Dwindling Hope in Cuba    

Five years ago, on December 17, 2014, U.S. President Obama and Cuba President Raúl Castro simultaneously announced that their two countries had embarked on a process of normalization and reconciliation that continued through the rest of Obama’s presidency that ended on January 20, 2017. [1] President Trump, however, has halted that process and in fact has adopted many hostile policies regarding the island.

On the fifth anniversary of the Obama/Castro announcement, journalists from the Associated Press walked through Havana to ask Cubans how they felt about the current conditions on the island. Overall, the journalists said, “it feels almost as if that historic moment never happened.. . . Now, the two years of detente under Obama feel like a temporary break in a long history of tension and struggle that has no end in sight.”[2]

“The Cuban economy is stagnant, with tourism numbers flat and aid from Venezuela far below its historic peak as Cuba’s oil-rich chief ally fights through its own long crisis.”[3]

Antoin Ugartez, a 42-year-old father of three who rents a three-wheeled covered scooter known as a Cocotaxi from a state-run agency, said the post-Trump decline in tourism had hit him hard. Detente, he said, “was a great step forward for Cuban society. Things developed and you started to see different perspectives, a different vision of economic improvement for your family, the conditions you live in.” Now, he said, “I barely make enough to put food on the table.”

On December 16, 2019 (the day before the fifth anniversary), Cuba’s Foreign Ministry’s General Director for U.S. Affairs, Fernández de Cossio, said, “There are powerful people today in the U.S. government that want to increasingly apply hostile measures and sever our bilateral relationship. If that were to be the case, we are ready to face that reality, but it is not what the people of Cuba want and not what the government of Cuba is seeking.”[4]

In an apparent response to this Cuban comment, an anonymous State Department official said, “”While there are no plans to break off diplomatic ties at this time, one thing that has clearly reached a low point is the Castro regime’s abuses of its own people. In addition, the regime is spreading its totalitarian repression to other countries in the region.”

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[1] U.S. and Cuba Embark on Reconciliation, dwkcommentaries.com (Dec.  21, 2014).

[2] Assoc. Press, 5 Years After Detent With US, Cubans Say Hope Has Dwindled, N.Y. times (Dec. 17, 2019).

[3]  On December 12, 2019, the Cuban government announced that foreign visitors for the year were only slightly more than four million versus predictions of more than five million. Taxi drivers, classic car tours, private bed and breakfasts, restaurants and other private businesses dependent on foreign visitors have been especially suffering with this lower number. (Assoc. Press, Cuba Tourists Barely Pass 4 Million, in Disappointing Result, N.Y. Times (Dec. 12, 2019).)

[4]  Reuters, Cuba Says It Is Prepared if U.S. Chooses to Sever Diplomatic Ties, N.Y. Times (Dec. 16, 2019).

 

More Details on Cuba’s Foreign Tourism

During the first quarter of 2018, 95,520 U.S. citizens visited Cuba, which was 40 percent fewer than came in the same quarter of 2017. This “is hurting this island’s access to hard cash and setting back the effort to reestablish ties between U.S. citizens and Cubans.“.[1]

The Cubans most adversely affect by this decline are ”the very Cubans the Trump administration has vowed to defend here — small-business owners looking to inject a dose of the free market into the economy.” They are “Airbnb hosts, the owners of small restaurants and art galleries, and tour operators.” Indeed, “unlike many European visitors to Cuba, the American newcomers largely eschewed the package tours that corralled tourists at big, beachfront hotels and assembly-line restaurants. Instead, the Americans spent more time exploring the colonial streets of Old Havana on their own” and patronizing the newer privately-owned businesses

Yes, there has been an increase in foreigners arriving on the island on cruise ships, 177,000 this quarter versus 38,000 in 2017’s first quarter, but they “spent relatively little money onshore.”[2]

Another positive development for Cuban tourism generally, but not the Cuban entrepreneurs, according to the Reuters article, are recent announcements of new hotels by foreign “hospitality companies including Spain’s Melia Hotels International and Iberostar Hotels & Resorts; Singapore’s Banyan Tree Holdings Ltd., Apollo Global Management LLC’s Diamond Resorts International Inc.;” and “Louvre Hotels SAS, a French subsidiary of China’s state-owned Jinn Jiang International Hotels Development Co, one of the world’s largest.”

The construction of such new hotels, however, is “generally carried out jointly with the Cuban Government and especially with the military , which controls a good part of the island’s tourism sector.” For example, “there are currently five new five-star hotels under construction in Havana, owned by the Gaviota Corporation -a military company-, and will be administered by foreign firms.”[3]

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[1] Faiola, In Cuba, the Great American tourism boom goes bust, Wash. Post (May 11, 2018); Drop in Foreign Tourists for Cuba, dwkcommentaries.com April 25, 2018).

[2] Reuters, Despite Hurricanes and Trump, Cuba Retains Charm for Foreign Tourism Firms, N.Y. Times (May 11, 2018).

[3] The Government and the military will continue to make cash with tourism, Diario de Cuba (May 11, 2018).

Cuban Council of Ministers Reviews Cuban Budget and Economy

At a recent meeting Cuba’s Council of Ministers, its highest ranking executive and administrative body, reviewed the government’s budget and the Cuban economy. Here is a Cuban website’s report of the meeting.[1]

Government’s Budget

The State Budget for 2016, which shows a deficit lower than that approved by the National Assembly of People’s Power. This was despite expenditures to restore the damages caused by Hurricane Matthew in housing, schools, roads, waterways, communications infrastructures, among others.

The State Budget for 2017 is projected to have a lower deficit than originally projected, For the first six months “gross income represents 53% of the annual Plan, which is determined mainly by the favorable behavior of tax revenues.”

Cuban Economy

For the first half of 2017, the national economy has performed in accordance with the original forecasts. Production of foods and vegetables has exceeded forecasts while milk and beef are below such forecasts. The drought has had a negative impact on this sector.

By the end of May 2017 the number of foreign visitors exceeded 2,260,000, which represents a 20% growth over the same period of 2016.

Cuban Self-Employment

More than half a million people are now engaged in self-employment, which confirms its validity as a source of employment and increased supply of goods and services with acceptable levels of quality.

 However, there are problems with this sector of the economy: use of “illicit origin” raw materials and equipment; breaches of payment of tax obligations and underreporting of income; Inaccuracies and inadequacies in control; and deficiencies in contracting for the provision of services or products between legal persons and natural persons. There also has been a lack of rigor and exigency in their monitoring and control; tendency to increase prices; and use of bank loans for unauthorized purposes.

However, the Council ratified that non-agricultural cooperatives constitute a means to free the State from the administration of subsidiary economic activities, production and services. Therefore, the Council will continue to advance the implementation of this experiment of self-employment by correcting the deviations.

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[1] Martinez & Meneses, Council of Ministers analyzes economic progress and other important issues, CubaDebate (June 30, 2017).