Cuban Entrepreneurs Express Frustration and Confidence

A recent study based on interviews of 80 Cuban entrepreneurs found seemingly contradictory results.[1]

There was frustration. As expressed by the Miami Herald, “Like entrepreneurs in any country, Cuban entrepreneurs want more access to resources and fewer bureaucratic obstacles to expand and reinvest in their businesses.”

There also was optimism. Said the author of the study, Cuban-born economist Carmelo Mesa Lago, there was a “very high level of reinvestment that the self-employed engage in. Most, including those renting apartments and houses, reinvest.” The study also found a “high degree of satisfaction expressed by those who have decided to start a private business in Cuba, which has allowed them to gain autonomy and live better than those who depend on state wages.”

With virtual unanimity, the entrepreneurs complained about “the level of state interference” or over-regulations plus high prices for supplies, the absence of a wholesale market and high taxes.

The study looked at four segments of the so-called “non-state sector” of the Cuban economy: (1) the self-employed; (2) farmers who use state-owned parcels; (3) corredores   (brokers) of home sales as well as buyers and sellers of private homes; and (4) workers of non-farm production and service cooperatives. Another sector–owners of private restaurants known as paladares—was not included because, says Lago, they do not want to attract attention to their business.

The study– oces del cambio en el sector no estatal cubano (Voices of Change in the Cuban Non-State Sector)—is published by the Ibero-American publishing house.

Conclusion

This study confirms the existence of a thriving non-state sector of the Cuban economy, contrary to the Senate testimony of the new U.S. Ambassador to the U.N., Nikki Haley, as mentioned in a recent post.

The study also confirms the unsurprising difficulties and challenges the Cuban government faces in creating a mixed economy. Indeed, as covered in an earlier post, Raúl Castro in his role as the leader of the Communist Party of Cuba at its Party Congress last year stressed those difficulties and challenges while also acknowledging the essential and important contributions of the non-state sector for the Cuban economy.

Finally the study confirms the need for the U.S. to support the further development and success of this sector by continuing and enhancing the U.S. normalizing of relations with Cuba, especially the enabling of U.S. remittances to those on the island and thereby constituting a major source of capital for this sector. This very point has been emphasized by Engage Cuba, a U.S. coalition, in its lobbying of the new Trump Administration.[2]

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[1] Gámez-Torres, Cuban entrepreneurs dream big, but the government gets in their way, Miami Herald (Jan. 26, 2017).

[2] U.S. and Cuba’s Efforts To Continue Normalization, dwkcommentaries.com (Dec. 9, 2016); Lobbying the Incoming Trump Administration To Continue Normalization with Cuba, dwkcommentaries.com (Jan. 18, 2017); Engage Cuba.

Lobbying the Incoming Trump Administration To Continue Normalization with Cuba  

Major supporters of U.S. normalization of relations with Cuba have been lobbying the incoming Trump administration to continue that policy. This includes Cuban entrepreneurs, as discussed in a prior post, and most recently U.S. agricultural and business groups.

Agricultural Groups[1]

On January 12 over 100 U.S. agricultural trade groups, including the American Farm Bureau and the American Feed Industry Association, sent a letter to President-Elect Trump. It said, ” we urge you to continue to show your support for American agriculture by advancing the relationship between the U.S. and Cuba and building on the progress that has already been made.”

The letter cited a recent deep dip in farm income to bolster their argument that U.S. farmers needed more trade. “Net farm income is down 46 percent from just three years ago, constituting the largest three-year drop since the start of the Great Depression.”

They also mentioned that under an exception to the U.S. trade embargo from the year 2000, Cuba may import agricultural products for cash, but this cash limitation limits the ability of U.S. agriculture to export to Cuba. Therefore, the letter calls on Trump to allow normal trade financing and credit so the sector can better compete for the Cuban market.

The letter concluded with these words: “As a broad cross-section of rural America, we urge you not to take steps to reverse progress made in normalizing relations with Cuba, and also solicit your support for the agricultural business sector to expand trade with Cuba to help American farmers and our associated industries. It’s time to put the 17 million American jobs associated with agriculture ahead of a few hardline politicians in Washington.”

Business Groups[2]

On January 17 the Cuban Study Group, an organization of Cuban-American business leaders, led a group of advocates for U.S.-Cuba normalization, in submitting to the President-elect a memorandum entitled “U.S. Policy Toward Cuba: the Case for Engagement.”

It argued that continued engagement with Cuba will create U.S. jobs and facilitate more positive change on the island. It states “constructive engagement — including the reduction of travel and commercial barriers — is the best strategy for supporting the Cuban people and boosting U.S. jobs and exports.” Indeed, further progress toward normalization stands the best chance of improving security just off U.S. shores, reducing irregular migration, enhancing the management of U.S. borders, and encouraging continued, positive evolution inside the island.” More specifically, continued engagement with Cuba should produce the following benefits to the U.S.:”

  • “U.S. Job Creation. Further engagement would allow the United States to regain lost market share in emerging Cuban markets from economic competitors such as China, Vietnam, and Brazil and employ thousands of U.S. workers in agribusiness, infrastructure, tech, and tourism.
  • Cuban-American support. Lifting restrictions on remittances and travel allows Cuban-Americans to support their families in Cuba and provide critical seed funding for the island’s nascent private sector.
  • Cuba’s burgeoning entrepreneurial sector. In just a few years, Cuba’s private sector has grown to account for 30% of the country’s workforce. U.S. travelers to Cuba have become the principal source of revenue for many small businesses.
  • Greater access to information. Internet access is growing, and continued engagement can further contribute to connectivity and the development of civil society in Cuba.”

Moreover, they say, “to reflexively reverse course could have pernicious consequences for U.S. economic and foreign policy interests and the prospects of evolutionary change in Cuba.”

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[1] Engage Cuba, Over 100 U.S. Agriculture Groups Urge Trump to Strengthen U.S.-Cuba Trade Relationship (Jan. 13, 2017); Reuters, U.S. Farmers Ask Trump to Stay the Course on Cuba, N.Y. Times (Jan. 12, 2017).

[2] Engage Cuba, Cuba Groups to Trump: Reversing Course Could Harm Cuban People and U.S. Interests (Jan. 17, 2017); Reuters, U.S.-Cuba Detente Supporters Make Last-ditch Effort to Sway Trump, N.Y. Times (Jan. 17, 2017).

The other signers of the memorandum are the American Society/Council of the Americas; the U.S.-Cuba Business Council; the Center for Democracy in the Americas; Ted Piccone, Senior Fellow, Brookings Institution; Richard E. Feinberg, Professor, UC San Diego and Senior Fellow (non-resident), Brookings Institution; William M. LeoGrande, Professor of Government, American University; Engage Cuba; Washington Office on Latin America (WOLA); Latin America Working Group; National Foreign Trade Council (NFTC); Christopher Sabatini, Executive Director, Global Americans and Lecturer, Columbia University’s School of International and Public Affairs; The National Cooperative Business Association CLUSA International (NCBA CLUSA) National Tour Association (NTA) United States Tour Operators Association (USTOA) TechFreedom The American Society of Travel Agents NAFSA: The Association of International Educators; the National Foreign Trade Council, the American Society of Travel Agents and the Association of International Educators; Christopher Sabatini, Executive Director, Global Americans and Lecturer, Columbia University’s School of International and Public Affairs; The National Cooperative Business Association CLUSA International (NCBA CLUSA); National Tour Association (NTA) United States Tour Operators Association (USTOA); TechFreedom; The American Society of Travel Agents; NAFSA: The Association of International Educators.

 

Secretary of State-Nominee Rex Tillerson Addresses U.S. Policies Regarding Cuba     

Rex Tillerson
Rex Tillerson

In his opening statement at the January 11 Senate Foreign Relations Committee hearing on his nomination, Secretary of State Nominee Rex Tillerson made the following comments about U.S. policies regarding Cuba:[1]

  • “And we must adhere to standards of accountability. Our recent engagement with the government of Cuba was not accompanied by any significant concessions on human rights. We have not held them accountable for their conduct. Their leaders received much, while their people received little. That serves neither the interest of Cubans or Americans.”

Later in response to questions by Senator Marco Rubio (Rep., FL), a Cuban-American and a noted opponent of normalization, Tillerson said he would advise the president to veto any legislation codifying President Obama’s thaw with Cuba, at least until the Trump administration can conduct its own review of that policy. In addition, Tillerson said the current U.S. normalization policy has not benefited most Cubans.

Tillerson specifically added that he would also advise Trump to veto any measures to lift the Cuban embargo, and “examine carefully the criteria” under which Cuba was taken off the list of state sponsors of terrorism, to determine “whether or not that de-listing was appropriate.”

Tillerson did not commit to indefinitely maintaining the above positions, instead deferring to the results of the new administration’s forthcoming review to determine its long-term Cuba policy.

Tillerson underscored that the United States “cannot ignore the law” and must comply with measures such as the Helms-Burton Act, which codified the embargo in 1996, and stated that economic restrictions must remain in force until the Cuban government complies with certain conditions, among them that the Castro family leaves power. Any modification of that legal basis on the policy toward Cuba “should be done by Congress,” according to Tillerson, who committed to strictly enforcing the law.[2]

The obvious follow-up question that I believe was not asked is whether one of the objectives of the promised review of U.S. policies regarding the island will be recommending changes to relevant statutes.

Responding to a question by Senator Robert Menendez (Dem., NJ), a Cuban-American opposed to normalization, Tillerson said that advancing human rights and democracy in Cuba and returning to justice U.S. fugitives like Joanne Chesimard, convicted of aiding and abetting the murder of a New Jersey State Trooper, would be a condition of any further engagement with Cuba.

Conclusion

This hearing was bad news and good news for advocates of normalization like this blogger.

The good news is Tillerson’s prediction that the new administration will conduct a review of existing U.S. policies regarding Cuba before making any changes in them.As previoulsy stated, this review should include recommendations to Congress for changes in existing statutes on the subject.

The bad news is the series of suggestions that many of the normalization policies will be cancelled.

Although I agree that so far Cuba has not made significant concessions on human rights, I disagree with the implicit conclusion from this statement: the U.S. needs to demand Cuban concessions on human rights as a condition for the U.S. making any further economic “concessions” to the island. This is the policy that was followed for over 50 years before December 17, 2014, without the desired result.

I also disagree with his prospective recommendation of a veto of any legislation ending the U.S. embargo of Cuba. In addition, I reject his implication that the U.S. May 2015 rescission of its designation of Cuba as a “state sponsor of terrorism” was not justified. As explained in earlier posts, the embargo is unjustified and counterproductive for the U.S. while  previous “terrorism” designations were ridiculous and unjustified and the rescission was fully consistent with the law and the facts and was implicitly endorsed by Congress’ failure to approve a joint resolution countermanding the rescission. [3]

Finally I disagree with Tillerson’s testimony that the Cuban “people have received little” from U.S.-Cuba engagement or normalization. As previously stated in various posts, the increased remittances from families and friends in the U.S. to others in Cuba, all made possible by the Obama Administration’s loosening of U.S. restrictions, have been a major source of funding for the expansion of family-owned businesses on the island. That expansion has helped to reduce the portion of the Cuban economy controlled by state-owned enterprises and has increased the income and well being of Cuban entrepreneurs and their employees, who are and will be a significant force for further modification of the Cuban economic and political system.[4]

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[1] Secretary of State Designate Rex Tillerson: Senate Confirmation Hearing Opening Statement (Jan. 11, 2017); Rex Tillerson Confirmation Hearing: Live Coverage, W.S.J. (Jan. 11, 2017); U.S. Senate For. Rel. Comm., Nomination Hearing for Secretary of State Nominee Rex Tillerson (Jan. 11, 2017) (video); Demirjian, Tillerson says Trump is prepping to review Obama’s Cuba policy, Wash, Post (Jan. 11, 2017); Menendez, Secretary of State Nom Rex Tillerson gives commitment to justice during Senate confirmation hearing (Jan. 11, 2017); Kasperowicz, Tillerson would recommend veto of bill ending Cuba embargo, Wash. Examiner (Jan. 11, 2017).

[2] Of greater interest to most of the media about this hearing was Rubio’s challenging questions to Tillerson about whether he favored sanctions against Russia and whether he thought Putin was a war criminal. (E.g., Sanger & Flegenheimer, In Rocky Hearing, Rex Tillerson Tries to Separate From Trump, N.Y. Times (Jan, 11, 2017).)  Were such questions about Russia merely a Rubio ploy to solidify Tillerson’s opposition to Cuba normalization?

[3] See posts listed in the “U.S. Embargo of Cuba” and “Cuba State Sponsor of Terrorism?” sections of List of posts to dwkcommentaries–Topical: CUBA.

[4] See posts listed in the “Cuban Economy” section of List of posts to dwkcommentaries–Topical: CUBA.

Nancy Pelosi and Other House Democrats Visit Cuba

A delegation of Democratic members of the U.S. House of Representatives led by Nancy Pelosi, the Minority Leader of the House, visited the island, February 17-19. They went “to build upon the announcement of U.S. normalization of relations and other initiatives announced by President Obama” and “to advance the U.S.-Cuba relationship and build on the work done by many in the Congress over the years, especially with respect to agriculture and trade.” [1]

The eight members of the delegation were David Cicilline (RI), member of the House foreign Affairs and Judiciary Committees; Rosa DeLauro (CT), the senior Democrat on the House Agriculture Appropriations Subcommittee and Co-chair of the Democratic Steering and Policy Committee;  Eliot Engel (NY), the senior Democrat on the House Foreign Affairs Committee; Anna Eshoo (CA), Ranking Member on the House Energy and Commerce Committee’s Subcommittee on Communications Technology; Steve Israel (NY), Chair of the Democratic Policy and Communications Committee; Jim McGovern (MA), member of the House Agriculture Committee and Co-Chair of the congressional Tom Lantos Human Rights Commission; Collin Peterson (MN), the senior Democrat on the House Agriculture Committee; and Nydia Velazquez (NY), the senior Democrat on the House Small Business Committee. [2]

After their arrival in Cuba, they first went to the U.S. Interests Section’s building on Havana’s Malecon. There they met with the Chief of Mission, Jeffrey DeLaurentis, and his team. “We are proud of them and the U.S. Marines serving us there,” Pelosi said. 

cuba-nancy-pelosi-bruno-rodriguezOn February 18th the delegation had a three and one-half hour meeting with Cuban Foreign Minister, Bruno Rodriguez. and Josefina VIdal, the Foreign Ministry’s leader of the current negotiations with the U.S. (Left is a photograph of Pelosi and Rodriguez.) According to a Cuban website, they “discussed issues related to the current context of ties between the two countries, including restoring diplomatic relations, opening embassies and the debate in Congress on lifting the blockade [embargo] against Cuba.” Afterwards, Pelosi said, ““We discussed areas of interest to the United States and Cuba, and our delegation listened to their concerns, including the embargo, bank and credit financing,” Pelosi said. “We underscored our commitment to human rights in Cuba and agreed to build upon the historic opportunity before us to make progress in our relationship.”

Pelosi+Diaz

On the 19th Pelosi and the delegation met with Miguel Diaz-Canel, Cuba’s First Vice President and presumptive next Cuban president. (Right is a photograph of Pelosi and Diaz-Canel.) They talked about Cuba’s market-style economic reforms, bilateral relations and prospects of the U.S. Congress lifting the country’s 53-year-old trade embargo of Cuba. Afterwards Pelosi told reporters, “There is strong bipartisan support to lift the embargo in the Congress, however it’s not universal and it certainly does not appear to be shared by those in power who have the ability to bring a bill to the floor.”

The delegation also met with leaders of Cuba’s legislature (National Assembly), including its vice president, Ana María Mari Machado. According to Pelosi, “During the meeting, we exchanged views about the actions taken by President Obama and President Raúl Castro. We agreed to continue our interparliamentary dialogue on areas of agreement and disagreement.”

U.S. House of Representatives Democratic leader Pelosi, Archbishop of Havana Cardinal Ortega and members of a delegation of congressional Democrats pose for a photograph in Havana

Other meetings were held with Cuban Cardinal Jaime Ortega (left is a photograph of the Cardinal and the delegation); American students at the Latin American School of Medicine; young entrepreneurs of the island’s emerging private sector; and representatives of civil society, but not with Cuban dissidents.

At a press conference on their last day on the island, Pelosi said, “We’re very positively impressed by what we heard here about our future prospects and the relationship.” Representative Engel noted they had raised the topic of human because “We’re very concerned with human rights and dissident rights. I’d like to see more changes from the Cuban side.”  Representative McGovern concurred with this comment: “The best way to promote human rights is to accelerate this new process to establish formal embassies in Havana and Washington.” The delegation also said they also spoken with Cuban officials about U.S. food sales to the island, internet technology and the island’s emerging small-business sector.

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[1] This post is based upon the following: Press Release, Pelosi Leads Congressional Delegation to Cuba (Feb. 17, 2015); Reuters, Pelosi Traveling with Lawmakers to Cuba, N.Y. Times (Feb. 17, 2015); Fram, Pelosi Leads House Democrats Visiting Cuba, Assoc. Press (Feb. 17, 2015); Press Release, Pelosi Statement on Historic Delegation’s Meetings in Havana (Feb. 18, 2015); Miller, Nancy Pelosi visits Havana, meets with top Castro regime officials, Wash. Times (Feb. 19, 2015); Oleaga, US, Cuba Relations Update: Representative Nancy Pelosi Leads congressional Delegation to Cuba, Hopes to Advance Renewed Relations, Latin Post (Feb. 19, 2015); Cuba FM Meets with Nancy Pelosi, Havana Times (Feb. 19, 2015); Cuban FM meets U.S. lawmakers on normalization of ties, Xinhua (Feb. 19, 2015); Trotta, U.S. congressional delegation meets Cuba’s heir apparent, Reuters (Feb. 19, 2015); Miroff, In Havana, Pelosi delegation promotes Obama’s Cuba thaw, Wash. Post (Feb. 19, 2015); Agence France-Presse, US-Cuba talks tackle human rights, reopening embassies (Feb. 19, 2015);Torres, Pelosi and other Democrats meet with Cuban officials in Havana, Miami Herald (Feb. 19, 2015); Miguel Diaz-Canel received the leader of the Democratic Party in the House of Representatives of the US, Granma (Feb. 19, 2015); Nancy Pelosi: The lock [embargo] is a “measure unsuccessfully,” CubaDebate (Feb. 19, 2015)(English translation by Google Translate); Press Release, Pelosi Statement on Historic Congressional Delegation’s Final Day of Meetings in Cuba (Feb. 20, 2015).

[2] Representative Peterson is a cosponsor of H.R.403 (Free Trade with Cuba Act) while Representatives DeLauro, McGovern and Velazquez are cosponsors of H.R.664 (Export Freedom to Cuba Act of 2015).