Argument Between Wall Street Journal and Cuba’s Ambassador to U.S.

The Wall Street Journal and the Cuban Ambassador to the U.S. are engaged in an argument that started with the newspaper’s April 22 editorial.

The Editorial[1]

 “Eighty-six-year-old Raúl Castro grabbed headlines last week when he ceded the title of president to 58-year-old civilian Miguel Diáz-Canel. Too bad this change at the top is nominal when it comes to freedom for the Cuban people.”

“Mr. Diáz-Canel is . . .[not] an independent thinker. Cubans have every reason to believe him when he says, as he did in his acceptance speech, that he is committed to preserving a police state. If Mr. Diáz-Canel wants to keep his job and privileges, human rights won’t be on his agenda.”

“Raúl still leads the Communist Party and has kept the two most powerful regime positions under his control. Col. Alejandro Castro Espín, his son, runs counterintelligence for the Interior Ministry that controls the secret police. Gen. Luis Alberto Rodríguez López-Callejas, Raúl’s former son-in-law, is top dog at GAESA, the military’s holding company that owns the tourism industry, the shipping company, the airline, construction companies, auto imports and sales, the real-estate business, the banks and control of container traffic at the Port of Mariel. Ramiro Valdés, a regime enforcer, still sits on the Council of State, Cuba’s highest government body.”

. . . .

“Now Havana’s crime family has again run out of other peoples’ money. Its largest sources of hard currency are the doctors and nurses who live in poverty while Cuba “rents” them to countries around the world. Yet even this multibillion-dollar human trafficking isn’t enough to support the broken Cuban economy.”

“President Trump has reined in some of Barack Obama’s executive orders that made it easier for Americans to travel to Cuba. But the regime’s bigger problem is that investors who kick the tires on the Castro jalopy increasingly walk away. There are plenty of opportunities in emerging markets these days, and the smart money doesn’t want gangsters for partners.”

“Promises of greater economic freedom for Cubans have never materialized. Small businesses can operate as long as they are subsistence operations. But they can’t hire and the regime has again cracked down on permitting lest it lose control. Cuba’s poverty suggests something has to change. But liberalization is not in the interests of the Castro family or the military. And they’re still in charge.”

The Cuban Ambassador’s Response[2]

On May 6 Cuban Ambassador José Ramón Cabañas Rodríguez responded to this editorial with the following letter to the Journal.

“The U.S. corporate press has always been predictable in its articles on Cuba and even more so when it comes to its editorials. Newspapers such as yours were against Cubans being free from Spanish power in the 19th century. Later on, they commended local corrupt politicians who supported the invasion—first militarily and then economically by American companies during the first half of the 20th century. Finally, those newspapers relentlessly demonized the Cuban Revolution since 1959.”

“However, I was caught off guard by the sordidness of the language used by your editorial board when referring to my country. It is the typical exercise of those who are left without arguments. There is still a financial, economic and commercial embargo imposed on Cuba intended to starve our population into submission. However, the information blockade has decreased. Americans massively travel to Cuba and 75% of them support a better relationship with our country.”

“Your renewed efforts to promote the business of the ‘dissidence’ in Cuba will not have the slightest success. History is wise and has forgotten (and will forget) the names of the annexationists of Cuban origins, but any educated human being who inhabits the earth today will be able to tell you about Carlos Manuel de Céspedes, José Martí, Antonio Maceo, Julio Antonio Mella, Ernesto Guevara and Fidel Castro; those are the names of the pro-independence figures.”

“To maintain a part of the audience you still have, before criticizing Cuba again, or any other Latin American or Caribbean country for that matter, please start by looking at yourselves in the mirror.”

Conclusion

Although I believe that U.S. policies regarding Cuba are heading the wrong direction in the Trump Administration and deplore its abandonment of many (but not all) aspects of  the Obama Administration’s opening of relations with Cuba and although I have met and respect the Cuban Ambassador, this exchange or argument is unsatisfying.[3]

The Journal, given its general support of free markets and capitalism, should have (a) encouraged the Cuban government to engage in further efforts to promote the expansion of its private sector of bed-and-breakfasts, restaurants and other ventures and (b) criticized some of the Trump Administration’s policies that discourage such Cuban expansion of free enterprise and markets.

Such efforts enable Cubans to increase their financial circumstances and offer better-paying jobs to other Cubans and thereby provide the Cuban economy with desperately needed boosts. Cuba’s efforts last year to restrict such expansion were misguided out of fears of changes.

This would have forced the Cuban Ambassador into the difficult position of trying to justify the regime’s clamp-down last year of expansion of the private sector.  The Ambassador in this hypothetical, however, could have argued that the Cuban Government needed to be cautious on these issues because of illegitimate U.S. efforts, overtly and covertly over many years, to promote regime change in Cuba.

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[1] Editorial, Cuba Gets a Castro Convertible, W.S.J. (April 22, 2018).

[2] Letter to Editor, Cabañas to W.S. J., W.S.J. (May 6, 2018).

[3] See List of Posts to dwkcommentaries—Topical: CUBA.

 

Vietnam Communist Official Advocates Economic Reforms for Cuba

                                                                                                                                      Vietnamese Communist Party General Secretary Nguyen Phu Trong, who is visited Cuba this week,  said in a lecture at Havana University,  “The market economy of its own cannot destroy socialism. But to build socialism with success it is necessary to develop a market economy in an adequate and correct way.” He added, “ With the clear vision of the [Communist Party of Cuba the island] . . .  will surely reach great achievements and successfully reach a prosperous and sustainable socialism.”[1]

Vietnam in the 1980s started to open up its centralized economy and as a result has lifted around 30 million Vietnamese out of poverty.

Interestingly Cuban media had many reports about Mr. Trong’s visit, but this blogger has not found any coverage of the above speech and its implicit criticism of Cuba’s failure to fully embrace market economic reforms.[2]

The closest it came was the report that Mr. Trong “expressed his full conviction that, guided by the decisions adopted in the VI and VII PCC Congresses, Cuba will continue to successfully implement the updating of the social and economic model of socialist development” and the statement that the two countries had an “Intergovernmental Commission for Economic and Scientific-Technical Cooperation” and exchanges on “the socio-economic models of the respective countries.”[3]

This soft pedaling of Mr. Trong’s comments contrasts with the Cuban Communist Party’s own recent admissions of mistakes in its liberalizing of the Cuban economy as discussed in a prior post.

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[1]  Reuters, In Cuba, Vietnam Communist Party Chief Advocates Economic Reforms, N.Y. Times (Mar. 29, 2018). A more complete report of Mr. Trong’s speech is contained in a Vietnamese source: General Secretary Nguyen Phu Trong received an honorary doctorate in Cuba, Zing (Mar. 30, 2018).

[2] The General Secretary of the Communist Party of Vietnam to arrive in Cuba today, Granma (Mar. 28, 2018); Ten landmarks in Cuba-Vietnam relations, Granma (Mar. 28, 2018); Peraza, Vietnam and Cjuba: Examples of what socialism can achieve, Granma (Mar. 29, 2018); Peraza, Cuba and Vietnam have the common goal of advancing in the construction of socialism, Granma (Mar. 29, 2018); Univ. Havana, He receives honorary title “Doctor Honoris Causa” in Political Science Mr. Nguyen Phu Trong (Mar. 29, 2018); Peraza, The youth of Cuba and Vietnam have the mission to keep alive the flame of brotherhood, Granma (Mar. 30, 2018); Castro, To the people, to the communist Party and to the Government of the Socialist Republic of Vietnam, our eternal gratitude, Granma (Mar. 30, 3018); Cuba and Vietnam: a brotherhood that takes hold (+ Photos), Granma (Mar. 31, 2018); Gómez, A path of success, Granma (Mar. 31, 2018). New stage of development in its historical links, Granma (Mar. 31, 2018).

[3]  New stage of development in its historical links, Granma (Mar. 31, 2018).

 

Cuba’s Communist Party Admits Errors in Liberalization of Economy 

On March 25-26 the 142-member Central Committee of the Communist Party of Cuba met to discuss the status of economic reforms during President Raúl Castro’s 10-year mandate to open up the economy with greater roles for the private sector and foreign investment.[1] Below is a photograph of the Party’s First Secretary, Raúl Castro, and to his left Miguel Diaz-Canel, the expected next President of the Cuba Council of State.

From 2012 through 2015 the reforms were implemented swiftly with the number of self-employed worked more than tripling to 580,000.

But since then implementation has slowed in the due to the complexity of the process, mistakes in oversight and low engagement of the bureaucracy. Further reforms also were hampered by economic and financial limitations. The Central Committee recognized Cuba lacked a fiscal culture and accountancy tools to make a serious economic analysis as well as difficulties communicating the complex process. This included the absence of a culture of paying taxes.

Now the Party and the Government are reviewing studies on unification of Cuba’s dual currencies and different exchange rates and the National Economic and Social Development Plan through 2030. There will be the implementation of the country’s  self-employment policy after a training process that will include some 580,000 self-employed workers and more than 30,000 public officials.

Raúl Castro said that all Communists needed to confront problems without hesitation, right away; planning more carefully to direct resources to where they are truly needed; and not waiting for solutions from above, but rather contributing creative, rational ideas.

Related to these problems of implementing economic reforms, only this year did Cuba open its first wholesale market for beans, beer, sugar, cigars and other staples for 20 to 30 percent less than the retail prices in the country. It will be open to 35 worker-owned cooperatives in Havana.

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[1]  The Party Central Committee, meeting in its Fifth Plenum, analyzed important issues related to the updating of Cuba’s socio-economic model, Granma (Mar. 27, 2018); Reuters, Cuba’s Communist Party Admits Errors, Slowdown in Reforms, N.Y. Times (Mar. 27, 2018); Assoc. Press, Cuba opens wholesale market to sell basic staples, Wash. Post (Mar. 19, 2018);  Pėrez,  Cuba expanding wholesale markets? (Granma (Feb. 6, 2018). Issues about Cuba’s economy have been addressed in the posts listed in the “Cuban Economy” section of List of Posts to dwkcommentaries–Topical: CUBA.

Congressional Delegation Visits Cuba

A delegation of six U.S. senators and representatives, all Democrats, visited Cuba from February 17 through 21. They were Senators Patrick Leahy (VT),  Gary Peters (MI) and Ron Wyden (OR) plus Representatives Jim McGovern (MA), Kathy Castor (FL) and Susan Davis (CA). [1]

Leahy, the leader of the group, announced that the purpose of the trip was “to meet with U.S. and Cuban officials, officials of other governments, and Cubans in the emerging private sector to discuss: the presidential transition in Cuba; U.S. and Cuban investigations of health incidents involving U.S. government personnel in Cuba; cooperation on maritime security, search-and-rescue, narcotics and human trafficking, and migration issues; the impact of the withdrawal of U.S. Embassy and Cuban Embassy personnel and of revised Treasury Department regulations on U.S.-Cuban relations; and opportunities for public health, law enforcement, scientific, environmental, commercial, educational, cultural, and other engagement with Cubans.”

Meeting at Cuba’s Foreign Ministry

On February 20 they met with the Director General of the United States of the Cuban Foreign Ministry, Cárlos Fernández de Cossío.

They discussed, among other topics, the medical problems of certain U.S. diplomats that occurred in Cuba. Cossío emphasized that  there was no evidence of attacks on the diplomats and Cuba’s difficulties of carrying out a rigorous investigation.

Meeting with President Raúl Castro

On February 20 the delegation also met with President Raúl Castro, who was joined by Foreign Minister Bruno Rodriguez and Director General Cossio. Below is the official photograph of the meeting. The Cuban release about this event merely stated, “During the meeting they exchanged about matters of interest to both countries.”

Other Activities

The delegation met with Cuban entrepreneurs who said Trump’s Cuba policy was hurting their businesses. Surprisingly there have been no reports that there was discussion of last year’s actions by the Cuban government to curtail the growth of the private sector or its new proposed regulations to impose even more onerous restrictions on that sector that apparently were leaked to the public the day after the delegation left the island as discussed in a prior post

An objective of the delegation was not met. They wanted to meet with Vice President Miguel Díaz-Canel, Castro’s presumed successor, but he was not available.

Press Conference

At the conclusion of their trip, on February 21, the delegation held a press conference at the U.S. Embassy in Havana, and below is a photography of the delegation at this event.

According to Diario de Cuba, Senator Leahy said, “The embargo does not make sense and the reversal of the policies negotiated by Barack Obama and Raúl Castro does not help the US or Cuba.” In fact, he said, President Trump’s retreat from engagement with Cuba was “erroneous” and “stupid.”

Leahy also addressed the medical problems of some U.S. diplomats who had been stationed in Cuba. He said, “If we have to find out if something happened, it is a big mistake to close our embassy or to pretend that the Cubans close theirs. How are you going to get visas? How to maintain medical cooperation? What about the students? Of the projects in agriculture? There are many projects that are paralyzed.” 

Moreover, according to Leahy, the Cuban government has been cooperating in trying to ascertain the cause of these medical problems  and he believes the island’s authorities do not have the slightest intention to harm U.S. citizens who visit Havana. Indeed, not a single one of his colleagues had any fears about traveling to Cuba as they believe the island to be a safe place, and have even travelled here with their spouses, and in Leahy’s case, with his 13 year-old granddaughter.

Leahy added that there are many American diplomats who want to work in Cuba despite the symptoms that Washington previously said affected 24 U.S. government officials and spouses. As a result, Leahy urged the State Department on Wednesday to restore embassy staff in Havana as soon as possible.

Leahy also stated, “”Whoever is [the new] president in Cuba will make a mistake if he thinks we should maintain tensions between our countries, which is easy to say, but we have to go back to the dialogue we had between Obama and Castro.”

Representative McGovern, again as reported by Diario de Cuba, offered that protection of U.S. diplomats is “paramount,” but it was an “error” by the Trump Administration to cut the Embassy’s staff and to expel Cuban diplomats in Washington. Moreover, “US policy toward Cuba has been guided by paranoia and suspicion,” which he described as “stupid” because it has not yielded any fruit in more than fifty years of hostility. “Cuba is changing, it will soon elect a new president and it will have a generational change of leadership. Unfortunately, at that historic moment for Cuba, the involvement of the United States will be limited.”

Senator Wyden added that the delegation had stressed the importance for Cuba to unify its two currencies and “Cuba officials repeatedly said that this was the year to get it done.” Representative Castor subsequently added that the delegation asked the Cuban government to eliminate the 13 percent exchange tax on the U.S. dollar with respect to the CUC, the local convertible currency. The Cuban officials responded by saying “they would like to do that, but they have said that in the past,” said Castor.

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[1] Press Release, Leahy To Lead Congressional Delegation To Cuba (Feb. 16, 2018); Delegation of the United States Congress Visits Cuba, CubaDebate (Feb. 18, 2018); Senator Leahy visits the MINREX headquarters in Havana, Martí (Feb. 20, 2018); Raúl received a delegation from United States Congress, Granma (Feb. 21, 2018); US congressmen criticize Trump’s turn toward politics as “erroneous and stupid,” Diario de Cuba (Feb. 21, 2018); US congressional delegation reaffirms need to improve relations with Cuba, Granma (Feb. 21, 2018); US Congressmen insist on the need to improve ties with Cuba, CubaDebate (Feb. 21, 2018); Assoc. Press, US Lawmakers Say It’s Time to Restore Staff at Cuba Embassy, N.Y. Times (Feb. 21, 2018); Marsh, Cuba tells U.S. delegation monetary unification on cards this year, Reuters (Feb. 21, 2018); Torres, Cuba shares plans for single currency and more during a visit by U.S. lawmakers, Miami Herald (Feb. 21, 2018). 

 

Upcoming Cuba Restrictions on Free Enterprise?  

As has been discussed in previous posts, in recent years Cuba has seen a growing private sector of its economy. For example, the number of Cubans working with self-employment licenses rose to 567,982 people in mid-2017, compared with 157,731 in 2010. In response to this growth the Cuban government over the last year has imposed various restrictions on this sector. [1]

Although President Raúl Castro at the 2016 Congress of the Communist Party of Cuba criticized the lethargy of many of the state-owned enterprises and praised the innovations of the growing private sector, Cuba has been struggling with the challenges of creating and managing a mixed economy. The biggest challenge for the regime has been the increasing wealth of those in the private sector and thus the rising economic inequality on the island. [2]

New Draft Economic Regulations [3]

Now Reuters reports that a “draft of new Cuban economic regulations proposes increasing state control over the private sector and curtailing private enterprise.”

The 166-page document “would allow homes only one license to operate a restaurant, cafeteria or bar. That would limit the number of seats per establishment to 50. Many of Havana’s most successful private restaurants currently hold several licenses enabling them to have a seating capacity of 100 or more.”

This draft, which is dated Aug. 3, 2017, and signed by Marcia Fernández Andreu, deputy chief of the secretariat of Cuba’s Council of Ministers, states that it ”strengthens control at a municipal, provincial and national level.” In addition, it provides that enforcement against infractions will be more “rigorous.”

The draft apparently was recently sent to provincial and national organs of administration for consultation. Its leak is suspected to gauge public opinion and could lead to revisions.

Reactions

Even before this new draft was released, the Miami-based Havana Consulting Group had warned that the recent Cuban restrictions on the private sector would generate an annual “flight of local capital abroad” of between 280 and 350 million dollars. Those restrictions also probably would be a negative factor for new foreign investment on the island. [4]

In addition, the new proposed regulations probably would prompt some younger Cubans to lose hope of change in their country and prompt their desire to emigrate, thereby exacerbating Cuba’s problems associated with an aging and declining population.

Finally for the very reasons that Raúl Castro advanced at the recent Party Congress, the proposed regulations could adversely affect Cuba’s employment opportunities and gross national product.

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[1] See posts listed in the “Cuban Economy” section of List of Posts to dwkcommentaries—Topical: CUBA

[2] Raúl Castro Discusses Socio-Economic Issues in Report to Seventh Congress of the Communist Party of Cuba, dwkcommentaries.com (April 19, 2016). 

[3] Reuters, Exclusive—Cuba Draft Rules Propose Curtailing Fledgling Private Sector, N.Y. Times (Feb. 22, 2018).   

[4] Study: The obstacles of the regime to the private sector generate a flight of millions abroad, Diario de Cuba (Feb. 20, 2018). 

Cuban Criticism of Government’s Crackdown on Private Sector  

Diario de Cuba, a Cuban independent news outlet, criticizes new details about the Cuban Government’s crackdown on cooperatives involved in construction.[1]

Such private entities are now prohibited from carrying out projects outside the provinces in which they were constituted and now are required to finish projects within three months. In addition, they may not hire labor and self-employed workers and instead only members of the cooperative may work on their projects coupled with a ban on increasing the number of their partners.

According to Diario de Cuba, these restrictions are a result of “fear” of the state bureaucracy, especially in construction, of their inability to compete against the higher quality of private construction cooperatives and the higher wages they pay their workers.

As a result, all workers are more aware of  “the reactionary nature of the state-wage model” and the lack of true socialism in Cuba. Instead, says Diario de Cuba, Cuba has “a system controlled by a group of people interested in staying in power forever.”

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[1] Campos, More bans on cooperatives, Diario de Cuba (Sept. 7, 2017). Previous posts have discussed the recent Cuban government’s crackdown on the private sector: New Cuban Limits on Private Enterprise (Aug. 2, 2017); Why Is the Cuban Government Trying to Slow Down the Private Sector? (Aug. 3, 2017); Cuban Government Shuts Down Accounting Cooperative (Aug. 7, 2017) (comment on 8/3/17 post); Cuba Tries To Calm Private Sector (Aug. 8, 2017) (comment on 8/3/17 post); More Cuban Government Explanations About Actions Regarding Private Sector (Aug. 9, 2017) (comment on 8/3/17 post); Exodus of Cuban Professionals? (Aug. 16, 2017) (comment on 8/3/17 post); Bleak Economic Prospects for Cuba (Aug. 20, 2017).

Bleak Economic Prospects for Cuba

 Although Cuba has reported a 1.1% increase of Gross Domestic Product (GDP) for the first six months of 2017, the prospects for the rest of the year are bleak.[1] Here are the problems:

  • Possible deepening of Venezuelan crisis and further reduction of its oil exports to Cuba.
  • Possible increased cost of oil from Russia, Angola, Algeria and other suppliers in the Caribbean.
  • Possible reduction of American travel to the island.
  • During the first half of this year Cuba paid $ 2.306 billion on its external debt and still has to catch up on current payments to foreign suppliers.
  • Decreased Cuban nickel production and drops in international prices for this commodity.
  • Reduced sugar production.
  • Elusive foreign investment on the island, and complicated, lengthy Cuban process for approval of same.
  • Recent Cuban government measures to control and stifle the country’s private sector.

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[1] Economists: The picture could complicate Cuba even further this second semester, Diario de Cuba (Aug. 19, 2017).