium sellers. Habanos was founded in 1994 as a joint venture between Cuba and Madrid-based Altadis SA, part of the island's push to draw private, foreign investment after the collapse of the Soviet Union cost it island billions of dollars in annual subsidies and trade. Altadis has been acquired by Britain's Imperial Tobacco Group PLC. Habanos produces 27 premium cigar brands in 220 different sizes, some as small as cigarettes and others nearly as big as a Chihuahua puppy. Garcia said Habanos has 146 stores worldwide, two more than the number of authorized dealers at the end of 2008. The flagship Cohiba brand was created in 1966 for Fidel Castro - perhaps the world's most famous cigar smoker - and top Cuban leaders to enjoy personally or give as gifts to visiting foreign dignitaries. Cohibas were authorized for sale on the open market in 1982, and Castro abruptly gave up smoking on doctors orders three years later.

Cuba slow to ease grip on shopkeepers

February 9, 2010

Marc Frank, Financial Times

Three years after Cuba’s Rebel Youth newspaper published “The Big Old Swindle” – a scathing series calling for reform of a state-managed retail sector beset by poor management, corruption and abysmal service – debate is still raging over liberalisation. The authorities have yet to act. Rumours abound in Havana that the state will soon cede control over its thousands of barber shops, cafeterias, bakeries and domestic appliance and car repair businesses, opting to regulate and tax rather than administer along the lines of the Chinese or Vietnamese model. Yet the state appears to be doing the opposite, remodelling and opening numerous restaurants, shops and other retail outlets in city after city. Raúl Castro, president, has insisted that Cuba’s Soviet-style command economy needs fixing. He has hinted that ways must be found to reform the retail sector since taking over from his ailing brother, Fidel Castro, two years ago. “State companies must be efficient and so must have resources to be so. The rest should adapt to more adequate forms of property given the resources available,” stated a report by the economy ministry last year soon after Mr Castro replaced the minister and his top deputies. Mr Castro has been short on specifics. However, commentators, economists and analysts propose raising the small number of family businesses and allowing employees to form co-operatives like those long established in agriculture. There is apparently fierce resistance within the ruling Communist party, especially in the provinces. “Cuba is not Havana,” a provincial-level party official in eastern Cuba quipped when asked to square the new government-run retail outlets with the idea that the state should get out of the sector. Pressed, he conceded that the state did not need to run some services, such as every barber shop. But he opposed letting go of larger establishments, such as restaurants or car repair shops. “Most cars and trucks in this country are owned by the state,” he said. A mid-level party cadre who administered eateries in the eastern city of Santiago de Cuba insisted the retail sector’s poor performance was not systemic but subjective. Fixing it was just a matter of improving party discipline, she said. Cuba’s second city has opened more restaurants, bars, stores and other establishments over the past year than any other. The administrator, speaking on condition of anonymity, said Lazaro Exposito Canto, the province’s new party leader, had improved the sector. “Since his arrival the retail sector has been completely turned round. It is a matter of caring about the people and being demanding with subordinates,” she said. The debate has spilled over into the pages of Granma, the Communist party daily, which has carried letters to the editor for and against reform. “We have to shake off the stereotype developed over many years that private property is always evil,” González de la Cruz wrote in a recent edition. “Property, state or private, is valid when it serves a social purpose,” he said. The opposing view was best expressed in Granma by Guerra González, another correspondent. “The solution of creating new owners and co-operatives and making current employees into supposed collective owners [in the retail sector] will only lead to uncontrolled free competition and capitalism,” he wrote, adding, “this would represent not only an economic step backward but a political, social and ideological one”. For the first time since all retail activity – right down to shoe-shine boys – was nationalised in the “revolutionary offensive” of 1968, licences are being handed out to food vendors in the interior who have played cat-and-mouse with police in city streets for decades, saving residents a long walk to state markets. But that appears to be part of reform already under way in the agriculture sector, where decision-making and food distribution has been decentralised and state lands leased to more than 100,000 farmers and would-be farmers. Authorities, in an apparent concession to popular frustration, are also granting family farms and co-operatives permission to sell a part of what they produce directly using kiosks and horse and bicycle-drawn carts. But not a single state-run retail outlet has been handed over to employees as a co-operative, let alone privatised.

Cuba looks to suburban farms to boost food output

February 8, 2010

Marc Frank, Reuters

CAMAGUEY, Cuba (Reuters) - Cuba has launched an ambitious project to ring urban areas with thousands of small farms in a bid to reverse the country's long agricultural decline and ease its chronic economic woes. The five-year plan calls for growing fruits and vegetables and raising livestock in 4-mile-wide (6.5 kilometer) rings around 150 of Cuba's cities and towns, with the exception of the capital Havana. The island's Communist authorities hope suburban farming will make food cheaper and more abundant, cut transportation costs, be less reliant on machinery and encourage urban dwellers to leave bureaucratic jobs for more productive labor. But the government will continue to hold a monopoly on most aspects of food production and distribution, including its control of most of the land in the Communist-run nation. The pilot program for the project is being conducted in the central city of Camaguey, which the Cuban agriculture ministry has said eventually will have 1,400 small farms covering 52,000 hectares (128,490 acres), just minutes outside the town. The farms, mostly in private hands but also including some cooperatives and state-owned enterprises, must grow everything organically, and the ministry expects they will produce 75 percent of the food for the city of 320,000 people, with big state-owned farms providing the rest. On a recent day, dozens of people were hard at work plowing fields, hoeing earth, posting protective covering for crops and putting up fencing as the sun came up. "This land they gave to us, the private farmers. I have four hectares (10 acres) and now they have leased me eight (20 acres) more," one of the farmers, Camilo Mendoza, told Reuters. "Look, on this side and the other side are other plots, and over there another. Here they have given quite a bit of land and support to private farmers," he said. The project is modeled after the hundreds of urban gardens developed by then-Defense Minister Raul Castro during the deep economic depression of the 1990s that followed the collapse of Communism in eastern Europe. BEANS, NOT CANNONS He proclaimed at the time that beans were more important than cannons, marking a strategic shift towards a more domestic focused agenda by Cuban leaders after decades of active support for liberation movements and leftist guerrillas overseas. The suburban project dovetails with other steps introduced by President Raul Castro since he took over the day-to-day leadership from his ailing elder brother Fidel Castro in 2008. These have included the leasing of fallow state lands to 100,000 mostly private farmers, raising prices for farm products and allowing farmers to sell part of their crops directly to the people instead of to the state. On the other side of Camaguey and a few miles up Cuba's central highway, Armando, the head of a cattle cooperative, said his group was persuaded to join the plan by the offer of land to raise garden and root vegetables and the chance for direct sales to the public. Stands have been set up every mile or so along the city's ring road for the sales, but Armando said they are taking their products to the customers. "They assigned us a district where we can sell our produce. We are using a mobile system, a bicycle cart, and sell out every day," he said. "In December we produced around five tonnes. The root vegetables we had to sell to the state, but we were free to sell the garden vegetables directly," he said. The changes are tweaks to Cuba's centralized socialism, not a major step away from it, keeping with Raul Castro's vow to protect the system put in place after his brother took power in the 1959 Cuban revolution. He has balked at more sweeping, market-oriented changes that many expected when he took power and without which many economists say Cuba will not significantly increase agricultural output. Cubans have seen many past government efforts to transform the country's agriculture fail, so the farmers at Camaguey said they were taking a wait-and-see attitude on this latest one. "For sure there will be more food around here if you come back in a few years," Camilio Mendoza said about his expectations. "More than that, I can't say." .
December 2009

Cuban nickel output seen lowest in a decade

December 31, 2009

Marc Frank, Reuters

HAVANA, Dec 30 (Reuters) - Cuba's unrefined nickel plus cobalt production appears to have been between 60,000 and 65,000 tonnes this year, the lowest in a decade, according to scattered radio reports this week. Cuba produced 70,400 tonnes of unrefined nickel and cobalt in 2008, after averaging between 74,000 and 75,000 tonnes during much of the decade. While production at Canadian mining company Sherritt International's (S.TO) nickel venture in Cuba topped 37,000 tonnes, output at two plants owned by state-run Cubaniquel was well below capacity. Cuba has not announced this year's nickel output, with officials simply stating it was less than the 70,000 tonnes planned. The Caribbean island is one of the world's largest nickel producers and supplies 10 percent of the world's cobalt, according to the Basic Industry Ministry. "The Pedro Soto Alba plant met this year's plan, producing more than 37,000 tonnes of nickel, and remains open," Jorge Cuevas Ramos, the first secretary of the Communist Party in Holguin, was quoted by national state-run Radio Rebelde on Wednesday as stating. Radio stations based in Holguin, where the three plants are located, reported this week that production at the Cuba-owned Ernesto Che Guevara plant, with a capacity of 32,000 tonnes, did not meet it's 26,000-tonne plan. There was no mention of output at the country's third and oldest plant, the Rene Ramos Latourt at Nicaro Holguin, which has a capacity of 10,000 to 15,000 tonnes and is also operated by Cubaniquel. Scattered reports this year indicated Rene Ramos Latourt and the feed process to the plant were operating below capacity at various times, so there were most likely production problems there as well. Hurricane Ike, a Category 3 storm, hit Cuba in September 2008 at Holguin's northern coast, where the nickel industry's three processing plants are located, damaging the two Cubaniquel plants, infrastructure, housing and buildings and swamping the area with torrential rains and a storm surge. Nickel is essential in the production of stainless steel and other corrosion-resistant alloys. Cobalt is critical in production of super alloys used for such products as aircraft engines. Cuban nickel is considered to be Class II, with an average 90 percent nickel content. Cuba's National Minerals Resource Center reported that eastern Holguin province accounted for more than 30 percent of the world's known nickel reserves, with lesser reserves in other parts of the country. (Additional reporting by Nelson Acosta; Editing by Walter Bagley) .

Despite crisis, Cuba says GDP rose 1.4 pct in '09

December 20, 2009

BusinessWeek- Will Weissert,

Cuba used its unique brand of state accounting Sunday to claim 1.4 percent economic growth for the year, avoiding an official recession but failing to meet original forecasts by more than two-thirds. It's a steep decline for a country that posted a 12.5 percent official growth rate as recently as 2006 and had expected gross domestic product to expand by 6 percent in 2009. Still, Economy Minister Jorge Murillo branded the result "a moral victory" and told a session of Cuba's rubber-stamp parliament to expect another, saying officials project GDP to grow 1.9 percent in 2010 -- despite a worldwide recession that communist Cuba blames on global capitalism and free-market-friendly policies. When calculating growth, the government includes what it spends on free health care and education through college, as well as subsidies for housing, transportation and food rations. Critics say that exaggerates output. Nonetheless, Cuba's economy was hit hard by the recession this year, with productivity declining 1.1 percent, exports falling 22 percent, and officials slashing foreign imports 37 percent. Murillo said Cuba simply could not afford more imports -- despite the government's ongoing complaint that the 48-year-old U.S. embargo is blocking it from purchasing vital American goods and causing shortages of everything from basic food, to car parts and school supplies. "Since the end of last year, we have seen a marked deceleration in the flow of hard currency," the island's top economic official said. "Because of that, it has been difficult to meet our obligations and external payments." Murillo said the government is renegotiating its debts to foreign countries, as well as what it owes to multinational firms operating on the island -- hundreds of which have complained that Cuba has stopped paying them while also restricting the amount of money they are able to withdraw from bank accounts they hold on the island. The economy minister said Cuba did not adequately prepare for the fluctuating price of nickel, its chief export, and added that tourism failed to generate as much revenue as hoped -- even though Cuba is on pace to break last year's record of more than 2.4 million annual visitors. Meanwhile, Osvaldo Martinez, head of the parliament's economic affairs commission, blamed falling national productivity on an excess of Cuban employees who have jobs but do too little work -- a long officially sanctioned practice that allows the country to claim an official unemployment rate of under 2 percent. It's "an old problem of superfluous jobs and an excess of positions in many of the country's activities," Martinez said. The government dominates well over 90 percent of the economy and pays state employees an average of less than $20 per month, making it easy for most sectors to take on far more employees than necessary -- even if it hurts overall productivity. Without releasing specific figures, Murillo said Cuba spent nearly 5 percent more than it took in this year. That was better news than in 2008, when the island ran up a 6.7 percent deficit. Cuba's weak economy has been kept afloat in recent years by Venezuelan President Hugo Chavez, who sends more than 100,000 barrels of oil a day in exchange for social services, including Cuban doctors who provide free medical care in that South American country.

Investors sticking it out in crisis-prone Cuba

December 18, 2009

Marc Frank, Reuters

HAVANA, Dec 17 (Reuters) - The number of joint ventures and other investment projects in Cuba remained stable this year despite a liquidity and payments crisis, according to testimony before a parliamentary commission published on Thursday. Foreign Trade and Investment Minister Rodrigo Malmierca reported there were 258 joint venture and other investment projects operating in the country and 46 abroad, according to the Communist Party newspaper Granma. In July 2008, the last time figures were released, the government said there were 246 joint ventures and other investment projects in the country, but gave no figures for Cuban projects outside its borders. Cuba has pharmaceutical ventures in Iran, India, China, Brazil and other countries, works construction in Angola and Vietnam, operates a hotel in China, and has numerous ventures in Venezuela. U.S. law forbids companies from investing in Cuba, though they may hold a minority stake in foreign firms with less than 50 percent of their operations in Cuba. "The presence of American investors in foreign firms that trade with or invest in Cuba is of growing importance," said Paolo Spadoni, a Cuba expert at Tulane University's Center for Inter-American Policy and Research and author of a soon-to-be-published book on U.S. money flows to Cuba. Some joint ventures have had difficulty transferring funds and profits abroad from state banks this year despite contractual guarantees. "FUNDS BLOCKED" Hurricanes, the international financial crisis, U.S. sanctions and a sluggish state-dominated economy left Cuba short billions of dollars this year, officials reported, and banks unable to back funds deposited in a local foreign exchange equivalent. "We are hanging in here hoping the situation will improve in 2010," the foreign manager of one venture said, asking that his name not be used. "We are trying to use local products to keep going because we can not keep importing with funds blocked in the bank." Malmierca said most ventures abroad were with allies Venezuela, China and Angola, while inside the country investors from Spain, Venezuela, Canada and Italy held the greatest presence in sectors such as tourism, oil exploration, communications and mining. "This shows that the Cubans have learned at least one major lesson from their last major economic crisis in the 1990s, which is the importance of diversification," said Dan Erikson, a Cuba analyst with the Inter-American Dialogue in Washington. "Although 2009 has been a grueling year for the Cuban economy, the island is now engaged with a spectrum of international partners across a range of industries, which has provided a much needed economic cushion," he added. The official media reported Cuba signed two hotel ventures with Qatar, a fishing venture and four oil exploration contracts with Russia, numerous deals with Venezuela, an electronics assembly venture with China, and a paper venture with a Spanish firm in 2009. The Spanish venture was the first reported with a European company in a number of years as Havana increasingly focuses on strategic allies Venezuela and China, Russia and energy rich developing countries such as Algeria, Angola, Vietnam and Qatar. (Editing by Leslie Adler) .
November 2009

Cubans scamper to avoid dreaded blackouts

November 24, 2009

Marc Frank, Reuters

HAVANA, Nov 24 (Reuters) - Cubans are scrambling to turn off lights and appliances and children are going door to door reminding them to do just that under a government threat of dreaded blackouts if energy consumption is not reduced through the end of the year. The drive to reduce energy use appears aimed at saving foreign exchange, and not related to the lack of oil and generating capacity that caused up to 18-hour blackouts in the 1990s after the demise of Cuba's patron the Soviet Union. In easternmost Guantanamo province, neighborhoods, on a rotating basis, are abstaining for an hour in the evenings when consumption peaks. "It is very important to save energy house by house. People know it is the only alternative to blackouts," Guantanamo retiree Pedro Fernandez said in a telephone interview. In various provinces grammar school children, organized into "click brigades," were reported going door to door to remind residents to save power. Cuba has been grappling with the global economic downturn, which has slashed revenues from key exports, dried up credit and reduced foreign investment. The communist-run Caribbean nation also faces stiff U.S. sanctions that include cutting access to international lending institutions, and it is still rebuilding from last year's trio of hurricanes that caused an estimated $10 billion in damages. The Cuban government controls all power generation and distribution and sells electricity at subsidized prices. "We are taking exceptional measures, such as shutting off air conditioning and refrigeration in all state entities that do not stockpile medicines and food," the deputy governor of central Villa Clara province, Jesus Martuste, told the official Radio Rebelde. "We have not shut down production, only adjusted some in the name of efficiency," he said. End-of-year university breaks have been extended a week, street lighting significantly reduced in the capital and provinces, non-essential air conditioning and refrigeration turned off, and some production and services "adjusted" away from times of high demand, according to media reports and a telephone survey of six provinces. "The choice is simple. Save or suffer blackouts, and that is a situation nobody wants to live through again," Gloria Hernandez, an office worker in central Camaguey province, said in a telephone interview. A Council of Ministers circular, dated Oct. 21 and which reduced government power allocations, termed the energy situation "critical" and called for "extreme measures" through December. "The energy situation we face is critical and if we do not adopt extreme measures we will have to revert to planned blackouts affecting the population," said the order, which was seen by Reuters. All provincial governments and most state-run offices and factories, which encompass 90 percent of Cuba's economic activity, were already ordered in June to reduce energy use by a minimum of 12 percent or face mandatory electricity cuts. The situation is not as dire as in the 1990s because Cuba receives 93,000 of the 150,000 barrels of oil per day that it consumes from strategic ally Venezuela on preferential terms. (Additional reporting by Nelson Acosta; Editing by Eric Beech) ((marc.frank@thomsonreuters.com; +537 833-3145)) .

Cubans Worry as Economy Suffers

November 12, 2009

CBS News- Portia Siegelbaum,

Ever since Raul Castro became Cuba’s President in February 2008, people—at home and abroad—have been waiting for changes that would improve living conditions on the island. But the changes have been slow coming and there are indications that when they do take place they might not be the ones hoped for. For three days this week, the official Communist Party daily, Granma, has front-paged statements made in the 1970s and 80s by former President Fidel Castro. They are all variations on the same theme: too many people being employed to do too little, and low productivity as the bane of the economy. He also warned that at some point there would be more university graduates than openings in their fields and that students should view their degrees as an honor but not necessarily as a ticket to a professional career. Castro’s statement printed last Tuesday focused on “inflated” payrolls. Inside the same newspaper was an article announcing that the Ministry of Agriculture would be cutting thousands of bureaucratic jobs. Twenty-six percent of their employees - 89,000 people - it said, were office workers resulting in an “excess of unproductive personnel.” Cubans fear that similar layoffs will come in many other sectors of the economy and that Granma’s publication of Fidel Castro’s views—if dated—on the issue are rather like trying to put the “Good Housekeeping Seal of Approval” on what are bound to be unpopular if necessary measures taken by his younger brother Raul. Raul Sarmiento, a retired University of Havana professor of political economy who for many years reported on economic issues for Cuban TV, sees the payroll cuts as part of the effort to save money and reduce subsidies but is unwilling to say that those laid off will be left to scrape by on their own. “These are bureaucrats who don’t produce anything … I don’t think unemployment will go up but that these people who are now a burden on the economy will be relocated in jobs where they actually produce something,” Sarmiento says. He wouldn’t specify where in the economy they could accommodate tens of thousands of newly unemployed white collar workers. Cubans are closely watching every step taken. “People are very tense,” said a foreign ministry employee and specialist on the Caribbean. “The ration book is flying out the window,” she said, asking not to be named because she was not authorized to make statements to the press. The ration book she refers to is a thin drab brown pamphlet the government issues annually to every Cuban family. It entitles them to a series of basic products—rice, beans, eggs, etc.—at highly subsidized prices. Earlier this year President Castro said his “maximum priority” was increasing domestic agricultural production. It’s an understandable goal as international prices have gone up and Cuba depends on imports for over 80 percent of the food consumed by the population of 11.2 million. But to cope with the global economic meltdown, $10 billion in damages from three hurricanes in 2008 and a liquidity crisis, Cuba has been forced to reduce spending: imports were cut by 30 percent, and overall trade is down by 36 percent to about $10 billion so far this year with about 80 percent of that being foodstuffs, according to Foreign Trade and Investment Minister Rodrigo Malmierca, who spoke at the recent International Trade Fair in Havana. The official state-owned media has been floating trial balloons on cost cutting and import substitution. Some of what they suggest has begun to be implemented, at least in part. In October, the Communist Party's daily newspaper Granma published a full-page editorial saying it was time to do away with the five decade old rationing system. It went so far as to compare some Cubans to "baby birds," waiting to be fed by "Daddy state." That description drew criticism from many people who have long complained about the “paternalistic state” that left them little room for individual initiative. The follow-up to that editorial was the recent removal of two basic products—potatoes and dried peas—from the ration book. Now they are available in unlimited quantities but at substantially higher prices - as long as the supplies last. Prior to that, cheap state-subsidized lunches were eliminated on an “experimental” basis from four government ministries whose workers had regularly eaten in on-site cafeterias. Wages were raised by 15 Cuban pesos a work day to compensate. And to encourage employees to “brown bag it” one of those ministries, the Ministry of Economy and Planning, has installed microwaves and a city food service has taken over their lunchroom and is offering reasonably priced meals in Cuban pesos. All of this represents major changes in Cuba’s system. So much so that all the chatter in a doctor’s waiting room last week focused mainly on the potential disappearance of the ration book. Like her patients, the woman general practitioner, a single mom supporting a 9-year old daughter and a mother in her 70s, worries how she will get by on her salary. She already illegally sells her Internet password—provided by the Health Ministry—for 250 Cuban pesos a month. Cuban economists have long debated the subsidized rations. Most have argued for providing aid to families in need rather than subsidizing products for everyone. But the ration book is a nearly 50-year-old institution and the thought of losing it provokes panic in many quarters. Clara, a housewife, and Pedro, a retired administrator are both in their 80s. In their younger years, Clara took in sewing and with her earnings and her husband’s salary, they did alright. Now they are forced to live on Pedro’s 200 peso monthly pension. They buy everything available on the ration book at their local grocery but they resell the extra sugar and rice to their neighbors at prices well above what they paid for them. They wonder what they will do for extra income if the ration book no longer exists. “Some people don’t buy the chicharos or dried peas but some families depend on them,” says Alina, a hotel restaurant employee in her 40s. Looking doubtful she added, “We’ll have to wait to see what happens.” Alina, like other tourist industry worker, is part of a privileged group whose income from tips gives them a living standard way above the average worker. But now they say their income is down because although tourists continue to vacation in Cuba they are spending less because of the economic crisis in their own countries. Besides the problem of putting food on the table more cheaply Cuba is also facing an energy crunch which is bound to become another irritant of everyday life. In June, government offices, factories and schools were ordered to substantially cut electricity use. Air conditioners were only allowed to be used for about three hours a day despite the unseasonably warm temperatures. In Havana, the enterprise providing information services for the national transportation industry, SITRANS, has a windowless room full of computer servers and other equipment worth tens of thousands of dollars. But the IT employees there are prohibited from turning on their air conditioners before 1 p.m. and by 4 p.m. they must be turned off. “It’s only going to be a matter of time before the equipment begins to break down. My co-workers are already suffering from the stifling heat,” says one of their specialists, who asked us not use him name. Now State enterprises are being asked to save even more energy during the remainder of 2009. A memo circulated by the Ministry of Light Industry to factories and work centers under its control says Vice President and Communications Minister Ramiro Valdez has ordered them to take “extreme measures” in order to avoid having to resort to programmed blackouts in residential neighborhoods. Among the measures to be implemented immediately is a total ban on air conditioning. Production, except for export goods and essential domestic products, will be shut down. Commercial refrigeration will be turned off unless they hold perishable food or medicines. Even security lighting will be reduced to the minimum. Similar memos have gone out to other sectors of the economy and to provincial and city governments. Already residents of the eastern city of Santiago de Cuba are complaining about reports that street lights will be turned off. “The most common complaint is that the absence of street lighting will be dangerous,” says law professor Miguel Martinez. “Increased crime and hilly streets that are difficult to navigate even in daytime will make for an unhappy mix,” he points out. It’s unclear if the current energy crunch is simply a result of people having used more fuel than the country has money to pay for during an extremely hot Spring and summer or if there are other factors that have not been made public. Cuba receives over 90,000 barrels a day of crude oil from Venezuela on very favorable terms that involve providing that country with medical and other professional personnel. Some Cuban analysts we spoke with speculated that Cuba might be reselling some of that oil in an effort to boost its cash reserves but it has not been possible to confirm that. There is a belief, however, that President Raul Castro is trying to deal with the problems of his cash-strapped economy in ways that will provoke the least instability. But that doesn’t mean he will hold back on changes he deems necessary.

Cuba orders extreme measures to cut energy use

November 12, 2009

Marc Frank, Reuters

HAVANA (Reuters) - Cuba has ordered all state enterprises to adopt "extreme measures" to cut energy usage through the end of the year in hopes of avoiding the dreaded blackouts that plagued the country following the 1991 collapse of its then-top ally, the Soviet Union. In documents seen by Reuters, government officials have been warned that the island is facing a "critical" energy shortage that requires the closing of non-essential factories and workshops and the shutting down of air conditioners and refrigerators not needed to preserve food and medicine. Cuba has cut government spending and slashed imports after being hit hard by the global financial crisis and the cost of recovering from three hurricanes that struck last year. "The energy situation we face is critical and if we do not adopt extreme measures we will have to revert to planned blackouts affecting the population," said a recently circulated message from the Council of Ministers. "Company directors will analyze the activities that will be stopped and others reduced, leaving only those that guarantee exports, substitution of imports and basic services for the population," according to another distributed by the light industry sector. President Raul Castro is said to be intent on not repeating the experience of the 1990s, when the demise of the Soviet Union and the loss of its steady oil supply caused frequent electricity blackouts and hardship for the Cuban public. The directives follow government warnings in the summer that too much energy was being used and blackouts would follow if consumption was not reduced. All provincial governments and most state-run offices and factories, which encompasses 90 percent of Cuba's economic activity, were ordered in June to reduce energy use by a minimum of 12 percent or face mandatory electricity cuts. The measures appeared to resolve the crisis as state-run press published stories about the amount of energy that had been saved and the dire warnings died down. The only explanation given for the earlier warnings was that Cuba was consuming more fuel than the government had money to pay for. The situation is not as dire as in the 1990s because Cuba receives 93,000 barrels per day of crude oil, almost two-thirds of what it consumes, from Venezuela. It pays for the oil by providing its energy-rich ally with medical personnel and other professionals. Cuba has been grappling with the global economic downturn, which has slashed revenues from key exports, dried up credit and reduced foreign investment. The communist-run Caribbean nation also faces stiff U.S. sanctions that include cutting access to international lending institutions, and it is still rebuilding from last year's trio of hurricanes that caused an estimated $10 billion in damages. In response, the government has cut spending, slashed imports, suspended many debt payments and frozen bank accounts of foreign businesses. It reported last week that trade was down 36 percent so far this year due mainly to a more than 30 percent reduction in imports. (Editing by Jeff Franks and Eric Beech) .

Crackdown on illegal vendors

November 6, 2009

CubaNet, Miami Herald

HAVANA, Cuba, Nov. 5 (Ángel Luis Bernabé, Isla Press / www.cubanet.org) – The City of Havana provincial court has punished 85 persons so far this year for illegally selling goods and food on the street. Antonio Torres of the public prosecutor’s office said those punished were guilty of anti-social acts because they were selling prime need goods. He said the measures taken against them will put a brake on hoarding and thievery. Housewife Mercedes Campos said reality was different and that the sellers were offering goods and foodstuffs unavailable at government stores and markets. “They’re the ones who are at risk and loss, but the real thieves are those in the government,” she said. “They’re the ones who are stealing the goods for sale on the black market.” .

In recession-battered Cuba, tough entry for business outsiders

November 6, 2009

Joseph Mann, Miami Herald

The world recession has caused more intense screening of business executives seeking Cuban visas and has slowed down decision-making on new business projects on the communist island, a U.S. maritime executive said Thursday. Speaking at the SeaCargo Americas conference in Miami, Jay Brickman, vice president of government services at Crowley Marine Services, said the worldwide slowdown has battered an already weak Cuban economy, with prices for nickel exports down by some 40 percent, a sharp decline in remittances from Cubans overseas and less spending by tourists visiting the island. ``The [economic] situation is causing indecision in a group used to central controls, and there is less initiative to make decisions,' said Brickman, who began visiting Cuba in 1978 and recently returned from a trip to the island. Crowley has regular shipments from Port Everglades to Havana. ``It's easier to travel to Cuba from the U.S. point of view, but it's more difficult from the Cuban point of view. To go there, businessmen need a business visa and that has to be given out by the Cuban government.' The Cubans are asking why business executives want to come to their country now and didn't before, he said. His advice: ``It's best to be transparent with them.' Speaking on the same panel, Pedro A. Freyre, chairman of the Greater Miami Chamber of Commerce Cuba Committee, an attorney and co-author of a study on a post-embargo Cuba, offered four basic tracks for Cuba in the coming years. In the first, the Cuban economy continues to deteriorate as Raúl Castro succeeds his brother, the Cuban Communist Party stays in power and there are no significant economic or political changes. He likened this scenario to the last days of the gerontocracy in the Soviet Union. Under a hybrid scenario, Fidel Castro ``goes to the great party congress in the sky,' there are significant economic reforms but no political changes. ``Then we will have a Vietnam [style economy] in the Americas,' Freyre said. A transition scenario would come about if both Raúl and Fidel Castro die and a period of national reconciliation ensues. There could be meaningful economic and political reforms, settlement of property claims and election of a democratic government. ``Then Home Depot would go to Cuba and sell a million gallons of paint in a week,' said Freyre. In the fourth scenario, which Freyre said he hopes will not occur, there would be increasing social tensions leading to violent confrontations and political and social upheaval. Subsequently, Cubans would attempt a mass exodus to the United States. During a morning session at the AirCargo Americas conference, which was held simultaneously, an executive of Cargolux Airlines, Europe's largest all-cargo airline, said that the air cargo business worldwide was in the midst of a ``crisis' with cargo volume down by about 20 percent this year, low freight rates and rising costs for fuel. Sebastiaan Scholte, head of marketing and special projects at Cargolux, noted that airlines worldwide will likely lose about $11 billion this year. Air cargo, he added, moves only about 2 percent of all cargo volume, but this cargo is worth more than 33 percent of the value of freight moved worldwide. Brandon Fried, executive director of the Airforwarders Association, said that air cargo recently has seen an increase in business, making him optimistic about a recovery next year. ``We are a leading indicator,' said Fried. ``When companies need something on their shelves right away, they use air cargo.' The three-day joint conferences and exhibition organized by the World Trade Center Miami, the Port of Miami and the Miami International Airport end Friday. The event, held at the DoubleTree Miami Mart Hotel and Convention Center, is the largest hemispheric event dedicated to air and ocean trade.
October 2009

Faced with a deep recession, Cuba tries socialism lite

October 14, 2009

Frances Robles, Miami Herald

Cuba's workplace cafeterias are closing, President Raúl Castro keeps saying the well-off shouldn't get the same subsidies as the poor, and now there are rumblings that one of the stalwart vestiges of the revolution -- the ration booklet -- has outlived its usefulness. As the Cuban government struggles through a deep recession, its leaders have begun picking away at socialism in order to save it. But experts say the latest buzz by the Cuban government is simply another desperate fix to stem the slide of a failed economy that buckled long ago. Even one of Havana's leading economists recently said Cuba's economy needed to be turned upside down -- ``feet up.' So taxi drivers got private licenses, farmers now have their own plots of land and government workers have to pack their own lunches. ``I think what they are trying to do is prepare the people for a hard landing,' said Cuba expert Jonathan Benjamin-Alvarado of the University of Nebraska. ``The government is really saying in so many words: We've got limited resources and can only do so much. I think they are stuck.' Since he took office early last year, Raúl Castro has been saying that the country's severely battered economy needs fixing. In a widely quoted August speech, Castro said Cuba was spending more than it made. ``Nobody, no individual nor country, can indefinitely spend more than she or he earns. Two plus two always adds up to four, never five,' he said. ``Within the conditions of our imperfect socialism, due to our own shortcomings, two plus two often adds up to three.' CASTRO'S CHANGES In the 18 months since he took office, Castro restructured the nation's agricultural system to give idle land to farmers, hoping they would revive a deeply troubled state-run agricultural industry plagued by inefficiency. He also allowed taxi drivers to have private licenses; many were working illegally anyway. Castro suggested it was time to rethink fundamentals such as deep subsidies for everyone. He started by saving $350 million by closing workplace cafeterias at four government ministries. Workers got a slight boost in pay as a result. On Friday, the Cuban state newspaper Granma published a signed editorial from its top editor criticizing the so-called ``supply card,' which provides Cubans with about a week and a half of deeply subsided groceries. In an article titled ``He's paternalistic, you're paternalistic, I'm paternalistic,' Granma editor Lázaro Barredo Medina blasted the Cuban ``gimme' mentality. ``You don't go to the store to buy, you go so they can give you what's yours,' he wrote. Barredo, a member of the Cuban National Assembly, did not say when changes to the system could take place. But in a country where the Communist Party and central government control the media, it was as if Castro had written the newspaper column himself. IT'S `ABOUT POWER' ``Of all the subjects and problems that can reach Granma, they chose this one, so undoubtedly they are planning to eliminate what I call the (un)supply card,' Central Cuban dissident Guillermo Fariñas said in a telephone interview. ``They are doing things like that -- and this pilot program to close the workplace cafeteria at some government ministries -- because they are trying not to spend money on food. It goes against socialism, but it goes in favor of staying in power, which in the end is what interests the Castro dynasty. ``This is about power.' Earlier this year, the Cuban government announced that 2009 economic growth projections had dropped from 2.5 percent to 1.7 percent. Last year, when the rest of the world reeled from the global financial meltdown, Cuba was hit with three hurricanes that cost $10 billion. Nickel prices tanked, and even tobacco production shrank drastically as fewer smokers around the world lit up. Suddenly the rush was on to find ways to trim waste from Cuba's inefficient economic model. ``Cuba goes through cycles of strict ideological code, but that code does not function. That code leads to corruption, leads to the black market and leads to economic collapse,' said Baruch College professor Ted Henken. ``So they shift back and forth, and they've been doing that for 45 or 50 years.' For nearly 20 years, Cuba has more often shifted toward market reforms but always stressed that the political system was not to be debated, he said. ``There's an expression in Cuba: You can play with the chain, but not the monkey,' Henken said. ``That's what they are doing: pulling at the chain, but the monkey is still attached.' .

The demise of the free lunch

October 13, 2009

The Economist

THIS month staff at four government ministries in Havana had to make new arrangements for lunch. The ministries’ free canteens were shut down and workers given a wage increase of 15 pesos ($0.60) a day in compensation. Since that raises their salaries by more than half in return for losing an often poor-quality lunch, on this occasion Granma, the daily newspaper of the ruling Communist Party, may have got it right when it headlined the news, “Giving, more than taking away”. Small though the change is, it is of huge symbolic import. It is the first step in a wider, albeit stealthy, abandonment of Fidel Castro’s half-century effort to forge a “new man” in Cuba by limiting individual reward in favour of all-embracing social provision, with the state imposing its choice of consumption as well as of production. Granma said that after the plan was “perfected” some 3.5m Cubans could expect their 24,700 workplace canteens to close too, and would get a similar wage increase. The government is also organising thousands of public meetings across the island to discuss a wider ten-point plan that proposes an end to the monthly ration of free staples and a host of perks, such as free wedding cakes. Instead, the focus is on creating incentives to work harder by raising wages, and thus productivity. All this reflects the ideas of Raúl Castro, who after almost half a century as defence minister replaced his elder brother as Cuba’s president last year and who has been much franker in discussing the country’s economic failures. While acknowledging the damage inflicted by hurricanes last year and by the American economic embargo against the island, he has stressed the economy’s inefficiencies. “Nobody, no individual or country, can indefinitely spend more than she or he earns,” he told the National Assembly in August. Cuba is close to bankruptcy. Foreign businesses have been waiting for months for permission to transfer abroad hundreds of millions of dollars in profits from joint ventures that are sitting in local banks. The government has slashed imports by more than 30% this year, and budgets for state companies and ministries have also been cut. Cuba does not produce enough and its population is ageing. Theft and absenteeism are rife in workplaces across the island. Raúl has placed trusted military men in charge of economic policy. Their aim is to save foreign exchange and raise output. They reckon that Cubans do not value the true cost of free services. Workplace canteens used some $350m in imported food last year, according to Granma. On the streets, reaction was mixed. A finance-ministry worker who had brought from home a lunch box of chicken breast and mashed malanga (a starchy root) supported the change. Another grumbled that 15 pesos would buy only a bun and a slice of ham and was no substitute for a hot meal. Menierva, a woman who sells pizzas at her front door next to the ministry on Havana’s Calle Obispo, said that her sales were rising. Cubans grumble, too, that the monthly ration of staples only lasts 10-15 days, and many items are often unavailable. But when it goes, they may miss it. Raúl is cautiously decentralising the economy, giving state companies more autonomy and leasing idle state land to private farmers. Officials at the Ministry of Economy and Planning are mulling over whether to introduce greater flexibility to other activities, by using co-operatives, say. Some local economists want to encourage family-owned restaurants and takeaway businesses, such as Menierva’s, to fill the lunch gap. Although Fidel Castro has withdrawn from day-to-day decision-making since an abdominal operation in 2006, big changes still require his consent. He continues to abhor markets. After the collapse of the Soviet Union and its generous subsidies to Cuba, Fidel allowed limited foreign investment and self-employment. When the economy briefly recovered, he cracked down: only 200,000 Cubans now have licences allowing them to run micro-businesses, such as restaurants or hairdressers, down from a peak of 350,000. The government said state-run restaurants will now provide more lunches. That is a recipe for appalling food and service. Some farmers complain of the state’s continuing monopoly over inputs and sales. Bumper crops of tomatoes and rice were partly wasted because of transport and processing problems. What nobody is saying publicly is that Raúl is tossing into the dustbin of Cuban history the idea espoused by Ernesto “Che” Guevara, at the start of the revolution that Cuba’s communist economy should be based on “moral incentives”, rather than material ones, and that this process would create a “new man”. Through various zigzags Fidel never wholly relinquished that idea. When opponents criticise Cubans’ derisory wages (averaging $20 per month), officials always point to the additional “social wage” of free housing, health, education, transport and food rations. Some of this will now go. Raúl, a practical man, has no time for Utopianism. He gives every sign of knowing that if Cuban communism is to survive its founders it will have to supply people with a few more material goods. But he may find it hard to raise wages by much without more radical reform. Cuban society no longer resembles that of the Soviet days. In real terms wages are still less than 50% of their level of 1989. Meanwhile, remittances from abroad, self-employment, tourism, foreign investment and the informal economy have lifted the incomes of a large group of Cubans. Some local sociologists say that around half the population is doing fine by developing-country standards, whereas the other half is living on the edge of poverty. “Maintaining subsidies and gratuities for all once ensured greater equality, but today they only exacerbate inequality,” a recent report for the Communist Party concluded. That seems to presage a move towards targeted social policy—radical indeed for Cuba.
September 2009

Drop in imports highlights Cuban economic crisis

September 5, 2009

Juan Tamayo, El Nuevo Herald

Cuba's sea-borne imports dropped by nearly two-thirds in the first half of this year compared to the same period in 2008, official data showed, highlighting the depths of the island's economic crisis. Yet the value of Cuba's U.S. imports for the same period dropped only 15 percent, underscoring the U.S. producers' advantages because of the short distance between the countries, trade experts said. A cargo transportation report issued last month by Cuba's Office for National Statistics shows that imports by sea dropped from 4,626,000 metric tons to 2,309,000 mt from the first half of 2008 to the same period this year. Exports also dropped, from 307,000 to 203,000 MT. ``The numbers show the real contraction of the Cuban economy because they reflect not the value but the volume,' said Jorge Piñon, a fellow at the University of Miami's Center for Hemispheric Policy who monitors the island's economy. The Cuban government has been reported to be planning to cut its 2009 imports by at least 30 percent because of its economic crisis. Raúl Castro's government is currently facing the worst economic crisis since the Soviet Union collapsed in the early 1990s. Three hurricanes last year caused $10 billion in damages, the world economic slowdown sparked a cut in the price and volume of Cuba's main export, nickel, as well as an estimated $1 billion drop in foreign lending to the island. Cuba's imports from U.S. producers have held up far better than imports from other countries, however, according to U.S. government figures gathered by the New York-based U.S.-Cuba Trade and Economic Council (USCTEC). The value of U.S. food and agricultural exports to the island dropped from $355.6 million for the first six months of 2008 to $301.8 million for the same period in 2009 -- a 15 percent drop -- according to the USCTEC figures.

Cuban lunchrooms closing, food service boom looms

September 3, 2009

Marc Frank (Reuters), Reuters

HAVANA (Reuters) - Cuba plans to close state-run office lunchrooms, put more money in employees' pockets and let them fend for themselves as it cuts budgets and food imports and works to wean people off the dole, government sources said. "The order is already out to close the lunchrooms of the ministries in Havana and pay the employees 15 pesos more per day," a mid-level government administrator said this week, asking that his name not be used. "If all goes well many more will close in the city and around the country," he added. The plan, in its pilot phase and which could involve hundreds of workplace cafeterias by next year, will fuel demand for food services provided by private vendors and other state-run food services. On the always crowded market-lined Tulipan Street in the Nuevo Vedado neighborhood, state and private vendors said they had heard of the measure and some were preparing for the increased demand from employees of the nearby agriculture and transport ministries. "I'm training two people to help me as I can't meet the demand that's coming. I have to think big," pizza maker Jorge Perez Diaz said. Roselia, an employee at a state-run cafeteria who asked that her last name not be used, was less enthusiastic. "They are going to have to give us more resources and employees because what there is now will not do even to start," she said. Cuba, like other Caribbean countries, has been hit hard by the global financial crisis, which has slashed revenue from key exports and tourism, dried up credit and reduced foreign investment. The government has cut imports by 30 percent and local budgets by around 10 percent, implemented energy savings and adopted other measures this year to cope with the crisis. President Raul Castro has railed against government inefficiency, pilfering and hand outs since taking over from his ailing brother Fidel Castro last year. Last month he called for "elimination of free services and improper subsidies -- with the exception of those called for in the constitution (healthcare and education)." BLACK MARKET The decision to close lunchrooms comes even as the government considers turning over some retail food services to workers as cooperatives and perhaps increasing licenses issued for private food vendors, frozen in recent years. Popular state television commentator Ariel Terrero recently suggested that sectors such as food services could perform better if they were run in a new way. Terrero pointed to Castro-led reforms in the island's agriculture that include decentralization of decision-making, greater emphasis on private cooperatives and farms, and the leasing of state lands to about 80,000 individuals. "The leasing of state lands, which in the end is the placing of state property in the hands of producers, could be applied in other sectors, for example food services ..." he said. The lunchrooms are a major source of black market activity, with a minimum 20 percent of the tons of imported food assigned every day stolen, the government believes. Waste is also rampant. A local economist said the plan killed numerous birds with one stone, from theft and employee grumbling over poor lunchroom meals to the need to transport supplies and supervise the lunchrooms, but what still needed working out was how the new demand for food on the street would be met. "The daily lunch stipend represents a doubling of Cuba's average base pay of just over 400 pesos per month and will greatly increase demand on the street for state and family-based food service providers," he said, asking his name not be used. The economist said many employees were expected to bring a meal to work, but others would buy the sandwiches, pizzas or bigger box lunches of rice, beans and pork or chicken typically offered by private vendors and state-run food services for 10 to 20 pesos. (Editing by Jane Sutton and Eric Beech) .
August 2009

Cuba faces toilet paper shortage

August 27, 2009

Juan Tamayo, Miami Herald

There's good news and bad news in Cuba. The bad news: There's a shortage of toilet paper, and officials in Havana say it will not ease until the end of the year. The good news: Day-old copies of the Communist party's newspaper Granma, a traditional substitute, are available for less than a U.S. penny. And that's six to eight full, if rough, pages per day. Cuban officials say the shortage is the result of the global financial crisis and three devastating hurricanes last summer, which forced cuts in imports as well as domestic production because of reductions in electricity and imports of raw materials. But CNN commentator Fareed Zakaria says that ``at the bottom of this toilet paper shortage is Cuba's continuing commitment to its bizarro world of socialist economics.' ``Cuba's disastrous economy would be a joke were it not for the poverty it has perpetuated among millions of Cubans,' Zakaria said in a video commentary posted last week. ``The whole country is stagnating. Fifty percent of its arable fields are going unfarmed. First and second year college students work one month out of the year in agriculture.' ``It's insane farm policies lead to frequent shortages of fruit, vegetables and other basic food needs, shortages even more serious than toilet paper,' he added. ``And all those programs that they have held up for years as successes of the communist revolution -- free education for all through college, universal health care -- well, Raúl Castro just announced they're going to have to make cuts in all of these.' ``Meanwhile the average Cuban still earns less than . $20 per month,' he concluded. ``Now, capitalism has its problems, as we have all seen. But at least we're not running out of toilet paper.' The toilet paper shortage is no joking matter for Cubans. Toilet paper is not included in the ration card that covers basic goods at highly subsidized prices, so Cubans have long been forced to buy their supplies at so-called ``hard currency stores' or use alternatives -- Chinese and North Korean magazines have been a favorite because of their soft paper. On Tuesday, a pack of four Cuban-manufactured toilet paper rolls was selling in Havana stores for the equivalent of about 28 pesos, or about two days' salary for the average worker. ``Right now almost all the stores are out of it, and it's a miracle that I found it,' said a Havana retiree, who asked for anonymity to avoid problems with authorities, in a telephone interview from Miami. Cuban officials quoted earlier this month in the official Radio Rebelde predicted ``an important importation of toilet paper' by the end of the year ``to supply this demand that today is presenting problems.' The Productos Sanitarios Proa factory in Matanzas province also produces toilet paper, branded ``hygienic and ecological.' Many Cuban factories have suffered from shortages of imported raw materials and government-forced closings to save on electricity. But the government-imposed closings of factories and offices to save on electricity may ironically also be helping to resolve the toilet paper shortage, according to the Havana retiree. Many copies of Granma and other newspapers sent to distribution points for later delivery to factories and offices are not being picked up when the intended recipients are closed, the retiree said, and are being sold to anyone else. Lots of retirees, he added, are hitting pre-dawn lines at those distribution points to buy 10-15 copies of both daily and older versions of the newspapers for bathroom use, wrapping garbage and other household uses. The retirees pay 20 Cuban cents per copy -- about .007 U.S. cents -- and re-sell it to neighbors for up to 20 Cuban pesos, or about 71 U.S. cents. The price of 20 Cuban cents per copy is the same for the day's edition and old copies, the retiree said, ``because they all have the same use.' .

In Cuba, agriculture is going back to basics

August 26, 2009

Juan Tamayo, Miami Herald

Cuba is going back as it looks forward, expanding its use of ox teams in agriculture to save on costly fuel for tractors while increasing production in the desperately needed food sector. ``The current world financial crisis requires a mixture of the modern and the traditional,' agricultural expert Juan Varela wrote in the Granma newspaper. ``Our country has sufficient capacity and experience to come out a winner and not allow itself to be defeated by problems and justifications.' Training centers for ox teams are being opened around the central province of Villa Clara to produce more than 3,000 teams, Granma reported Tuesday. Outside experts argue, however, that the root cause of Cuba's agricultural woes is a centralized state that largely controls what can be planted and when, provides inputs such as seeds and fertilizers and sets prices for the harvests. ``They know what the real problems are,' said José Alvarez, emeritus professor at the University of Florida and longtime expert on Cuban agriculture. ``But they pretend that they don't have any memory, and they think that we are stupid.' STATE OF CRISIS Cuba's agriculture fell into an acknowledged state of crisis this year, with millions of acres fallow and many crops damaged by three powerful hurricanes last year that caused an estimated $10 billion in damages. Cuba imports at least 60 percent of its food, including several hundred million dollars worth from the United States. In an effort to turn around the low productivity and slash imports, Raúl Castro's government has loaned 1.7 million acres of fallow state lands to 82,000 Cubans and shifted Acopio, the notoriously inefficient agency that gathers and distributes farmers' products, from the Agriculture to the Domestic Commerce Ministry. But in recent weeks the Cuban media also has been talking up the need to increase the use of ox teams, which had their first revival in the early 1990s, when the collapse of Soviet subsidies all but imploded oil imports and created shortages of spare parts for the island's predominantly Eastern European-made tractors. ``Let's forget about tractors and fuels for this program, even if we had them,' Castro told the legislature this month, referring to the parcels being loaned out to Cubans in the hopes of increasing food production. Calling it ``animal traction,' the Cuban media has been projecting the use of ox teams as a cheap and even ecologically correct alternative to tractors -- they do not compact the soil as much as the machines, according to the reports. Varela was quoted as saying that the Ministry of Agriculture can count on 265,120 oxen ``ready to work,' which are ``capable of supplementing and even surpassing the machinery in an infinite number of labors and types of plantings.' CHANGES REQUIRED But he cautioned that the successful use of the ox teams will require several changes, among them improved salaries for the ox team drivers, blacksmiths, trainers ``and anyone else directly involved in animal traction.' Horseshoes, for example, have been in short supply in Cuba since 1960. Back in 2007, independent journalist Reinaldo Cosano Alén reported that ox teams were being used successfully in Las Tunas province in lands farmed by a highly regarded state agricultural enterprise, the División Mambisa Mayor General Vicente García González. The enterprise was working 16,600 acres with 700 ox teams and 35 drivers, Cosano reported, while also manufacturing its own yokes, ropes and plows. It even had the ``ingenuity,' to figure out how to add two oxen to the usual four-oxen teams to make the work easier on the animals as well as their human drivers. Alvarez recalled that Cuba at one point imported Vietnamese water buffaloes to pull plows and farm carts, and added that the only crop blooming these days is marabú, a thorny bush that quickly takes over fallow fields. The only way to efficiently increase agricultural production, he added, is to let market forces drive the sector. ``They know that works, but they don't want to do that. So they go over the same old things -- oxen!' .

Cuban economy feels heat of world downturn

August 10, 2009

Juan Tamayo, Miami Herald

Fernando used to have a cushy job in Havana as a teller in a government bank office with air-conditioning, a nice computer and a bank-provided lunch. Not anymore. Amid Cuba's deepest economic crisis in nearly two decades, his office has shut off the AC and his computer constantly crashes because of the heat, exasperating him and his customers. His lunch, Fernando said, has ``shrunk to a snack.' Driving the bulk of the crisis has been the world recession, which slashed demand and prices for Cuba's few exports, like nickel, and choked off new credits to a government already deeply in debt. Add the island's internal woes, and Raúl Castro's recent description of the problems as ``a matter of national security' seems like no exaggeration. After Castro replaced brother Fidel, ``most Cubans hoped for some improvements in the medium term. But now everyone is preparing for worse and worse,' said one Miamian who recently returned from a visit and asked for anonymity to protect her relatives there. Castro has adopted Draconian measures to survive the storm in the short term. To cut electricity consumption by 12 percent -- Cuba imports half its oil needs -- the government has shut down many factories and ordered state office buildings, theaters and other facilities to shut off their ACs. Inspectors also are cracking down on Cubans who steal electricity through illegal hookups with $23 fines -- about five weeks' worth of the average salary. ``Banks are built to keep out robbers, not to let in a breeze,' said Fernando, who asked that his surname not be published because of fear of government reprisals. ``Without [air conditioning] . my office is two bus stops past hell.' Some hospitals also are shutting down their emergency rooms for two hours a day, and elective surgeries are being postponed until electricity services become more dependable, said Elaine Scheye, a Chicago consultant who has studied Cuba's health system. LESS FOOD Portions for many rationed foodstuffs have been cut -- red beans and chickpeas from 30 to 20 ounces a month, salt by half to about four ounces per month -- while food deliveries to factory, office and school cafeterias have been trimmed, according to official announcements. Harsh police crackdowns on the food black market -- apparently an attempt to ensure that more items reach the legal outlets -- have driven up prices yet left many of the legitimate sales points with shelves oddly bare, Havana residents say. Even foreign businesses are suffering, with the government tightly controlling withdrawals from their accounts. Castro also replaced his entire economic Cabinet in March, and just last week the legislature created a comptroller's office to attack official corruption. Yet many analysts in and out of Cuba argue that those belt-tightening moves are far from what's needed to address the crisis. ``Mercurochrome and Band-Aids for deep wounds with heavy bleeding,' Miami activist Juan Antonio Blanco wrote in his blog, Cambio de Epoca (Epochal Change). Even the official Granma newspaper called the situation ``grave.' EARLIER TROUBLE Cuba was already in deep trouble by the fall of 2008, after four hurricanes caused $10 billion in damage -- equivalent to a whopping 10 percent of its gross domestic product (GDP) for 2007. Imports for 2008 spiked 41 percent to $14.2 billion from the previous year while exports remained flat at $3.7 billion, meaning the island's already huge trade deficit mushroomed by 65 percent. Food imports alone rose from $1.5 billion in 2007 to $2.2 billion last year as the government tried to replace hurricane-damaged harvests, according to official Cuban figures. And then the world economy plunged into recession, drying up lending markets. Foreign commercial lending to Cuba fell by $1 billion in 2008, according to the Bank for International Settlements, a crippling blow to a government that for the past decade had been taking on ever larger debts to pay for imports and older debts -- ``financing by arrears,' as one economist put it. Russian auditors reported last month that Cuba had failed on three dates to make payments due on a $355 million loan signed in 2006. And some 80 Cuban government enterprises postponed payments to foreign creditors this year, according to Carmelo Mesa Lago, a University of Pittsburgh expert on the Cuban economy. GRIM OUTLOOK With remittances and tourism expected to be flat this year and the price of nickel -- 41 percent of Cuban exports -- at about 25 percent of its 2008 levels, the outlook for 2009 remains grim. Over the past month Havana cut its predictions of 2009 GDP growth from 6 percent to 2.5 percent and then 1.7 percent -- though some Cuba economists are privately predicting a .5 percent drop. ``The country is again facing a situation as adverse' as the early 1990s, the U.N.'s Economic Commission for Latin America wrote earlier this year. Cuba's economy shrank by 35 percent after the Soviet Union collapsed and cut off its $4 billion-$6 billion annual subsidies to Havana. LONGER-TERM REFORMS Since Raúl Castro officially assumed power in early 2008, he has also been putting in place several longer-term reforms that he hopes will give Cuba a more productive, streamlined and less centralized economy. In his government's most ambitious effort, it has loaned 1.7 million acres of fallow state lands to 82,000 Cubans, hoping to increase food production and slash costly imports. It also shifted Acopio, the notoriously inefficient agency that gathers and distributes farmers' products, from the Agriculture to the Domestic Commerce Ministry. The government also has increased some salaries as incentives to productivity, allowed Cubans to hold more than one job at a time and let retirees to return to work. Castro last week predicted cuts in government spending on health and education, and said imports would be cut back this year. Havana also has hinted that it is studying opening the doors wider to foreign investors and abandoning the costly food rationing system. One leading Havana economic analyst, Ariel Terrero, even suggested recently that the government put more of the economy ``in the hands of producers' -- for example, allowing state grocery or clothing shop workers to run their own enterprises. `RATIONAL SOCIALISM' Despite early speculation that the reputedly pragmatic Castro would move Cuba toward a Chinese-like ``market socialism system,' his reforms have remained relatively moderate. Brother Fidel remains a powerful opponent of more profound changes even three years after he was last seen in public, analysts say, and Raúl Castro must know that opening Cuba to more market forces could fuel a potentially destabilizing increase in the island's social and economic inequalities. In a keynote speech to the legislature last month, he prescribed a move toward a kind of ``rational socialism' that will preserve Cuba's political system while cutting back the bureaucracy, state subsidies and waste, and increasing productivity and efficiency. ``It's a matter of defining, with the broadest popular participation, the socialist society to which we aspire and can build, given Cuba's current and future conditions -- the economic model that will rule the life of the nation in benefit of our people,' Castro said. Lest anyone get the wrong impression, Castro added a caution. ``I was not elected president to restore capitalism in Cuba or surrender the revolution,' he said. ``I was elected to defend, maintain and continue perfecting socialism, not to destroy it.' .

In Cuba, the ox may be mightier than the tractor

August 10, 2009

Will Weissert- AP, Miami Herald

SAN DIEGO, Cuba -- In China it's the year of the ox - and it could be for Cuba, too. President Raul Castro is promoting the beasts of burden as a way for the economically strapped communist country to ramp up food production while conserving energy. He recently suggested expanding a pilot program that gives private farmers fallow government land to cultivate - but without the use of gas-guzzling machinery. "For this program we should forget about tractors and fuel, even if we had enough. The idea is to work basically with oxen," Castro told parliament Aug. 1. "An increasing number of growers have been doing exactly this with excellent results." Cuba's economy was devastated by three hurricanes last summer, and the global recession has left the government short on cash to cover debts. As a result, it has slashed spending and cut domestic production and foreign imports, causing shortages of such basics as cooking oil, ground beef and toilet paper. Though the island gets nearly 100,000 free barrels of oil a day from Venezuela, it also has begun a campaign to conserve crude. The agricultural ministry in late June proposed increasing the use of oxen to save fuel, as Cubans have seen a summer of factories closing and air conditioners at government offices and businesses shutting off to save oil. The ministry said it had more than 265,000 oxen "capable of matching, and in some cases overtaking, machines in labor load and planting." In the farming initiative that began last year, about 82,000 applicants have received more than 1.7 million acres so far - or 40 percent of the government's formerly idle land. The program seems to have slightly increased production of potatoes and tomatoes in season, but the government has provided no official figures. Shortages in Cuba are not new. And neither are oxen. Thousands of Cuban farmers have relied on the beasts in the half century since Fidel and Raul Castro and their rebels toppled dictator Fulgencio Batista. "The ox means so much to us. Without oxen, farming is not farming," said Omar Andalio, 37, as he carefully coaxed a pair of government-owned beasts through a sugarcane field last week. For reasons no one can remember, the plumper one is called "Caramel," even though he's white, and his caramel-hued field-mate is "Lightweight" - never mind that he's nearly 1,000 pounds. Andalio is one of 300 employees who grow cane, low-quality tobacco, sweet potatoes and bananas in San Diego, 95 miles (150 kilometers) west of Havana, with stunning views of limestone mountains in the distance. The cooperative has 24 oxen and eight tractors - with two of the machines clawing through terrain cooked by a recent drought. Each tractor can do the work of five teams of oxen, Andalio said. "Work with tractors hasn't stopped, but it will only go as far as the economy allows," he added. Juan Alvarez, a member of a state flower cooperative that supplies nearby funeral homes, tugged at two oxen with names translating to "Foreman" and "Spoiled Brat." A pair called "Evil Eye" and "Coal-Stoker" stood in the shade nearby, where a sea green-and-red highway billboard read: "Everything for the Revolution. Summer 2009." "We use tractors when there are tractors, but there almost never are," said Alvarez, 59. Zenaida Leon, acting head of the 10-employee flower cooperative, said the issue is not "oxen 'yes,' tractors 'no.'" "I am thankful for the revolution," the 52-year-old said. "But we don't get boots, tools, irrigation that works." .

Cuban grocery stores stay closed, sparking rumors

August 4, 2009

AP- Anne-Marie Garcia,

HAVANA — Upscale grocery stores that were scheduled to close two days last week for inventory remained shuttered Monday — sparking rumors of food shortages because of the country's dire economic situation. More than a dozen stores in Cuba's capital that had been run by the now-defunct firm Cubalse closed Thursday to tally merchandise before they were transferred to the new managing company, TRD Caribe. The change is part of a government effort to streamline bureaucracy. When they didn't reopen Saturday as scheduled, customers started to get concerned. Cuba has seen its revenue from nickel and other exports plummet, leaving it short on cash to pay bills overseas. "We have been forced to re-negotiate debts, payments and other commitments with foreign companies," President Raul Castro said in a speech Saturday night. The shuttered stores cater to foreigners and accept only convertible pesos, a currency worth 24 times the regular peso, which most Cubans are paid in. However, some islanders get convertible pesos through remittances from relatives in the United States, or from jobs in tourism or with foreign firms, and frequent the upscale stores seeking toilet paper, ground beef, cooking oil and other products unavailable in local groceries. Customers knocked on the door of one closed store Monday to demand an explanation. "It's a lack of respect for the consumer," said Alina Marquez, a 66-year-old retiree who came because, "I ran out of laundry detergent and was also looking for a little chicken to eat." TRD Caribe commercial director Maria Eloisa Cabrera said Monday that the inventory took longer than expected, and added that she doesn't yet know when the stores will reopen. "We are taking organizational steps, and there were incompatibility issues with our computer systems," Cabrera said. She said when stores open again, "they are going to keep selling everything Cubalse had. Nothing is going to change." But the closings have raised fears of less merchandise and higher prices. In recent weeks, grocery vendors complained they had not received shipments of everything from laundry detergent to dog food since the government dissolved Cubalse in June and canceled its contracts with international exporters. Some stores that weren't controlled by Cubalse, such as Palco Supermarket on the capital's outskirts, are open but have been mobbed by crowds of customers who snapped up much of the available inventory. Copyright © 2009 The Associated Press. All rights reserved.
July 2009

Cuba shuts factories, cuts energy to save economy

July 31, 2009

Will Weissert, Miami Herald

HAVANA -- It's hard to find a spare tire in Cuba these days, or a cup of yoghurt. Air conditioners are shut off in the dead heat. Factories close at peak hours, and workers go without their government-subsidized lunches. Cuba has ordered austere energy savings this summer, and the secretive Council of Ministers and Communist Party Central Committee met this week to consider more cuts to cope with budget deficits and plummeting export profits. The communist government imposed conservation measures even as it continues to get free oil for services from Venezuela, fueling rumors that Cuba is selling President Hugo Chavez's crude on the side to raise cash. More likely, the shortages result from a global recession that hit an already struggling economy still reeling from last year's hurricanes. President Raul Castro scolded Cubans in a national address Sunday to work harder because they have no one to blame but themselves. "The only thing I know is that we're screwed," said one 27-year-old who only gave the name Raul because he sells cement and housing materials on the black market. "I don't work. I find a way to survive." The latest cuts are small compared with strict measures imposed during the so-called special period, when Cubans nearly starved after subsidies dried up with the collapse of the Soviet Union. Nor are they as severe as the blackouts of 2004, when technical problems at power plants left much of the island in the dark for hours at a time. Fans and water pumps were idled. Milk and food spoiled, while electrical surges damaged refrigerators, televisions and other costly appliances. Still, every bit of belt-tightening stings in a country where almost everyone works for the state and average wages are less than $20 per month. The price of nickel, Cuba's chief export, is down more than 50 percent from last year, according to Toronto-based Sherritt International Cooperation, Cuba's largest energy partner. The company's oil production on the island was down 19 percent last quarter compared to the second quarter of 2008, mainly because Sherritt suspended drilling earlier this year when Cuba fell behind on its payments. The government and Sherritt have worked out a plan to pay down the debt, and the company says Cuba has been sticking to it. But the situation could have spurred the mandatory energy savings. Neither Sherritt nor the Cuban government would provide more details. Or Cuba may be trying to save unused oil to bolster strategic reserves while prices are still relatively low, said Dan Erikson of the Inter-American Dialogue in Washington. But he also said the strict measures lend credence to whispers that Cuba is selling Venezuelan oil overseas - something the communist government did with some of the discounted oil it got from the Soviet Union. "It's been alleged they've been selling Venezuelan oil on the side. They've denied that, but if they are open to doing it, now would be the time," Erikson said. "Cuba's in a real cash crunch." Beginning June 1, the government ordered energy conservation measures as part of a broader plan to cut the national budget by 6 percent. Central planners also revised their economic growth projections from 6 percent to 2.5 percent and could lower expectations even further. These days, most countries would cheer any economic growth. But Cuba counts what it spends on free health care and education, monthly food rations and other social programs as production - making economic growth figures dubious. The island's economic woes began in earnest with three hurricanes last summer that caused more than $10 billion in damage and wiped out some of the food and grains the government had stockpiled to insulate itself from rising commodities prices. How much Cuba has spent on hurricane recovery is unclear. But Castro said the government has rebuilt or repaired 43 percent of the 260,000 homes damaged or lost in the storms. Cuba consumed about 150,000 barrels of crude oil a day in 2008, of which 52,000 were produced domestically and 93,000 imported from Venezuela, said Jorge Pinon, an energy fellow at the University of Miami's Center for Hemispheric Policy. Half is used to generate electricity, according to Cuba's Ministry of Basic Resources. Though the numbers leave the country 5,000 barrels a day short, Pinon said natural gas production last year covered the energy equivalent of 20,000 barrels of oil daily and kept the power plants running smoothly. "Cuba, from a petroleum point of view, is balanced," he said. "It's not running out of oil." So far the power-saving measures have been confined to state-run businesses and factories, though many Cubans fear they will soon hit residential users as well. Workers at a tire factory in San Jose de las Lajas, a rugged farming town 30 miles (50 kilometers) south of Havana, said production is down and the factory goes dark when demand for electricity is high - leaving gas stations and mechanics short on spare tires. In the central province of Cienfuegos, a large dairy that supplies ice cream and other products to much of the country and exports cheese has been ordered to cut production, according to the Communist Youth newspaper Juventud Rebelde. Yogurt is scarce in Havana - sold only in upscale grocery stores that cater to tourists and are too expensive for most Cubans. Some government office workers say their hours have been cut to between 8 a.m. and 3 p.m., and others are being told to come in only twice a week. State companies also have stopped offering employees low-cost lunches in worker cafeterias to save power. Other government offices, businesses, banks and stores have ordered air conditioners turned off for much of the day, rather than close early. Customer service, never stellar in state-run institutions, has suffered even more. In the sweltering banks, barbershops and boutiques, listless employees are more interested in fanning themselves than serving sweating customers.
HOLGUIN, Cuba - The global economic crisis means tougher times ahead for Cuba, but the country has no one to blame but itself for poor farm production that leads to shortages of fruits, vegetables, and other basics, Raul Castro said yesterday. In a speech marking Revolution Day, Cuba’s president said the island can’t pin all of its problems on Washington’s 47-year-old trade embargo. He implored Cubans to take better advantage of a government program begun last year to turn unused state land over to private farmers. “The land is there, here are the Cubans,’’ he said, pounding the podium. “Let’s see if we get to work or not, if we produce or not, if we keep our word.’’ The line did not get much of a response from the crowd, but Castro called agricultural production Cuba’s top priority and a matter of national security. “It is not a question of yelling ‘Fatherland or death! Down with imperialism! The blockade hurts us,’ ’’ he said, referring to US sanctions begun in 1962. “The land is there waiting for our efforts.’’ Unlike during his past two holiday speeches, Castro did not address the crowd with a sculpture or banner of the face of his brother, Fidel, nearby.

Cuba's outlaw mattress makers thriving

July 27, 2009

Wilfredo Cancio Isla, Miami Herald

STRINGS ATTACHED To get their raw material, entrepreneurs have been known to steal metal springs, stuffing and cover fabric from Cuba's official mattress factory. After a long, exhausting day behind the wheel of his truck, Alberto Escalona would like nothing better than to rest his weary bones and drift off to la-la land on a comfy spring mattress. Only in his dreams. Escalona lives in midtown Havana. One of the many deprivations of life in Cuba is a dire shortage of decent mattresses, which are manufactured by one company under an exclusive agreement with the state. Escalona and his wife and their children sleep on threadbare foam rubber padding that hardly provides any support or comfort. ``At this rate, my children will have to be taught how to sleep on a real mattress,' Escalona said. But in a textbook example of supply-meets-demand, even in the communist world, a flourishing black market of mattress-making entrepreneurs has sprung up to help Cubans get a good night's sleep. Until the economic crisis of the 1990s, newly married couples and outstanding workers were occasionally given the chance to buy Cuban-made mattresses through state-run stores. No longer. Today, mattresses are passed from grandparents to grandchildren like prized heirlooms. Enter the black market mattress makers. To get their raw material, they have been known to steal metal springs, stuffing and cover fabric from the official mattress factory. They also cannibalize old, discarded mattresses or use straw as a filler. ``Theft here has been constant, ever since the company started,' said Luis Hernández, who works at the official mattress plant. ``The bosses need eyes in the back of their heads, at all times.' In a bit of over-the-top brazenness, the freelance mattress merchants have been known to set up shop right outside the hard currency stores where the official mattresses are sold. Other nonsanctioned mattress makers operate more or less openly, using pushcarts or trucks to distribute their wares. TAKING NOTICE The government is beginning to take notice. According to dissident economist Oscar Espinosa Chepe, the authorities have increased their pursuit of independent craftsmen over the past year, engineering raids on clandestine shops and fining illegal manufacturers. In Cuba, the Mattress Giant is the communist state. It has granted the country's sole mattress-making concession to an outfit called Dujo Copo Flex, a joint Cuban-Spanish operation created in 2001. The company annually produces 60,000 mattresses. Generally, they are designated for ritzy tourist hotels that don't cater to Cubans or sold through hard-currency stores run by the government. There are two types of currency in Cuba: convertible pesos (each worth about $1.24) and regular pesos, worth a fraction of that. In a hard-currency store, a queen-size mattress made by Dujo Copo Flex might cost 120 to 180 convertible pesos. The same mattress would cost 5,352 in ordinary pesos. Either way, the price tag exceeds a year's salary for the average Cuban. While the cost of a black-market mattress is far less, the quality can be dicey. ``You run the risk of getting a new mattress with old springs and straw filling,' said independent journalist Odelín Alfonso. During a visit to the town of Guanajay, west of Havana, Miami historian and blogger Ingeborg Portales found a factory that manufactures straw mattresses. ``It was like an image from the Middle Ages,' said Portales, who photographed the manufacturing process. ``It's exhausting work that allows these people to barely survive, provided the police don't confiscate their mattresses because they have no license to make them or sell them.' Portales, who has lived in South Florida since 2004, said the mattress makers buy straw for five ordinary pesos and spread it out to dry. They buy burlap sacks, which are placed between the straw and the spring armature. ``The sacks are used by garbage collectors who, instead of throwing them away, wash them in the river and sell them for one ordinary peso,' said Portales, who went to Cuba in June 2008. The price of straw mattresses ranges from 600 to 800 pesos ($25 to $30). Portales said they are very much in demand. But not everyone is willing to find rest on a rudimentary rectangle made of straw and a garbage man's hand-me-down burlap. SAVINGS Cary Ruiz, 43, who sells household appliances at the Carlos III shopping mall in Havana, saved part of the remittances sent to her every three months by her sister in New York in order to buy a semi-orthopedic mattress for her mother at a state-run store. ``It's the first time in 10 years we'll be buying a mattress,' the woman said. ``The one we had is no longer useful. The springs broke and we have no other option. But I prefer to choose something with quality.' Responding to harangues at neighborhood assemblies and workplace gatherings, the Cuban government has acknowledged it has a mattress problem, but said it is making strides to boost production. Dujo Copo Flex last year invested 297,000 in convertible pesos (about $368,000) to purchase new equipment as part of a plan to produce six million units by 2010. The production plan includes mattresses and other bedroom items, the company's director, Lázaro Viera Valdés, told the newspaper Granma. However, part of the company's production has gone -- by state directive -- to armed forces units and Operation Miracle, the ophthalmological project that since late 2004 has brought to Cuba thousands of Latin American patients for eye surgery. The company says it has also exported some of the precious mattresses to Italy -- and to Venezuela, Cuba's petroleum-producing patron.
HAVANA (GlobalPost.com) - On this Communist-run island, the black market is a vast, irrepressible force, an underground river of unlicensed services, goods pilfered from government stores and coveted items carried in from abroad. Cuban authorities go to great lengths to curtail it; they cannot. Over the years, buying and selling en la calle — in the street — has been practiced by generations of Cubans forced to make ends meet in a state-controlled economy where official wages are woefully inadequate and most forms of private commerce are banned. But Cuba's informal economy is an imperfect marketplace. Without advertising, it relies heavily on word-of-mouth, and its commercial activity tends to flourish in small circles — among neighbors, coworkers and other trusted acquaintances. Then came Revolico.com. Its name essentially translates as "disarray," and while Havana residents jokingly call it "the Cuban eBay," the site is really closer to Craigslist. For Cubans who make a living through the black market, it's a godsend. Like its American cousin, Revolico is a free classified service that functions as a digital bazaar for a broad range of goods and services, with headings like Housing, For Sale and Classes. If you have internet access, and you're looking for a golden retriever, a cheap housecleaner or the latest episodes of the HBO series "True Blood," then Revolico is your place. Many of the ads on the site propose transactions that are perfectly legal in Cuba — or at least tolerated by authorities. One user posted a recent ad offering to rent rooms in his Havana home for $30 a night, emphasizing that he was fully licensed. Another ad offered $12 men's razors — "GUILLETT (sic) MACH 3 TURBO" — from a vendor who clearly wasn't authorized to sell them but probably wouldn't attract police, either. Of course, Revolico is also a clearinghouse for more serious illegal activities, including several that could lead to arrest and harsh punishment in this country — or in the United States. "If you want to make a deal to leave the island, send me an email with your contact information," wrote one user claiming to be a 24-year-old Cuban American woman traveling to the island with the intention of setting up a fraudulent marriage. "Half the money when we start the process, half the money at the end," she wrote. "Price is negotiable." Several other postings were also targeted at Cubans looking to leave the island, mostly through fake marriages, while others sought travelers who could procure specific items abroad for resale on the black market — clothes, electronics and other goods. Satellite receivers linked to Direct TV or Dish Network accounts in the U.S. also appear to be in high demand on the site. But the most popular category is computers and computer equipment. Some venders seemed to be operating a virtual RadioShack on the site, with a diverse stock of flash memory, hard drives and modem equipment, luring potential customers with promises of "home delivery." Internet access in Cuba is achingly slow and tightly restricted, but several postings advertised illegal dial-up accounts providing web access for about $1 an hour. One listing offered high-speed satellite internet installation for a whopping $6,000 — a fortune here — and suggested it could be used to start a business as a black-market Internet Service Provider (ISP). The posting drew several expletive-laced denunciations from the site's other users — not because the service would be illegal but because the asking price was so steep. As with Craigslist in the U.S., Revolico's personals listings are a draw for lonely hearts and hookers alike. Many of the "casual encounters" postings appear to be created by foreign men looking to arrange for female company during upcoming trips to the island. Other ads offered anatomical paraphernalia and other sex toys not sold in Cuban government stores. But perhaps the most surreal pages on the site are the auto listings. Because of title-transfer restrictions, only vehicles built before 1960 can be freely bought and sold in Cuba, so Revolico's car section is a time-warped catalog of classic vehicles in various states of preservation. (here) "53' Chevrolet for sale in perfect condition, second owner, upholstery in very good condition … everything on the dashboard works," wrote one seller who added photos of his sturdy black-and-white sedan. Another vehicle owner said he was looking to trade his 1948 Oldsmobile "for a smaller model." Interview requests to Revolico's administrators went unanswered, but the site claims to be among the top three most-visited web sites in Cuba, with 1.5 million page views per month and 100,000 classified listings created in the past 60 days. If accurate, those would be impressive figures in a country that ranks toward the bottom for web access among Latin American countries, according to United Nations data. While the classified listing are free, the site sells advertising space (in euros) for banner ads and other high-visibility spaces. There's no indication where Revolico is based, but since it lacks Cuba's .cu domain extension, the site is clearly not hosted by any servers on the island. According to its mission statement, it claims to work by "collective intelligence" and a spirit of "cooperation" that asks users to refrain from political discussions or postings. There are also no ads for drugs, gambling or other more serious criminal enterprises. Still, vendors on the site are generally skittish about undercover police and it may only be a matter of time before authorities decide to block access on the island. If that happens, other Cuban classified sites like dicuba.com and cu.clasificados.st — which now receive far less traffic — will surely fill the void..

Cuba slashes projections for 2009 imports, exports

July 24, 2009

Marc Frank, Reuters

HAVANA, July 21 (Reuters) - Cuba is cutting estimates of imports by billions of dollars this year and projecting a decline in export revenues due to the international financial crisis, according to a government report shown to Reuters this week. The Economy and Planning Ministry forecast was drawn up within two months of President Raul Castro's replacement in March of Cuba's entire economic leadership team after a dismal 2008 performance. The report outlines adjustments to the 2009 plans of the old cabinet, including projections of 2.5 percent economic growth compared with the original 6 percent. The report says imports will plummet 22.2 percent, or some $3.4 billion, compared with an increase of nearly $1 billion first projected. Exports will decline by $500 million, compared with an increase of $600 million the old cabinet forecast. "I think the figures are much more realistic and indicate they are trying to get the current account back in the black," a foreign businessman said, asking his name not be used. The current account is a broad gauge of the balance of foreign exchange flowing in and out of a country, in Cuba's case critical given the Caribbean island's dependence on imports. The government has implemented energy savings measures, cut social spending and adopted other measures in recent months to cope with a growing liquidity crunch. At the same time creditors have been asked to restructure debts, and the bank accounts of hundreds of suppliers and other foreign companies have been blocked in state-run banks since January. The report coincides with a video of a cabinet meeting, apparently in May, making the rounds of state managers. Economy and Planning Minister Marino Murillo Jorge announced at the meeting that the country was short 30 percent of the resources needed to meet the 6 percent growth figure, a source familiar with the video said. Local analysts said Communist-run Cuba had not faced such a dire situation since the early 1990s when the fall of the Soviet Union forced a 75 percent cut in spending. They said growth would be less than 2.5 percent and could be negative this year. Cuba's trade deficit soared by 65 percent in 2008, driven by a doubling in the value of oil imports, higher costs of food imports, a decline in prices for key export nickel and destruction caused by three hurricanes. Exports totaled $4 billion, similar to 2007, while imports increased 41 percent to $15.4 billion, leaving a deficit of $11.4 billion, the National Statistics Office reported on its web page www.one.cu. (Editing by Jane Sutton and Kenneth Barry) .

Cuban offshore oil drilling plans postponed again

July 10, 2009

Marc Frank, Reuters

HAVANA, July 7 (Reuters) - Cuba and a consortium of foreign oil companies have once again postponed plans to drill for oil in the island's still-untapped fields in the Gulf of Mexico, diplomatic and industry sources said this week. Cuba had announced the consortium, led by Spain's Repsol-YPF (REP.MC), would drill in June or July, but now it is uncertain when work will begin in the waters that Cuban oil experts say may contain 20 billion barrels of oil. "The project has been postponed until a further date for more study," said a foreign oil industry source with direct knowledge of the plans. "It is premature to say when drilling might begin, later this year or next," he added. A European diplomat said he had first-hand knowledge that drilling was postponed at least until the end of 2009, if not into 2010. Neither source wished to be identified. Cuban authorities were not immediately available for comment. Repsol drilled a test well 20 miles (32 km) off Cuba's northern coast in 2004 and said it discovered traces of high quality oil, but that it was not commercially viable at the time. Since then, there have been several announcements that a second well would be drilled, but each time the project has been put off without explanation. It was not clear if the latest postponement had to do with difficulties obtaining and moving a drilling rig, the cost of the project compared with the current price of oil, or other factors. The on-again, off-again project has been cloaked in secrecy in part due to opposition in the United States. The U.S. trade embargo against communist-run Cuba is said to be a factor in the repeated delays because of U.S. regulations that threaten sanctions against companies doing business with Cuba if their drilling equipment contains more than 10 percent American technology. The United States has vast oil and gas fields in the Gulf of Mexico, but its energy companies cannot do business in Cuba because of the 47-year-old embargo against the island that is just 90 miles (145 km) from Florida's Key West. Repsol has an agreement with Cuba's state oil monopoly Cubapetroleo (CUPET) for exploration of six offshore blocks in partnership with Norway's StatoilHydro (STL.OL) and ONGC Videsh (ONGC.BO) of India. Cuba has divided its share of the gulf into 59 blocks, 21 of which are already under lease to seven companies. Manuel Marrero Faz, oil advisor to Cuba's Ministry of Basic Industry, said earlier this year Cuba was in negotiations to lease another 23 blocks to firms including China National Petroleum Corporation, Angola's national oil company and a Russian consortium. Cuba says it produces the equivalent of 80,000 barrels a day of oil and gas, or about 50 percent of its energy needs. It depends on ally Venezuela for the rest. PDVSA, the national oil company of Venezuela, has said it plans to sink its first exploratory well in Cuba's offshore fields next year. Other companies with blocks are Vietnam state oil and gas group Petrovietnam, Malaysia's state-run Petronas (PETR.KL) and Brazil's Petrobras (PETR4.SA)PBR.SA. The U.S. Geological Survey has estimated that Cuba's offshore reserves are likely around 5 billion barrels of oil and 10 trillion cubic feet of gas. Cuba experts say their estimates are higher because they have more information about the geology of the region. (Editing by Jeff Franks and Marguerita Choy) .
June 2009

Cubans face dire formula

June 30, 2009

Nick Miroff- Global Post, Miami Herald

HAVANA — As a general rule with Cuban revolutionary slogans, the second choice is never a good option. Such is the case with Fidel Castro's famous rallying cries of "Patria o Muerte" ("Homeland or Death") and "Socialismo o Muerte" ("Socialism or Death"). And now, with the island facing its grimmest economic outlook in years, Cubans have been presented with a new mortal ultimatum: "Ahorro o Muerte" ("Conservation or Death"). That phrase, appearing in a recent editorial in the Communist Party newspaper Granma, was meant as a call to arms for the Cuban government's new energy-conservation campaign. But taken more broadly, it also appears to reflect the country's economic strategy under President Raul Castro, who assumed Cuba's leadership more than a year ago. Rather than follow the path of market-based liberalization reforms that China and Vietnam's communist governments have taken, Cuba intends to weather the crisis by slimming its bureaucracy and exhorting citizens to conserve resources and produce more. Cuba "can't get more out of its pockets than what it puts in," economic planner Julio Vazquez Roque said in a lengthy article on the country's economic woes that appeared June 21 in the communist youth daily Juventud Rebelde. The effects of the global economic crisis are hitting Cuba at a time when the island is still struggling to recover from three powerful hurricanes that caused an estimated $10 billion in damage last year. And the situation is worsened by five-decades-old U.S. trade sanctions that squeeze Cuba's access to credit and export markets, a policy Cuba likens to a "blockade" in part because the measures attempt to punish foreign companies and governments who do business with Havana. But government officials increasingly acknowledge that many of Cuba's shortcomings are self-inflicted. The country's state-run economy is plagued by inefficiency, low worker productivity, and a frighteningly skewed trade imbalance. During the first three months of 2009, imports outpaced exports at a nearly four-to-one clip, according to Granma. Revenues in key Cuban industries like tourism and nickel are slumping with the global recession, and tightening foreign credit markets have produced a cash crunch at government banks. Projections for Cuba's economic growth this year have been revised sharply downward in recent months. The island is in the throes of a "very deep and difficult" crisis, leading Cuban economist Alfredo Jam said at an international economic conference here last week. "We’re at a truly complex moment in our history." Some foreign suppliers have suspended shipments to the island for lack of payment, causing certain car parts or other imported goods to disappear from state-run stores as well as Cuba's vast black market. Foreign businessmen who partner with the Cuban government complain of frozen bank accounts and mounting debts that are long overdue. "I haven't been able to touch my money for five months," said an English businessman who imports computer equipment. At the street level, the crisis has amounted to additional hardship for ordinary Cubans, who earn an average of $17 a month and rely heavily on state-subsidized housing, electricity, food and other services, including free health care and education. Monthly rations for beans and salt have already been cut, and the recent Juventud Rebelde report warned that government planners would further scale back food rations, which are also heavily dependent on imports. Other cost-saving measures have resulted in reduced bus service, scattered factory closures and power blackouts. Much of the energy rationing has been targeted at workplaces, however, where most managers are under instructions to keep air-conditioning turned off until 1 p.m. despite stifling humidity and temperatures reaching into the high 90s. Government officials say the conservation campaign is working so far, resulting in a savings of 20,000 tons of fuel during April and the first half of May, alleviating the threat of residential blackouts. Still, the severity of the country's financial straits has prompted some comparisons to Cuba's so-called "Special Period," a euphemism for the grinding penury of the 1990s that followed the collapse of the Soviet Union and the Eastern Bloc. When Soviet subsidies and most foreign trade disappeared virtually overnight, Cubans faced acute food and fuel shortages, with power outages routinely lasting 12 hours or more. "Things haven't gotten that bad yet," said a vegetable vendor at a local outdoor market, when asked how the current situation compared. Like several Cubans who echoed similar sentiments, she was afraid to be quoted by name. A key difference now is oil. Cuba produces about 55,000 barrels a day from domestic sources, and the island receives another 93,000 barrels a day from Venezuela, according to industry data. With its own needs met, Cuba has become an energy supplier, and oil is now the country's second-leading export after nickel, according to Reuters. Several foreign energy companies are partnering with Cuba to explore for crude off the island's northwest coast. Oil exports brought Cuba an estimated $880 million in revenue in 2008, and with global fuel prices rising, the government's current energy-saving measures are likely to deliver a clear cash benefit: The more oil Cuba can save through conservation measures, the more it can sell abroad.
HAVANA (Reuters) - Cuban factories are closing down and production is being cut at other workplaces as the international financial crisis weighs on the import-dependent Caribbean island, the official media said on Sunday. A growing shortage of foreign exchange has forced the Communist-run country to drastically cut imports and local budgets, impose power quotas on state-run companies, restructure debt and put off payments to foreign suppliers. The state-run Juventud Rebelde newspaper, the only national Sunday publication, said a tire factory had shut down since February due to a lack of rubber imports while an aluminum packaging plant cut output for similar reasons. The newspaper said the plants were examples of a wider problem "in other sectors of the Cuban state company sector," which encompasses 90 percent of economic activity. Other workplaces were having difficulty obtaining spare parts, the newspaper said, and still others were being forced to scale back output after a recent government measure mandating a 12 percent reduction in power consumption. Cuba, like other Caribbean countries, has been hit hard by the global financial crisis, which has slashed revenue from key exports, dried up credit and reduced foreign investment. It is under longstanding U.S. economic sanctions and is recovering from three hurricanes that struck last year, causing an estimated $10 billion in damages. Workers at lobster processing plants, cigar rolling factories and other establishments have reported layoffs for months, but Sunday's Juventud Rebelde report was the first official admission of growing problems in the productive sector. "The waves of the present international financial and economic crisis are slowly gaining force and the rough waters are reaching the pockets of companies and workers around the world," the newspaper said. "We can't harbor the illusion that we can escape just because our country has a social system that defends justice for all," it said. Economy and Planning Minister Marino Murillo recently said Cuba's growth forecast for 2009 was reduced from 6 percent to less than 2.5 percent. Some local economists believe this year's growth will be 1 percent or less, similar to forecasts for the region overall. (Reporting by Marc Frank; Editing by Maureen Bavdek) .

Cuba's energy woes in focus at oil partners

June 15, 2009

AP, Miami Herald

HAVANA -- Venezuela's president called for increased cooperation among Cuba and other Caribbean nations buying his country's oil under highly preferential terms, putting politics over economics as he met Friday with neighbors looking for more cheap fuel. Cuba already benefits from Venezuela's largesse more than any other member of the Petrocaribe pact that has boosted the South American nation's influence in the region. But higher-than-expected energy use this year has prompted Cuban officials to threaten Saturday morning blackouts and forced vacations just as the sweltering summer season begins. 'What would have become of our poor economy if this mechanism hadn't been there when a barrel of an oil cost more than $140?' Cuban Vice President Esteban Lazo asked the gathering. ``All of us in the Caribbean have triumphed.' Leaders of 18 nations in the Petrocaribe pact heard promising news during the one-day summit on the island of St. Kitts. 'Petrocaribe will be strengthened -- independent of the international situation, independent of the price of oil,' Venezuelan President Hugo Chavez said as he arrived. During the meeting, Chavez called the pact a geopolitical and social 'offensive for unity' and said Venezuela is open to accepting other nations. In Cuba, the program is building new refineries and expanding existing ones that will raise the island's refining ability to 350,000 barrels daily, he said. 'When you turn 85, Fidel, you'll know what your present is,' Chavez said, referring to former Cuban president Fidel Castro, whose 83rd birthday is next month. Chavez made no concrete promises about increased oil sales, but wrapped up the summit by calling on member nations to collaborate on everything from bauxite production to agriculture. 'We've been detaching ourselves from dependency on the north,' Chavez said, referring to the U.S. The plan promotes Chavez's vision of regional independence from the United States, and the lure of cheap oil has drawn countries friendly to Washington as well as the Venezuelan's leftist allies. Despite political tensions, Venezuela remains the third-largest supplier of crude oil to the United States. St. Kitts and Nevis Prime Minister Denzil Douglas said that with world oil prices fluctuating, his country ``has benefited greatly from the security of supply under the terms and conditions of Petrocaribe.' Cuban officials reported that energy consumption overshot projections by 3 percent in the first quarter and they are struggling to rein in use. Air conditioners have been stilled at government offices, and some work hours shortened. Tellers at an Old Havana bank cooled themselves with hand-held fans this week. Clerks at shops along Havana's waterfront swapped their uniforms for cooler clothes and still sweated as temperatures inside and out hit the mid-80s Fahrenheit (about 30 degrees Celsius). 'The measures have been successful,' Cuban Basic Industries Vice Minister Juan Manuel Presas said this week. He estimated national energy consumption fell 10 percent in early June, averting the need for Saturday morning blackouts. Cuba produces about half of its fuel and depends on Venezuela for the rest. That aid has eased once-dramatic power and transport shortages on the island of more than 11 million people -- an improvement symbolized by a fleet of new buses from China and Belarus. Falling petroleum prices have hurt oil-rich Venezuela over the past year. Though rebounding prices reached an eight-month high Thursday -- touching $73.23 a barrel on the New York Mercantile Exchange -- they remain 50 percent below last July's peak. Venezuela established the Petrocaribe pact in 2005 to give allies fuel on easy terms: long-term loans and the option to pay with services or goods such as rice, bananas and sugar. Venezuelan officials at the summit said their country had financed about $3 billion of the 94 million barrels of fuel sold to neighbors since the pact was formed in 2005. With oil prices above $50 a barrel, member nations must pay 60 percent of their oil bills to Venezuela within 90 days and the rest over the next 25 years at 1 percent interest. If oil prices rise to $80 a barrel, only half must be paid up front. Cuba gets oil under an agreement made before Petrocaribe was formed. Few of the terms have been revealed, but Cuba apparently pays most of what it owes by sending Cuban doctors, sports trainers and other specialists to Venezuela. Venezuelan economist Asdrubal Oliveros said if oil prices don't rise more, ``it would be hard for me to believe that Venezuela would substantially increase those shipments to the detriment of its clients that pay.' Still, Oliveros said Chavez's political ties with communist-ruled Cuba are so important that Venezuela might increase oil shipments to the island while reducing shipments to other nations. Venezuela's state oil company, Petroleos de Venezuela SA, increased oil shipments to Cuba by nearly a third in 2008 over the previous year, to 115,000 barrels of oil and oil products daily. Venezuela has increased oil shipments to 120,000 barrels a day to other Petrocaribe members, Venezuelan Oil Minister Rafael Ramirez said Thursday in St. Kitts. 'We're guaranteeing supply,' he said.
HAVANA (AFP) — Smaller bean rations and longer bus lines are among the new hardships hitting Cubans in their already difficult lives as the world economic crisis tightens its grip on the communist island. Holding an empty palm leaf basket, 67-year-old Luisa Suarez said she was already resigned to a recent government directive to reduce monthly rations. "Of course it affects us, but we're used to suffering," said Suarez, standing at a counter in an Old Havana shop with 1950s appliances and paint peeling off the walls. A sign in black letters, as in all stores, explained that bean and pea rations were dropping from 30 to 20 ounces (850 to 567 grams), and that salt rations would be practically halved. "They told us that this was due to the difficult economic situation, but we don't know if it will extend to other products," said the store owner, who declined to be named. Cubans -- whose average monthly salary is 400 pesos (17 dollars) -- can buy a basic bag of groceries, including rice, sugar, oil and eggs, at very low prices with their ration books. But they need to top up supplies on the black market, or in high-priced shops that accept only foreign currency. "What international crisis? In Cuba we've been in crisis for 50 years," a 28-year-old dentist told AFP wryly, declining to be named. "I'm tired of hearing justifications for the problems we always have." The crisis has reduced the island's predicted economic growth from 6.0 percent to 2.5 percent, and authorities have acknowledged it will hit key areas of the economy including tourism, nickel and tobacco exports. The island will this year be unable to import all its necessary primary materials, equipment and consumer items, and will have to "readjust its enormous expenses on fuel and food," an editorial in the official Granma newspaper said this week. The government of 78-year-old Raul Castro will carry out "inevitable adjustments" to the economy to face up to the crisis, it said. These included decentralizing farming from August 1 to ease access to food in a country which imports 80 percent of the products it consumes and last year spent 2.5 billion dollars on food purchases. "The crisis is knocking on our doors," said Ana Orosco, a craftswoman selling cloth dolls on a central boulevard, who can earn up to 30 dollars per day. "Someone with their own business makes money here, but it's really difficult for someone on a state salary," said the 60-year-old. Meanwhile the brakes have also been applied on a project to renovate public transport, which began in 2004. "It got much better for a while but now the 'guaguas' (buses) are bad again," said a young girl studying at a sports college in the east of the capital, declining to be named. A positive assessment of the situation could at least be heard on the airwaves, however. "Take the bad luck away. We're sure the bad times won't come," rang out the lyrics of a popular reggaeton tune. Sweating behind the window of a Havana shop, 44-year-old Yakelin Rodriguez was not so sure. Under a new energy savings plan introduced this month, and amid sweltering heat, she can only turn on air conditioning for four hours in the afternoon. "I'm about to die in this heat," Rodriguez said.
June 9 (Bloomberg) -- Venezuela’s shipments of crude oil and refined products to Cuba gained 32 percent last year and sales to Asia doubled under President Hugo Chavez’s strategy of diversifying the country’s oil sales to rely less on the U.S. Sales to Cuba climbed by 28,000 barrels a day to 115,000 barrels a day, state oil company Petroleos de Venezuela SA, or PDVSA, said in an annual report on its Web site late yesterday. Sales to Asia gained by 223,000 barrels a day to 422,000. Cuba pays for much of its Venezuelan oil through sending thousands of doctors, sports trainers and other advisers to Venezuela and its allies. Cuba received twice as much crude oil in 2008 as a year earlier as a joint venture with Venezuela restarted a refinery in the Cuban city of Cienfuegos. Most of PDVSA’s Asian shipments went to China, India and Singapore, with sales to Japan falling to zero, the company said. Venezuela is paying off $8 billion in loans from the China Development Bank and $3.5 billion in loans from Japan’s Mitsui & Co. and Marubeni Corp. with oil and related products.

Plan de ahorro empeora condiciones de trabajo

June 9, 2009

Andrea Rodriguez, El Nuevo Herald

Pasillos a oscuras, turnos reestructurados y aires acondicionados apagados son algunas medidas tomadas por la industria del hierro y el acero en Cuba para contribuir a una campaña de ahorro energético, pero con el reto de no parar la producción. "No queremos sacrificar la producción, por eso están todos los equipos de oficina apagados', comentó Guillermo Almeida, subdirector de la Empresa de Equipos Médicos de La Habana, un taller de unos 300 empleados que se resignan a pasar calor mientras fabrican mobiliarios y se esmaltan puertas de armarios para hospitales. Dijo que su horno de pintura es un ejemplo de lo que la industria está haciendo: antes se prendía de seis de la mañana a seis de la tarde, ahora se espera tener un considerable volumen de demanda para mantenerlo sin parar durante dos días. Hace una semana las autoridades lanzaron un programa para detener el alarmante incremento del consumo de energía, que alcanzó el 3 por ciento en el primer cuatrimestre del año, un lujo que la isla no se puede dar, reconoció el gobierno. Para la población el alerta tiene un mensaje difícil de digerir: se aprestan los apagones en medio del verano y de los calores tropicales. La sideromecánica cuenta con 187 empresas "56 de ellas consumen el 90 por ciento del total' de lo que absorbe esta industria, comentó a periodistas la viceministra del ramo Adriana Barceló. Pinturas, fundiciones de acero, mobiliarios de oficina, hospitales y escuelas, son algunas de las producciones del sector que aporta unos $2,000 millones a la economía cubana y con la cual se sustituyen importaciones en unos 140 rubros por $70 millones anuales. "La esencia no está en no consumir, sino hacerlo... según las necesidades productivas', comentó Barceló. Mencionó algunas medidas ahorrativas como acomodar las cargas para trabajar en horarios que no sean picos e identificar los "puestos claves' como el horno de la Empresa de Equipos Médicos y racionalizar su operación. Barceló señaló que el monitoreo es diario y que la industria debe lidiar con equipos antiguos poco eficientes o con repuestos "inventados', pese a los 100 millones de inversiones en el sector desde el 2007, Según la Oficina Nacional de Estadística, se produjeron en Cuba 17,661 gigawatt en el 2008 de los cuales el sector estatal consumió 7,828 y el residencial 6,053. Un dato alarmante: 2,786 gigawatt, el 15 por ciento, se perdió el año pasado en la transmisión y distribución. Las autoridades arrancaron con el programa el 1 de junio mediante una resolución aplicable al sector estatalen la cual se ordenaron una serie de acciones que van desde la disminución de la iluminación callejera hasta las organización de "vacaciones masivas' para el verano. La Unión Eléctrica emitirá los viernes un reporte para que cada provincia analice en los ‘‘Consejos Energéticos' los excesos de consumo. Si se producen los apagones programados no deberán ser en los horarios de preparación de alimentos o durante la noche. La semana pasada se informó que al menos a un centenar de empresas ya se les cortó la luz o se las sancionó por no hacer caso de la resolución sobre el ahorro.
HAVANA, June 4 (Reuters) - Cuba announced the resignation of its veteran central bank chief on Thursday as the communist-ruled state grapples with a deepening economic crisis. Francisco Soberon Valdes, who held the cabinet-level post for nearly 15 years and shaped the Caribbean country's monetary policy, was stepping down with immediate effect, a government statement said. Soberon was one of the last holdovers from the government of former Cuban leader Fidel Castro, who retired due to health problems in February 2008 and handed the presidency over to younger brother Raul Castro. The resignation comes as Cuba's state-run economy has been hard hit by the global financial crisis and a drop in revenues from tourism and nickel, its leading export. Soberon was replaced at his "own request" by Ernesto Medina, who has served as president of the state-run International Finance Bank since 2003. A foreign banker with operations in Cuba said Madina was "a capable career banker" who could be expected to follow Raul Castro's policies. Soberon's departure had been expected in Cuban financial circles for quite some time due to rumors he was at odds with the new government's top economic advisers. (Reporting by Marc Frank, Editing by Tom Brown, Gary Hill) .
May 2009

Cuba foreign income could be slashed by $1 billion

May 26, 2009

Nelson Acosta, Reuters

HAVANA, May 26 (Reuters) - Cuba is facing a "very hard" economic blow in 2009 as depressed nickel prices and reduced tourism revenue could slash foreign income by $1 billion, Cuba's top economic commentator said on Tuesday. The Cuban government was already reducing imports and limiting production in some industries in response to a growing cash crunch, Ariel Terrero said on state-run television. Nickel and tourism are two of Cuba's top sources of foreign exchange. Terrero said prices for nickel had averaged $11,000 per tonne so far in 2009, down from $21,000 per tonne last year, and if they continued at current levels, would cut the island's nickel income for the year by $720 million. He added that tourism visits had increased in the first quarter, but revenue had fallen 13.7 percent, which over the year would result in a drop in income of $300 million from 2008. "We are talking about losses that could be $1 billion in a country that brings in about $4 billion for exports (a year)," Terrero said. "The blow will be very hard," he went on. "The country has at its disposal today less resources. It has available hundreds of millions (of dollars) less and that is affecting the capacity for growth in the Cuban economy." Terrero's comments were the latest public admission by Cuban economic experts that the communist-ruled island was feeling a heavy squeeze from the global economic downturn. The head of Cimex, one of Cuba's largest business corporations, acknowledged last week that payments for some goods were being delayed because of a liquidity shortage provoked by, among other things, the global financial crisis and three damaging hurricanes that struck last year. Foreign businesses have been complaining about slow payments and inability to transfer cash abroad, while Cuban banks have warned they are short of hard currency. Cuba's state-run press has been calling for a reduction in energy use and has warned that blackouts may begin soon to save money. The government initially had forecast 6 percent economic growth in 2009, but this weekend Economy and Planning Minister Marino Murillo said the forecast had been reduced to slightly more than 2 percent. Terrero said effects of the slowdown were already being felt. "Imports are being reduced, production is being limited in selected industries such as light industry," Terrero said. "And now we're seeing some instability of supplies in foreign currency stores," he said. (Editing by Jeff Franks and Padraic Cassidy) .
HAVANA -- Cuba is revising its economic growth forecast to 2.4 percent, down from its original projection of 6 percent for the year. Economy Minister Marino Alberto Murrillo says the world financial meltdown has hurt tourism and prices for nickel, a key export. The announcement comes as the communist government calls for workers to be more productive and to save resources in the face of economic crisis. Cuba also is still recovering from the effects of three hurricanes last year. Murrillo was quoted Sunday by Juventud Rebelde newspaper.

Cuba Announces Massive Investment in Ferro Nickel Production

May 1, 2009

Metal Miner- Stuart Burns

Cuba isn’t blessed with many assets, apart from an easygoing population and plenty of sunshine. But one asset the country does have is nickel. In fact Holguin, at the eastern end of the island, appears to be made of very little else. Cuba’s National Minerals Resource Centre estimates the area holds 34% of the world’s reserves (although the USGS suggests it is more like 15%). The fact remains Cuba has and continues to be a major supplier of both nickel and cobalt which are both found in the Cuban laterite deposits. Now, with aid from Venezuela, Cuba is planning to invest $600m in a new plant at Las Camariocas to produce Ferro Nickel a stainless steel feed product containing about 38% nickel and the balance iron. The new plant will increase the number from three to four yet even by Cuba’s own admission two of their existing plants are probably losing money. Cuba’s two state-run plants consume on average 117 barrels of fuel oil to produce one metric ton of product for market compared to the third plant, a joint venture with Canadian Sherritt International, which uses only 35 barrels. Even cheap oil from your friendly local autocrat is not enough of an advantage to overcome that kind of cost hurdle. Other plants operating with similar efficiencies to Sherritt are closing around the world due to low prices, the latest being Xstrata’s Falcondo mine just across the water in the Dominican Republic. The problem for Cuba is nickel contributes some 50% of the island’s export earnings, already badly hit by a drop in nickel prices and reduced repatriation of funds from Cubans living overseas. However foolhardy the investment sounds it may yet prove to be the right decision. The new plant is not scheduled to come on stream for 2-2.5 years by which time the stainless market will be in better shape than it is now. Demand should have picked up. More nickel mine closures will have helped supply side economics and it is just possible Cuba may have warmer relations with its largest neighbor which would be an enormous boost to the local economy. Meanwhile China continues to be the main market for Cuba’s nickel and cobalt, and though growth has slowed there, low growth is better than none. –Stuart burns .
April 2009
HAVANA, Apr 27 (Reuters) - Cuba will proceed with plans to build a ferronickel plant with its ally Venezuela, even though a dramatic drop in international prices has drained the island's foreign income, a government official said on Monday. The communist-run island is one the world's biggest producers of nickel and cobalt. "We continue to work on this new project of ferronickel that should add in the next two to two-and-a-half years a significant quantity of ferronickel," Juan Ruiz, director of Cuba's state-owned Nickel Export Company, said in an interview with Cuban television. Cuba produced some 70,000 tonnes of unrefined nickel plus cobalt in 2008. The mineral is mostly exported to China. The new $600 million ferronickel plant will be located in Las Camariocas, in Cuba's eastern province of Holguin where the island's nickel industry is based. In 2007, Venezuela, Havana's main political and economic ally, replaced China's state-owned Minmetals Corp. as Cuba's partner in the ferronickel joint venture. Cuban officials have said in the past the plant could produce annually up to 68,000 tonnes of ferronickel, an alloy used in making stainless steel. But nickel prices have dropped so sharply in recent months that Cuban authorities earlier warned that the nickel industry was on the verge of being unprofitable. Ruiz said Cuba is undertaking a series of cost-saving measures to keep its nickel industry afloat, such as using crude oil produced in Cuba instead of imported oil to power the plants. "Our production fortunately goes according to plan, but it's obvious that at these price levels we can not expect to contribute much, like in past years, to the country's economy," he said. Nickel has been until recently Cuba's main source of foreign export income and accounted in recent years for more than 50 percent of the country's export earnings aside from services. Cuba has three nickel processing plants, one of which is operated with Canada's Sherritt International (S.TO). (Reporting by Esteban Israel; editing by Jeff Franks and David Gregorio) .
March 2009
March 17 (Bloomberg) -- Cuba’s oil reserves in its portion of the Gulf of Mexico “continue increasing,” Agence France- Presse reported, citing Yadira Garcia, the island nation’s minister for basic industries. The Caribbean country’s future oil reserves are most likely to be found in its area of the gulf, which measures 112,000 square kilometers (43,000 square miles) and is divided into 59 oil blocks, AFP reported, citing Garcia, who spoke at a geological sciences conference in Cuba. Cuba may have 21 billion barrels of probable oil reserves, including onshore and offshore discoveries, AFP said, citing conference participants. To contact the reporter on this story: Jose Orozco in Caracas at jorozco8@bloomberg.net Last Updated: March 17, 2009 01:55 EDT .

Purge aims to halt Cuba's economic free fall

March 9, 2009

Frances Robles and Wilfredo Cancio, Miami Herald

Cuba's new Cabinet members named in a surprise political shake-up last week are a cadre of unknowns who share a history of cracking down on waste and running a tight ship. The sweeping Cabinet shuffle underscores Cuban leader Raúl Castro's eagerness to bring military-style discipline to an economy that a top U.S. intelligence official recently called ``a basket case.' Facing a $10 billion hurricane destruction tab, soaring food prices and declining revenue, Castro wiped out nearly his entire economic team, sacking some of the country's most visible rising stars. Theories abound -- some contradictory -- about why most of the ministers dismissed were in the economic arena. Some experts say Castro sought to purge loyalists to former head of state Fidel Castro, getting rid of the people who may have stood in the way of reforms. Others suspect that Raúl Castro simply wanted to restructure his government, tackling economic problems by first tightening up the country's massive bureaucracy. This much is clear: Cuba's economy is in a free fall. And as Raúl Castro finally steps out of his brother Fidel's shadow by putting his own team in place, he must soon take drastic measures to reverse the slide. 'The year coming to an end has been without doubt one of the most difficult since the special period began,' then-Economy Minister José Luis Rodríguez told the National Assembly at the end of 2008, referring to the era of economic crisis that followed the 1991 collapse of the Soviet Union. Rodríguez was among 10 officials fired on Monday. The economy is going so badly that Raúl Castro cut travel spending in half and stopped offering bonuses and other perks to government workers. In the last hurricane season, Cuba suffered several devastating storms. The recovery bill came as the nation paid a record $710 million for food imports to the United States alone -- a 61 percent rise in a single year. The majority of ministries affected by the shake-up were related to food-buying. The government has said it expects the economy to grow by 4.3 percent this year -- about half the earlier government forecast of 8 percent. Castro has been busy traveling the world, seeking to diversify Cuba's financing so the nation is not so dependent on Venezuela. Castro has inked deals with China, Iran, Russia, Brazil and oil-producing nations. Although tourism and some exports were up last year, the price of Cuba's top export -- nickel -- dropped by 41 percent, and the cost of imports increased by more than 50 percent. The island imports more than 80 percent of what it consumes, and efforts to increase domestic production have failed. 'Raúl Castro inherited a legacy of complete neglect -- not benign neglect,' said Miami economist Jorge Sanguinetty, who monitors Cuba's economy. ``Raúl Castro has to be very worried. Cuba is in a very precarious situation.' The Cabinet changes affected the ministers of foreign trade, foreign investment, food industry, finance and prices, domestic trade, and iron and steel industry. Two of those ousted, Rodríguez and Vice President Carlos Lage, were linked to the transformation and economic planning that began in 1990 as a result of the collapse of the socialist camp. Lage was replaced by Gen. José Amado Ricardo Guerra, who, as secretary of the Armed Forces Ministry, developed a special talent for organization. He is essentially a bureaucrat who earned his stars at an office desk, under the protection of the current defense minister, Gen. Julio Casas Regueiro, and Raúl Castro, who held that post for more than 45 years. The new ministers of food industry and of finance and prices are women forged in party discipline. Both worked in the secretariat of the party's Central Committee, whose task it is to reinforce the party's influence. The new food industry minister is María del Carmen Concepción González, who was called the 'Iron Lady' by her close aides from the days when she was party secretary in the municipality of Consolación del Sur. She later became the party's first secretary in Pinar del Río province and was in charge of the agricultural foods department of the party's Central Committee. Minister of Finance and Prices Lina Pedraza has a degree in economics. While she was founder and minister of Auditing and Control from 2001 to 2006, she had a reputation for being rigid and controlling, which earned her a promotion to chief of the economics department of the party's Central Committee. In short, the top two economic ministers are known for hard party discipline. 'This is in keeping with the military mentality Raúl Castro has,' said Florida International University economist Antonio Jorge. ``As I see it, this is trying to make things efficient, tighter, leaner.' More puzzling was the decision late last year to tap Gen. Ulises Rosales del Toro, once a member of Fidel Castro's rebel army, to be minister of agriculture. 'He did an awful job as sugar minister,' said Carmelo Mesa Lago, an expert on Cuba's economy. ``Does that make sense? No, but Rosales is an army general, and Raúl Castro trusts him.' A general was also named to take over the steel ministry, and a former colonel was named minister of the economy and planning. Marino Alberto Murillo had been in charge of cracking down on theft at state businesses at the domestic trade ministry for the past two years. The new head of the steel and mechanical industry ministry is Gen. Salvador Pardo Cruz, who ran the military companies that supply the armed forces. Those military assignments show that Castro is still a firm believer in his military reform project known as 'business perfection,' which he brought to other state industries in a quest to boost their efficiency. Last week's military appointments join seven other top Cabinet changes decreed by Raúl Castro since his appointment to the presidency last year, illustrating a trend toward government centralization and the placement of military figures in key jobs. Among the vice presidents of the Council of State and the vice presidents of the Council of Ministers -- Cuba's cradle of power -- there are four generals, two revolutionary commanders who retain military rank, and a former army colonel. Experts say the last time Cuba changed this many posts was in 1980, when 30 percent of the Cabinet members were ousted. Monday's changes affected about a third of the Cabinet. 'I happen to think that just because he is surrounding himself with hard-liners does not mean he is not going to bring economic change,' said Jorge Piñon, an energy fellow at the University of Miami's Center for Hemispheric Policy. ``It means he needs people who will bring law and order while the changes are taking place.' .
Cuba is still waiting for its offshore oil rush. It has been four years since U.S. experts said the island may sit atop nearly 10 billion barrels of deep-sea oil, revealing for Cuba an enormous economic Catch-22. Cuba needs the technical expertise of major Western oil companies to get to any of the unexploited crude. Yet last month the U.S. marked the 47th year of a trade embargo that has blocked producers with the technical ability to drill that deep, denying Cuba what could be a massive windfall. A major discovery was supposed to transform Cuba into an oil exporter, drawing the foreign currency it needs to finance imports of food and machinery to modernize its Communist economy and to raise state wages that average less than a dollar a day. With public debts mounting, the government was forced to buy out its two main drilling partners from a 25-year deal, and even high-ranking officials say Cuba now imports about half the roughly 200,000 barrels of oil it consumes a day at a discount from leftist ally Venezuela. The embargo and world economic crisis have undermined some of the appeal of costly deep-water drilling off the island, and Cuba's existing oil industry is floundering. Output is thought to have dropped by a quarter since 2003 as its top field, found by Russians in 1971, dries up. There has been talk of President Obama easing U.S. sanctions, which could unleash a flood of energy investment. But for now, analysts say most companies remain on the sidelines. "It's not a pretty picture," said Jorge Pinon, a former president at Amoco Oil Latin America. The U.S. Geological Survey in 2005 estimated that as much as 9.3 billion barrels of oil could lie off the island's north coast, while Cuban geologists put that number at 20 billion barrels in October, said Rafael Tenreyro Perez, production manager at state oil company Cubapetroleo, or Cupet. Experts widely dismissed the Cuban estimate, noting the government failed to disclose the methodology and data that would back up such a claim. Cuba's only deep-sea test well to date, drilled by Cupet and Spanish oil company Repsol YPF in 2004, found just small amounts of "high quality reserves," while the Ministry of Basic Resources postponed drilling projects in 2007 and 2008, saying that unprecedented oil prices had made rig rental costs too much to bear. With oil now 75 percent below its July peak, Repsol may start drilling a second well this year, Tenreyro Perez said -- though the company declined to confirm. Cuba lacks the technology and training to certify its reserves and has sought foreign partners -- offering better terms than those offered by state-owned companies like in Mexico, which restricts foreigners to fee-for-service deals. Cuba is offering foreign companies the chance to recover capital investments in the event of a discovery, and to split the spoils with the government. Yet rights to just 21 of Cuba's 59 offshore blocks have been purchased since bidding began in 1999, and buyers from Vietnam and Venezuela to Madrid and Moscow have been slow to drill. The island's top partners have been Canadian, with Toronto-based Sherritt International Corp. and Montreal's Pebercan Inc. accounting for about 60 percent of current production. But the two companies said the island owed them a combined $501.3 million last year, so Cuba bought out their 25-year contract for $140 million. Even with a big find, it could take five years and $3 billion to develop the 59 deep-sea blocks, which sit an average 6,550 feet below sea level, said Pinon. They would need to yield about 10,000 barrels a day at more than $60 a barrel to be profitable, he added. "That's pretty pricey if you're not sure of your financing or the longevity of the current government," said Eric Smith, of the Entergy-Tulane Energy Institute at Tulane University in New Orleans. In a country plagued by shortages, petrodollars could mean more steak, shoes and soap, as well as medical supplies and heavy machinery needed to replace Soviet-era equipment the island traded Moscow for sugar. Havana also needs hard currency for President Raul Castro to raise state salaries, which support about 90 percent of the island's working population on an average $19.70-a-month wage. Further taxing Cuba's oil industry is the fact that the U.S. embargo not only prohibits American oil companies from investing, but bans the sale of the latest drilling equipment, forcing Cupet to use less efficient technology, said Jonathan Benjamin-Alvarado, a Cuban oil expert at the University of Nebraska at Omaha. Meanwhile, U.S. oil majors sitting on huge stacks of cash are desperate to expand their reserves. Obama's election has raised expectations of a thaw in U.S.-Cuba relations, but there has been little talk of ending restrictions on U.S. investment in Cuban oil, said Kirby Jones, founder of the U.S.-Cuba Trade Association in Washington, D.C. "The assumption is there is oil all over the Gulf," Jones said. "Much of the business community and energy sector is waiting." .

Why Cuba's Dreams of Major Oil Discoveries Might Come True

March 4, 2009

Thomas Omestad- US News and World Report,

HAVANA—There is a place tantalizingly close to American shores that—but for reasons of politics and foreign policy—could emerge as a welcome new source of oil for U.S. consumers. That surprising potential entrant onto the world energy stage is Cuba. The island nation, says Jorge Piñon, a leading expert on Cuba's energy at the University of Miami, "can certainly become a major producer of oil." Cuba is one of the biggest wild cards in the Western Hemisphere's energy outlook. It is also the most politically sensitive. The nearly half-century-old U.S. embargo against the Communist country means that American energy companies and consumers cannot partake in Cuba's oil business. Even foreign firms using drilling technology of U.S. origin could face legal action. The Bush administration went so far as to disrupt a conference of Cuban and U.S. oil executives underway at a Mexico City hotel because the hotel was part of the U.S.-based Starwood chain. But given Cuba's proximity—and the relatively low cost of transporting its oil were the embargo removed—U.S. oil executives still pay attention. A major oil find in Cuban waters could subvert the old logic behind the U.S. embargo of Cuba, a policy that endures in part because it imposes only minor economic costs while meeting the political demands of hard-line Cuban-Americans. "It would obliterate the domestic political excuse," says Julia Sweig, a Cuba expert at the Council on Foreign Relations in Washington. Adds Jonathan Benjamin-Alvarado, a Cuba energy watcher at the University of NebraskaOmaha, "It could be a game changer." In the Obama administration, Cuba's oil development is likely to be seen as an issue for the future. Says a senior State Department official, "If it's a game changer, it's not going to be a game changer for a while." Other players. Other countries are not barred from investigating Cuban-controlled portions of the Gulf of Mexico, and they are doing just that. The future drilling byforeign oil companies as close as 45 miles from the shores of Florida injects new dimensions into the debate in the United States over the embargo. Some decry the lost opportunities of a policy that still aims to isolate Cuba while other countries do the opposite. Others worry about ecological risks of any oil spills, which ocean currents would tend to carry toward the Florida Keys and the state's east coast beaches. Cuba now supplies about half of its own energy needs, say its officials, principally from an oil belt running along its northern coast. Operations include both traditional onshore wells and directional drilling rigs positioned close to the sea that tap oil under the shallow, coastal waters nearby. Many of the rigs are visible along the coastal highway between Havana and the beach resort of Varadero, itself a major oil-producing zone The oil is what specialists call heavy and sour, less suitable and more expensive to refine into gasoline because of its thickness and high sulfur content. All of Cuba's heavy crude goes into its oil-burning electricity plants. The oil action that pulls in global interest lies farther off the coast, beneath the deep waters of the Gulf. How much lighter, lower-sulfur crude is out there remains unclear. The U.S. Geological Survey estimates that Cuba's offshore fields contain about 5 billion barrels of oil—comparable to Colombia or Ecuador—as well as 10 trillion cubic feet of natural gas. Last October, however, Cuba's state oil company unveiled a dramatically higher estimate: more than 20 billion barrels of recoverable crude—a level that, if proved correct, compares to that of the United States. Cuba, with just 11.2 million people, would enter the top 15 oil-reserve nations—courtesy of subsea oil geology like that off the Mexican and U.S. Gulf coasts. "Cuba has high potential from an exploratory point of view," says Rafael Tenreyro Pérez, exploration manager for the state oil company Cubapetroleo, or Cupet. Experts say it would take three to five years to launch commercial oil extraction following a large discovery. Exploratory drilling is due to resume in the second quarter of this year 20 miles north of Havana by a consortium led by Spain's Repsol, along with India's Oil & Natural Gas Co. and Norway's StatoilHydro. Repsol struck oil in 2004, though not in commercial quantities. Other foreign firms will very likely do exploratory drilling in Cuban waters in 2010 and 2011, following on their seismic tests in recent years. Tenreyro calls the seismic testing "very encouraging.&quo