Major Difficulties in Reinvigorating U.S. Rural Areas

As previously discussed in this blog, most rural areas of the U.S. have aging, declining population. Therefore, this blog has advocated for increasing immigration and having these immigrants settle in the small and medium-size towns in these areas.[1]

However, Eduardo Porter, an economics writer for the New York Times, presents persuasive reasons why  reinvigorating these rural areas has been and will be very difficult.[2]

He starts by pointing out that for the last 25 years the 60 million people now living on farms and in hamlets and small towns have experienced “relentless economic decline” in terms of median income and population along with an increase in median age. Moreover, their share of U.S. population and income are shrinking while crime and opioid abuse are increasing. The result is “intensifying ruralization of distress,” with “distress”  measured “as a combination of data ranging from joblessness and poverty to abandoned homes and educational attainment.” Indeed, he says, “These days, economic growth bypasses rural economies.”

Although many ideas have surfaced on how to address and alleviate these problems, Porter is very doubtful that they will be successful.

The primary reason is “the inescapable reality of agglomeration, one of the most powerful forces shaping the American economy over the last three decades. Innovative companies choose to locate where other successful, innovative companies are. That’s where they can find lots of highly skilled workers. The more densely packed these pools of talent are, the more workers can learn from each other and the more productive they become. This dynamic feeds on itself, drawing more high-tech firms and highly skilled workers to where they already are.”

Therefore, he endorses a suggestion in a Brookings Institution report that any effort to address the problems of rural America should “focus on middle-sized places that are near big tech hubs and have some critical infrastructure, rather than scatter assistance all over the landscape.”

Another suggestion is to help rural residents relocate to prosperous cities and, therefore, focus on developing affordable housing in these cities.

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[1] See the posts listed in the “U.S. Population & Immigration”  section in List of Posts to dwkcommentaries—Topical: United States (POLITICS).

[2]  Porter, The Hard Truths of Trying to ‘Save’ the Rural Economy, N.Y. Times (Dec. 14, 2018)

U.N. Security Council Discusses Cameroon’s Anglophone-Francophone Conflict

On December 13, the United Nations Security Council heard reports from two U.N. officials about various issues in the Central African Region, including the Anglophone-Francophone conflict in Cameroon. Two of the 15 Council members (the United States and the United Kingdom) expressed the strongest concern about that conflict; eight others had varying degrees of alarm (Sweden, Netherlands, France, Côte d’Ivoire, Equatorial Guinea, Poland, Kuwait and Bolivia). Only one (Russia) had hostile or skeptical remarks while four others () apparently had nothing to say on the matter. [1]

U.N. Officials’ Reports

François Louncény Fall, Special Representative of the Secretary‑General and Head of the United Nations Regional Office for Central Africa (UNOCA), expressed “concern over the situation in the north-west and south-west regions of Cameroon.” He said that “violence has not diminished and there are reports of alleged human rights violations by all sides.” Recalling his November visit to Cameroon and his meetings with key Government officials, he encouraged the national authorities to address the root causes of the crisis, including by accelerating decentralization.

Reena Ghelani, Director of the Operations and Advocacy Division in the Office for the Coordination of Humanitarian Affairs (OCHA), noted  that internal displacement has tripled in Cameroon’s south‑west and north‑west regions in the past six months and that the situation amounts to one of the fastest growing displacement crises in Africa.  Noting with great concern the deteriorating protection of civilians in those regions, she said humanitarian partners are scaling up their presence despite limited access.  However, severe underfunding has a significant impact on their ability to respond, she added, pointing out that every single humanitarian response plan in Central Africa was funded at less than the global average in 2018, Cameroon being the least funded.  Calling upon Member States for support, she stressed that the situation must change for the humanitarian response to be fully effective.

Ms. Ghelani emphasized the majority of the internally displaced Cameroonians “are hiding in dense forests, without adequate shelter and lacking food, water and basic services. Schools and markets are also disrupted and there are alarming health needs.” She also expressed “great concern [over] the deteriorating situation with respect to the protection of civilians, including reported killings, burning of homes and villages, extortion and kidnappings in the South West and North West regions [along with ]multiple attacks on schools and threats to students and teachers.”

Council Members’ Strongest Statements,of Concern About Cameroon

The two strongest statement of concern over the Anglophone-Francophone dispute at this session of the Council came from U.S. Ambassador Jonathan Cohen, the U.S. Deputy Permanent Representative to the United Nations, and U.K. Ambassador Jonathan Allen, the .U.K. Deputy Permanent Representative to the U.N.

U.S. Ambassador Cohen’s Statement

“The security and humanitarian conditions in Cameroon’s northwest and southwest regions have significantly deteriorated since the last UNOCA briefing to the Security Council in June. Violence continues to escalate, obstructing vital humanitarian aid delivery to over 430,000 IDPs [Internally Displaced Persons] and blocking health and education services to rural children.”

“October was the most violent month on record in Cameroon in recent years, and judging from anecdotal reports, we fear that November will surpass October as the bloodiest month on record. We don’t want to see that horrible trend continue again this month, December. The violence must stop now.”

“Violence between government and Anglophone separatists has resulted in killings and abductions of civilians, including a U.S. missionary who was killed on October 30. Faced with mounting insecurity, tens of thousands of Cameroonians have fled to neighboring Nigeria, as we’ve heard, while hundreds of thousands have been internally displaced and need humanitarian assistance.”

“The stakes in Cameroon are too high for this crisis to continue unaddressed. Cameroon remains an essential security partner in the fight against Boko Haram and the Islamic State in West Africa, including as a member of the Multi-National Joint Task Force. The continuing crisis threatens to detract from our mutual security objectives in the Lake Chad Basin.”

The “United States calls for an immediate and broad-based reconciliatory dialogue, without pre-conditions, between the Government of Cameroon and separatists in the Northwest and Southwest Regions. We urge all sides to forswear violence, to restore peace, and to resolve their grievances through political dialogue.”

“We note that in his inaugural address on November 6, President Biya expressed confidence that ‘there is an honorable way out in everyone’s interest.’  We encourage President Biya to make good on his commitment to accelerate the decentralization process and adopt the recommendations of the Cameroonian Commission on Bilingualism and Multiculturalism.”

“The creation of a government-led humanitarian assistance coordination center is a promising development. However, the government has done little to address concerns over its own lack of respect for humanitarian principles of neutrality and impartiality and the guarantees of unhindered access to conflict-affected populations. We urge the Government of Cameroon to prioritize respect for humanitarian principles and to ensure unobstructed access for UN agencies and humanitarian NGOs assisting conflict-affected populations.”

The ”United States believes that UNOCA – through the good offices of Special Representative Fall – could provide technical assistance and mediation support to facilitate a broad-based reconciliatory dialogue without pre-conditions. We hope that ECCAS [Economic Community of Central African States], the [African Union (AU’s] Peace and Security Council, and the AU Commission will enhance their efforts to support the peace process, and we encourage them to coordinate with UNOCA in this effort.”

“A peaceful and stable Cameroon is critical to regional stability in Central Africa and both deserves and requires the continued and close attention of this Council. As noted by our Assistant Secretary of State for African Affairs last week, the last thing we need, given the challenges in the region, is for a disproportionate response by security forces to result in the growing radicalization and hardening of separatist groups.”[2]

U.K. Ambassador Allen’s Statement

The “United Kingdom recognises the many positive contributions Cameroon is making to stability in the region, including their continued commitment to the fight against Boko Haram and the sanctuary that Cameroon offers to refugees from Nigeria and the Central African Republic. However, we are concerned by the reality of the rapidly deteriorating security and humanitarian situation in the Northwest and Southwest regions of Cameroon.”

“In particular, we are concerned about high levels of displacement and take very seriously Reena Ghelani’s warning that this is now one of the fastest growing displacement crises in Africa and reports of human rights violations and abuses perpetrated by armed separatist groups and Government forces, including extra-judicial killings, other killings, abductions, restrictions of movement and access to health and education as described in the Secretary-General’s report. We must always be alert, colleagues, to the risk that the situation escalates, affecting the broader peace and stability of the Central African region, and we have already seen over 30,000 Cameroonians flee into Nigeria. If grievances are not addressed, tensions are likely to increase further.”

“[These] concerns are not new – I raised them in the Council’s discussions in March, as did others. Unfortunately, we have not seen the action needed to address the situation and since March, it has deteriorated further.”

  • “We welcome President Biya’s recent pledge to address the situation but words alone will not improve things. We strongly urge the Government of Cameroon to take urgent action, including by:actively addressing the situation through inclusive dialogue with the Anglophone leadership to address the underlying issues;
  • undertaking confidence-building measures in order to diffuse tensions and build conditions for dialogue. This includes the release of political detainees, and implementing the Government’s own commitments on decentralisation, and the recommendations of the Commission on Bilingualism;
  • allowing full humanitarian access and access to human rights monitors to all parts of the country – and I would also hope and expect that our own SRSG would have access wherever he wanted to go; and
  • ensuring accountability for all those responsible for human rights violations and abuses.”

“And clearly . . . we also call on the armed groups involved to cease their attacks on civilians, allow full humanitarian access, and access to human rights monitors, and to engage with the Government on these issues.”

“The UK, for its part, is committed to supporting Cameroon and I am pleased to announce today that the United Kingdom is contributing $3.1 million to the UN’s response in the Anglophone regions – that’s equivalent to 20% of this year’s flash appeal for the Anglophone crisis – to address immediate humanitarian and medical needs. We strongly encourage other Member States to fund this as an important part of the conflict prevention effort. Preventing a crisis costs significantly less than resolving one.”

“[We] have raised our concerns quietly so far and directly with the Government and we are committed to working with the Government of Cameroon in every way we can to help resolve this situation. But I fear, unless action is taken and the situation improves, concern over the situation in Cameroon is likely to increase amongst Security Council Members and become a more prominent part of our discussions.

Other Council Members’ Statements of Concern About the Cameroon Conflict

Olof Skoog (Sweden) “deplored the acute humanitarian situation [in Cameroon] and the massive displacement in the north‑west and south‑west regions, noting reports of abductions and extrajudicial killings.  The crisis may drive regional instability, affecting the fight against terrorism in the Lake Chad Basin and peace-building in the Central African Republic, he warned, urging all parties to end the violence immediately.  He encouraged the Government of Cameroon to seek support from the United Nations and regional actors.

Lise Gregoire Van Haaren (Netherlands) noted that indiscriminate violence by the army and armed groups in Cameroon has displaced more than 437,000 people and risks spilling over into the wider region.  Expressing support for the country’s territorial integrity, she called upon the Government of Cameroon to begin meaningful, inclusive dialogue with all parties, including female representatives.  Human rights violations by all parties must be investigated and perpetrators held to account, she emphasized.

Anne Gueguen (France) expressed alarm at the situation in parts of Cameroon and pledged further efforts to encourage the Government to foster dialogue, decentralize power and hold violators of human rights accountable.  However, the U.N. summary did not indicate any comments by France directed at the actions of the Francophone majority in Cameroon.

Kacou Houadja Lkéon Adom (Côte d’Ivoire, a former French colony)), Council President for December, discussed the threat of Boko Haram and its devastating repercussions, especially for children and women in Cameroon, Chad and Niger. He apparently said nothing about the Anglophone-Francophone conflict.

Anatolio Ndong Mba (Equatorial Guinea) appealed for greater international support for dialogue and political stability in neighboring Cameroon.

Pawel Radomski (Poland) called upon the authorities in Cameroon to engage mediation efforts and resolve the crisis in its western region.

Mansour Ayyad Sh. A. Alotaibi (Kuwait) expressed concern about the deteriorating humanitarian situation in Cameroon.

Verónica Cordova Soria (Bolivia) affirmed [Cameroon] Government’s primary role in tackling challenges through inclusive dialogue.

Russia’s Negative Statement About Cameroon’s Conflict

Dimitry A. Polyanskiy (Russian Federation) said the available information with respect to Cameroon was “contradictory, emphasizing that the Council must not take any hasty decisions.  Citing concerns over rights violations in that country, he expressed hope that ‘London and Washington will adopt equally principled positions on the rights of Russian speakers in the Balkans and Ukraine.’ Underlining the importance of not breaching the line between prevention and intervention, he expressed his country’s willingness to offer assistance if Cameroon deems it necessary.

.Conclusion

 It is important to remember that at this session there was no resolution for any U.N. action to be taken regarding Cameroon.

Was it mere happenstance or an attempt to counter some of the talk at the Security Council that on the same day, December 13, the Cameroon government announced that it had ordered the country’s military tribunal to stop legal proceedings against 289 people who had been accused of taking part in the separatist movement? The announcement said that President Biya “had listened to the people” in making this decision to “maintain the country as a peace heaven.” [3]

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[1] U.N., Special Representative  Stresses Need for New Strategies to Tackle root Causes of Insurgency, as Security Council Considers  Situation in Central Africa (Dec. 13, 2018); U.S. Mission to U.N., Remarks at a UN Security Council Briefing on the Central African Region (Dec. 13, 2018); U.K. Mission to U.N., Preventing further conflict in Cameroon and the Lake Chad Basin (Dec. 13, 2018); Assoc. Press, US Demands Immediate End to Violence, Talks in Cameroon, N.Y. Times (Dec. 13, 2018).

[2] See U.S. Warns Cameroon Internal Conflict Could Get Much Worse, dwkcommentaries.com (Dec. 8, 2018).

[3] Assoc. Press, Cameroon Leader Halts Cases Against 289  Alleged Separatists, N.Y. Times (Dec. 13, 2018).

State of Minnesota Faces  Increasing Shortage of Workers

Last week had great news for the State of Minnesota. The State government was projected to have a  $1.5 billion surplus in its budget over the next two years [1]

On the other hand, this great news was coupled with a more troubling projection. The tight labor market caused by retiring baby boomers is an immediate problem, and its pinch on growing businesses is only going to get worse.

The report itself put it this way, “The state continues to add jobs at a steady pace, driving the unemployment rate well below the U.S. rate. Together, high demand for labor and low unemployment continue to support growth in total Minnesota wage income and wages per worker. However, as retiring baby boomers dampen growth in the state’s workforce, forecast employment growth is increasingly constrained. This means that more of Minnesota’s growth in total wage income is expected to arise from higher wages per worker, and less from increases in the number of people working.”

“Strong demand for workers,” the report continued, “combined with low unemployment, continues to tighten Minnesota’s labor market. Statewide, there have been fewer unemployed job-seekers than open positions for the past 18 months. Other indicators, such as initial claims for unemployment insurance and temporary help employment, are at levels consistent with a tight labor market. In October, Minnesota’s seasonally adjusted unemployment rate was 2.8 percent, 0.9 percent below the national rate, 0.5 percentage points lower than a year ago, and the lowest unemployment rate the state has seen in more than 18 years.”

According to Walker Orenstein in MINNPost, there are five key facts underlying the projected worker shortage.

  1. There have been fewer unemployed job-seekers than open jobs for the past 18 months.

In October 2018, the state’s unemployment rate was 2.8 percent, which is 0.9 percent lower than the national rate and the lowest for the state in more than 18 years. The rate is still 5.4 percent for black Minnesotans and 5.0 percent for Hispanic residents, but those numbers also have dropped over the last few years.

  1. Job vacancies are up 16 percent compared to last year.

Minnesota has about 142,000 open jobs, a 16 percent jump over the same point in 2017. That’s more job openings compared to fewer than 100,000 unemployed people. The economic forecast report says the industries with the most open jobs are health care, accommodation and food service, retail and manufacturing.

When businesses can’t find people to fill the jobs they have open as baby boomers retire, it hampers their ability to grow and succeed. That crunch is being felt especially hard in the Twin Cities, where there are two job vacancies for every unemployed person, according to the report.

  1. Nearly 70 percent of people age 16 and older are employed.

Minnesota’s 68 percent rate of working people is the highest of any state and 7.4 points higher than the national rate,  This is great news, but  it also illustrates just how few people there are left for businesses to entice into working compared to other states.

  1. Wages are expected to rise as businesses struggle to find workers.

A “moderate acceleration” in salary growth is forecast. The forecasters expect wages to increase at higher rates than the national average during 2019 and 2020, but slow through 2023.

  1. More people are moving in, than out (for once).

From 2016 to 2017, nearly 8,000 more people moved to Minnesota from inside the U.S. than left the state, reversing a 15-year-long trend of negative domestic migration.

While the report warns one year of growth in this statistic doesn’t signal a long-term growth trend, the number of new Minnesotans is good news in an otherwise bleak landscape of worker shortages.

Shortage of Police Recruits[2]

A subset of the overall shortage of new workers is the problem Minnesota police departments are having in “attracting and keeping new police officers.”  For Minneapolis, “officials blamed the shrinking candidate pool on decreasing interest in the profession, lower enrollment and graduation rates from area college law enforcement programs, and ‘internal issues with the application, testing and hiring processes.’”

This also is a problem throughout the U.S. attributable to “low pay, high turnover and unflattering news coverage in the wake of high-profile police shootings.”

The Proposed Solutions to the Worker Shortage

The initial responses to this problem from Minnesota elected officials, in this blogger’s opinion, were meager at best.

Outgoing Speaker of the House Kurt Daudet (Rep.) suggested the state improve at enticing young people into trades and manufacturing — two industries struggling to fill positions. Gov.-elect Tim Walz (DFL) said some school districts lack the money to properly train an adequate workforce thanks to the state’s over-reliance on local property taxes to pay for schools.

So far at least, no public official is advocating for what the state really needs—more immigrants.[3]

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[1]  Minnesota Management & Budget, Budget and Economic Forecast (December 2018); Orenstein, A warning lurks beneath state budget surplus prediction: not enough workers to go around, MINNPost (Dec. 11, 2018); Berkel, Minnesota projects $1.5 billion surplus, StarTribune (Dec. 6, 2018).

[2]  Jany, Minnesota police look to combat crisis of statewide shortage in potential recruits, StarTribune (Dec. 13, 2018).

[3] See posts listed in the “U.S. Population & Immigration” section of List of Posts to dwkcommentaries—Topical—United States  (POLITICS).

Inner-Ear Damage to U.S. Diplomats in Cuba

On December 12, 2018, physicians at the University of Miami published a scientific study  concluding that the U.S. diplomats  in Cuba who have reported certain medical problems over the last two years suffered damage to the part of the inner ear responsible for balance. [1]

Dr. Michael E. Hoffer, the director of the university’s Vestibular and Balance Program and lead author of the study, said, “These people were injured. We’re not sure how. The injury resulted in ear damage and some trouble thinking.”

Dr. Hoffer added, “What we noticed is universal damage to the gravity organs in the ear. The ear has a bunch of different balance organs — and two of them are gravity organs — and those are damaged in everyone.” After suffering the damage, he said, the patients’ bodies spend so much energy trying to stay balanced that it wipes them out.“That’s very fatiguing. And it doesn’t leave a lot left over to remember where you put your keys.”

To date the U.S. has not identified any known cause for these injuries. The University of Miami study said, “it would be imprudent to exclude any potential directed or non-directed energy sources at this time.”

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[1]  Dr. Hoffer, et al., Acute findings in an acquired neurosensory dysfunction, Investigative Otolaryngology (Dec. 12, 2018); Robles, U.S. Diplomats With Mysterious Illness in Cuba Had Inner-Ear Damage, Doctors Say, N.Y. Times (Dec. 12, 2018); Assoc. Press, Cuba Health Mystery: Diplomats Had Inner-Ear Damage Early On, N.Y. Times (Dec. 12, 2018); Gámez Torres, Doctors who first tested diplomats after Cuba ‘health attacks’ doubt concussion theory, Miami Herald (Dec. 12, 2018). Previous posts on this subject are listed in the “U.S. Diplomats’ Medical Problems in Cuba, 2016–??” section of List of Posts to dwkcommentaries.com—Topical: CUBA.

Another U.S.-Cuba Dispute Over Human Rights

On December 7 U.S. Secretary of State Mike Pompeo sent an  open letter to Cuba’s Foreign Minister Bruno Rodriguez, and Cuba immediately and angrily denounced the letter without responding to the specific questions advanced by Pompeo.

Secretary Pompeo’s Letter[1]

The letter asked for a “substantive explanation of the detention of the [following eight] political prisoners” and “whether [Cuba] . . . continues to incarcerate . . . [them]  as charged with ‘pre-criminal dangerousness’ and “for an explanation of the charges and the evidence against the other individuals [on a list provided by the U.S. in January 2017]:”

  • Yosvany Sanchez Valenciano, Melkis Faure Echevarria, and Yanier Suarez Tamayo of the Cuban Patriotic Union;
  • Eduardo Cardet Concepcion of the Christian Liberation Movement;[2]
  • journalist Yoeni de Jesus Guerra Garcia;
  • Martha Sanchez of the Ladies in White; [3] and
  • Jose Rolando Casares Soto and Yamilka Abascal Sanchez of the Cuban Youth Dialogue.

The Secretary also said that the U.S. “has for decades expressed profound concern regarding Cuban political prisoners. Such prisoners include those charged with pre-criminal ‘dangerousness, ’defined [in Cuban law] as ‘the special inclination an individual has to commit crimes demonstrated by conduct in manifest contradiction to the rules of socialist morality.’ Former President [Raúl] Castro, in a news conference with then President Obama in March 2016, said that if U.S. officials presented him with a list of political prisoners, they would be released that very night. He received such a list, but political prisoners remained in detention. U.S. representatives [also] raised the issue during the October 2016 Human Rights Dialogue in Havana. They were told all prisoners were in jail for sound reasons and that, if we had questions as to the reasons, we could raise them. Our representatives were also advised that pre-criminal ‘dangerousness’ was no longer used as a basis for imprisoning people.”

 Cuban Responses[4]

The Cuban Foreign Minister responded on Twitter, ” Pompeo lies and slanders. U.S. government  is a global repressor [of human rights and] lacks moral authority.” In another tweet, Rodriguez said he has asked “Washington to lift the embargo, restore visas for Cubans” and “stop the repression of migrants, minorities and the poor.”

Cuba’s more extensive response to Secretary Pompeo’s letter was made by  US Director of Cuba’s  Ministry of Foreign Affairs, Carlos Fernández de Cossío. He said the U.S. “acts dishonestly when it raises concerns about the human rights situation in Cuba or anywhere.” He added that the “constant and flagrant abuses against its own population and the population of many countries in the world, and their alliance throughout history with dictatorial regimes authors of the most opprobrious crimes, disqualify the moral authority of the American rulers.”

The Pompeo letter and “his public management are nothing more than acts of propaganda.” They accompany . . . “the unwillingness of that government to sit down with Cuba, with seriousness and commitment, in a bilateral dialogue between equals, to deliberate on the issue of human rights and how to advance with sincerity towards constructive cooperation on the subject. . . . [and if] the United States were truly interested in the human rights of Cubans, it would not impose a criminal economic blockade that punishes the entire nation, nor would it place increasing obstacles to orderly emigration, nor to consular services on which tens of thousands of Cubans depend. ”

Fernández de Cossio concluded, “Cuba is a country in which human rights are respected. . . .  [and contrary to the U.S.]”the Cuban government and society as a whole are mobilized to promote and guarantee the legal framework, public policies and the effective enjoyment of the rights of citizens, including the rights to a life worthy, free of exploitation, marginalization, social alienation, discrimination of any kind, violence, crime and abuse of power, and with access to quality health and education services for the entire population, among other guarantees.”

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[1] U.S. State Dep’t, An Open Letter to the Foreign Minister of the Republic of Cuba (Dec. 10, 2018)   (the letter itself was dated December 7, 2018); Assoc; Press, US Demands Answers From Cuba on Imprisoned Dissidents, N.Y. Times (Dec. 11, 2018).

[2] See U.S. at U.N. Condemns Cuba’s Imprisonment of Political Opponents, dwkcommentareis.com ( Oct. 17, 2018).

[3] See Search Results for: Ladies in White in dwkcommentaries.com.

[4] Cuba Foreign Ministry, Tweets by Foreign Minister Rodriguez (Dec. 2018); Cuba Foreign Ministry, Statement by the Director General of the USA of the MINREX on false accusations of the Department of State of the United States (Dec. 10, 2018).

 

U.S. Warns Cameroon Internal Conflict Could  Get Much Worse 

On December 6, Tibor Nagy, the U.S. Assistant Secretary of State for Africa, while on a trip in Africa said the separatist crisis in Cameroon could get “much, much” worse” and was “worrying me greatly.”[1]

He also said that the U.S. continues to call for dialogue between the Cameroon government and the Anglophone separatists and suggested “some form of decentralization” in Cameroon as mentioned in a proposed constitution for the country.

Unfortunately, he added, Cameroon reminded him of neighboring Nigeria, where the government’s “brutal response” to extremism led to an increase in the membership in Boko Haram. That decade-old Islamic insurgency continues to rage in northeastern Nigeria and has spilled over into Cameroon.

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[1] Assoc. Press, US: Cameroon Separatists Crisis Could Get ‘Much, Much Worse,’ N.Y. Times (Dec. 6, 2018)

Cuba Relaxes Some New Rules Regarding Private Enterprise

On December 7 Cuba implemented new rules for its private sector (the “self-employed” in Cuban parlance) that had been announced on July 10.[1]

However, these new rules had been relaxed or liberalized in the following respects from those earlier announced:

  • The proposed limit of one self-employment license per person was eliminated.
  • Licenses for 26 of the 27 activities that had been suspended will be resumed. (The other suspended category (self-employed computer programmers) will remain suspended until specific norms for this area are developed.)
  • The proposed limit on the maximum capacity of 50 customers for food-service establishments was eliminated, with capacity to be determined by the size of the site to be utilized.
  • The required minimum balance of a commercial bank account: will be reduced from three monthly tax quotas to two, for operations in six categories (food services, restaurants and cafeterias; bar and recreational services; rental of rooms and spaces; construction, repair and maintenance services; and transportation of passengers in the capital).
  • Up to 35% of income of the foregoing establishments need not be deposited in the commercial bank account, to provide greater flexibility.

In announcing these changes, the Minister of Labor and Social Security Margarita González Fernández commented that, as projected, this modality of employment has generated jobs, expanded options for the population, and freed the state from the responsibility of managing small-scale activities that do not play an essential role in the national economy.

She also emphasized these adjustments reflect the government’s intention to recognize the positive role played by self-employment workers in the updating of our economic model, and to take into consideration the opinion and experiences of those directly involved, with the goal of establishing a climate of order and discipline in the sector.

However, there were no changes to the proposed rules regarding private taxis obligating drivers, for example, to purchase a minimum amount of fuel from state gas stations with huge markups in order to curb the black market for fuel amid a decline in oil supplies from ally Venezuela. The new rules  also fix prices for the set, shared routes.[2]

Some private drivers in Havana have said the new rules are so stifling that they prevent them from making a living, so they would rather give up their licenses to operate as taxis. The Vice Minister for Transport Marta Oramas said that around 800 drivers had handed in their licenses so far.

Anticipating this reduction in an already severe shortage in public transportation, the government said it was importing hundreds of microbuses and buses to alleviate the shortage.

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[1] Martinez Hernández, Legal norms governing self-employment modified, Granma (Dec. 6, 2018); These are the new regulations to control the Cuban private sector, Diario de Cuba (Dec. 7, 2018). See also Cuba Announces New Regulations for Private Businesses, dwkcommentaries.com (July 10, 2018); More Details on New Cuban Regulations on Private Business, dwkcommentaries.com (July 11, 2018).

[2] Reuters, Cuba Reinforces Public Transport as It Clamps Down on Private Taxis, N.Y. times (Dec. 6, 2018).