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A Pessimistic Assessment of Cuba’s Economic Future

Jorge G. Castañeda, the Foreign Minister of Mexico from 2000 to 2003,[1] has rendered a pessimistic assessment of Latin American socialism, especially in Venezuela and Cuba.[2]

He starts with the assertion that the recent “Cubana de Aviación airliner’s crash in Havana . . . [was an] illustration of the utter bankruptcy of the 21st century socialism.” Later in the article he says, like “the Cuban economy, the plane was old, poorly maintained, leased by the national airline because it was the only one it could afford, and the rest of Cubana de Aviación’s domestic fleet had already been grounded.” (A subsequent article reported that Cubana de Aviación has suspended all domestic flights until September.[3])

Cuba, he says, “paid a heavy price for the initial, and perhaps enduring, successes of its revolution: education, health and dignity. But from the very beginning — with the exception of a few years between the collapse of the Soviet Union and the end of its subsidies to Cuba in 1992 and the advent of Venezuelan support in 1999 — it always found someone to pay the bills. The next option was meant to be the United States. That no longer seems possible.”

Now, with a new president, Cuba “again faces enormous economic and social challenges. They stem from three problems with no solutions.”

“First, says Castañeda, is the fall of tourism from the United States and the new tough line on Cuba adopted by the Trump administration. Through March of this year, the number of visitors from the United States is down more than 40 percent compared with 2017. This is partly because of travel warnings over safety issued by Washington, partly because of new travel restrictions put in place by President Trump [[4]] and because after the initial boom of nostalgic tourism, Cuba is now competing for normal travelers with the rest of the Caribbean. Its beauty and charm do not easily outweigh other destinations’ far superior services and infrastructure, and lower prices. Today myriad start-up businesses — always thought to be too small and numerous to survive — that sprang up for United States visitors are failing as a result of falling tourism.” [5]

Second, according to Castańeda, “American sanctions and Cuban fear of economic reforms have rendered the push for greater foreign investment somewhat futile. After an initial rush of highly publicized announcements, some United States companies have proved reluctant to run risks, particularly given Mr. Trump’s hostility toward all things Obama, and his dependence on Florida for re-election.”

As a result, he continues, the Cuban “economy has stopped growing, scarcities have re-emerged and new opportunities for employment and hard-currency earnings are not appearing. If one adds to this the government’s decision to suspend new cuentapropista or private self-employment permits, it is no surprise to discover that economic prospects are dim.”

Third, “Venezuela is no longer able to subsidize Cuba’s transition to a Vietnam-style socialist economy the way it did before.” In short, Venezuela cannot now provide oil to Cuba at below-market prices and on credit and cannot pay for Cuban doctors, teachers and intelligence personnel, which has been a major source of Cuban export earnings.

Nevertheless, Venezuela is “Cuba’s only unconditional ally in the world.” Hence, the first foreign leader to visit Cuba’s new president, Miguel Diaz-Canel, was Venezuela’s president, Nicolás Maduro, and Diaz-Canel returned the favor by making his first foreign visit to Venezuela.[6]

Now the U.S. is pressing for increased hemispheric sanctions against Venezuela with U.S. Secretary of State Mike Pompeo on June 4 being expected to drop the next shoe in an address to the General Assembly of the Organization of American States.[7] If any of those anticipated U.S. requests are met, this will increase the pressures on Cuba.

Conclusion

In partial response to these issues, on June 2 Cuba started the process for revising its constitution with the agenda for an extraordinary session of its national legislature (the National Assembly of People’s Power) including approval of “the process to be followed in carrying out Constitutional Reform and the commission of deputies responsible for drafting and presenting the proposed Constitution of the Republic.” This first step was the approval of a commission to prepare a draft of a revised constitution that will be headed by Raúl Castro, the former president, Diaz-Canel, the current president, and 31 others. Once the constitutional draft is ready, it is slated to be discussed first by the national legislature and then by the broader population, before being submitted to a referendum.[8]

One of the major anticipated challenges for drafting the new constitution will be validating private ownership of property and businesses while simultaneously upholding the “irrevocable nature of socialism.” Perhaps the selection of Castro as the chair of this constitutional commission is not as anti-economic reform as might appear to outsiders. After all Raúl first announced the need for a new constitution in 2011 after embarking on a series of reforms cautiously opening up the economy to foreign investment and the private sector in order to make Cuban socialism sustainable. And at the Communist Party’s Congress in 2016, Castro praised the innovations of the private sector and criticized the “outdated mentalities” and “inertia” of state-owned enterprises.[9]

Such a change will have to delete or modify a current constitutional clause forbidding Cubans from “obtaining income that comes from exploiting the work of others.” “According to Julio Perez, a political analyst and former news editor at state-run Radio Habana, said “Cuba has to make substantial changes to the constitution that endorse private property, self-employment and cooperatives as part of the Cuban economy.”

Simultaneously there are reports that the government is preparing decrees regarding norms for 2,386 Cooperatives of Credit and Services (CCS), 650 Cooperatives of Agricultural Production (CPA) and 1,084 Basic Units of Cooperative Production (UBPC) operating in the agricultural sector and producing 92% of the island’s food.[10]

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[1] Castañeda now is Associated Professor of Public Service, New York University (NYU) Wagner; Global Distinguished Professor of Politics and Latin American and Caribbean Studies, NYU Faculty of Arts and Science. He also is a former member of the board of Human Rights Watch and a noted author.

[2] Castañeda, The Bankruptcy of 21^st Century Socialism, N.Y. Times (June 2, 2018).

[3] Cubano de Aviación will maintain the suspension of domestic flights at least until September, Diario de Cuba (June 2, 2018).

[4] This blog has criticized the 2017 State Department’s urging Americans to reconsider traveling to Cuba because of the still unresolved medical problems experienced by some U.S. (and Canadian) diplomats in Havana and the U.S. cancellation of individual person-to-person travel to Cuba. (E.g., A New Travel Warning for Americans Traveling to Cuba, dwkcommentaries.com (Sept. 19, 2017); New U.S. Regulations Regarding U.S. Travel to Cuba and Transactions with Cuban Entitles, dwkcommentaries.com (Nov. 8, 2017).)

[5] As this blog has reported, Cuba’s private sector was flourishing in 2015-2016, but has fallen into hard times as a result of new Cuban restrictions on such enterprises and the decline of American visitors, a result that should be contrary to the normal Republican promotion of entrepreneurship and of a potential challenge to Cuba’s socialism. (See., e.g., Why Is the Cuban Government Trying To Slow Down the Private Sector? dwkcommentaries.com (Aug. 3, 2017).)

[6] E.g., Cuba’s New Leader Praises Maduro in ‘Solidarity’ Visit to Venezuela, N.Y. Times (May 30, 2018); Why did Díaz-Canel make his first state visit as President to Venezuela?, Granma (June 1, 2018).

[7] U.S. State Dep’t, Secretary of State Pompeo to Lead U.S. Delegation to the Organization of American States General Assembly (June 1, 2018).

[8] Reuters, Cuba Set to Launch Constitutional Rewrite to Reflect Reforms, N.Y. Times (June 2, 2018); Raúl will lead the Commission in charge of the project of Constitution of the Republic (+ Video), Granma (June 2, 2018); Díaz-Canel: The new Constitution will take into account the principles of our political system, Granma (June 2, 2018); Deputies will continue meeting following extraordinary session, Granma (June 1, 2018); Romero, Constitutional Reform in Cuba: Priority for ANPP commissions, Cubadebate (June 2, 2018); Assoc. Press, Cuba Forms Commission to Update Soviet-Era Constitution, N.Y. Times (June 2, 2018); Reuters, Raul Castro Appointed to Head Rewrite of Cuba Constitution, N.Y. Times (June 2, 2018).

[9] Raúl Castro Discusses Socio-Economic Issues in Report to Seventh Congress of the Communist Party of Cuba, dwkcommentaries.com (April 19, 2016); President Raúl Castro Affirms Importance of Cuba’s Private Sector, dwkcommentaries.com (July 18, 2017).

[10] The government prepares laws for Cuban agricultural cooperatives, producers of 92% of food, Diario de Cuba (June 2, 2018).

Dismissal of Spanish Criminal Case Against Judge Garzon for Alleged Bribery

As described in a prior post, Spanish Judge Baltasar Garzon has been charged with crimes in three separate cases.

One of the cases charged him with bribery in his dismissal of a tax fraud case against a top executive of Spain’s Banco Santander even though it appeared that neither the executive nor the bank paid anything to Judge Garzon personally. Instead, the bank had made a substantial gift to New York University (NYU) that supported several of its international programs. One of the programs was NYU’s hosting international visiting faculty (presumably including Judge Garzon who was a fellow at NYU in 2005.)

On February 13, 2012, as reported by El Pais and the New York Times, Spain’s Supreme Court dismissed this case on the ground that it was barred by the statute of limitations (by prescription, in Spanish legal parlance).

Spanish Criminal Cases Against Spanish Judge Baltasar Garzon

As we have seen in a prior post, Spanish Judge Baltasar Garzon was suspended from his judgeship in May 2010 after he was charged with a crime for allegedly exceeding his judicial powers when he initiated a criminal investigation of human rights violations during the the Franco regime. After these criminal charges were brought against Judge Garzon, he was hit with two other and apparently unrelated criminal charges.

We now examine these three criminal cases. In a subsequent post I will explore reactions to these cases.

Case Relating to Judge Garzon’s Franco-Era Investigation

In 2008 Judge Garzon approved a popular criminal complaint brought by groups of relatives of people allegedly killed and “disappeared” by the Franco regime in the 1930’s and 1940’s. The Judge in October of 2008 ordered exhumation of 18 mass graves and charged Franco and his associates of murder and disappearances of over 114,000 people. The Judge refused to apply a Spanish amnesty law that barred prosecution of any crimes of a political nature during the Franco era because under international law such amnesties are invalid fro crimes against humanity. The chief prosecutor, however, challenged this order as violating that amnesty law, and in late 1988 the Spanish Supreme Court reversed Judge Garzon’s order.

Thereafter two groups–Manos Limpias (Clean Hands) and Falange (the successor to Franco’s political party)–brought a popular criminal case against Judge Garzon for alleged prevarication (knowingly overstepping his authority) by refusing to apply the amnesty law.

20120117elpeng_1 — Judge Garzon & His Attorney

The trial of this case opened on January 24, 2012, with a motion by Garzon and the public prosecutor to dismiss the case because of a doctrine in Spanish law that a criminal trial cannot be based only on a people’s complaint, especially when the public prosecutor also asks for dismissal, and because the judge in this case against Garzon had helped the attorneys for the private groups in amending their complaint to make it admissible. On January 27th, however, the Supreme Court, 4 to 3, denied the motion. (An article in el Pais said that four of the judges hearing this case were regarded as conservative while the other three are deemed to be progressive.)

The trial itself resumed on January 31st with testimony from Judge Garzon. On February 1st for the first time in history the court heard testimony from Franco-era victims and their families. Further hearings through early February are anticipated with a decision to follow.

Case Relating to Judge Garzon’s Authorization of Bugging Attorney-Client Communications

In this case Judge Garzon was accused of “prevarication” or “trespass” (knowingly making an improper decision) in February 2009 by approving police wire taps or bugging of attorney-client communications in a corruption investigation involving the political party of a former Spanish Prime Minister.

In the underlying corruption case, Judge Garzon was presented with evidence by the police that three of the men charged with corruption who were in pre-trial detention were continuing to launder money via third parties, including their attorneys, who visited them in prison. Judge Garzon, therefore, granted the police application for tapping these conversations. Subsequently the police edited the transcripts of those conversations to delete the portions about legal strategy for the upcoming criminal trials of the detainees before the transcripts were presented to Judge Garzon. Another judge was prepared to testify about his continuation of the taps with verification by two prosecutors, but this testimony was barred in the case against Judge Garzon.

This went to trial, January 17-19, 2012. We await the decision.

Case of Alleged Bribery of Judge Garzon

In the last of these three criminal cases, Judge Garzon is charged with bribery in his dismissal of a tax fraud case against a top executive of Spain’s Banco Santander. On February 3, 2012, Spain’s Supreme court indicted Garzon on this charge. The trail in this case has not been scheduled.

If there were such bribery, this would be a serious charge against the Judge. But it appears that neither the executive nor the bank paid anything to Judge Garzon personally.

Instead, the bank and New York University (NYU) were partners in a Strategic Collaboration on Global Education whereby the bank’s gift of Euros 300,000 to NYU financed selected NYU undergraduates’ foreign study, NYU graduate fellowships in Spanish creative writing, NYU student internships at the bank and NYU’s hosting international visiting faculty (presumably including Judge Garzon, who for nine months in 2005 held NYU’s King Juan Carlos I of Spain Chair and was a Fellow at the NYU School of Law’s Center on Law and Security).

Assuming the latter is a correct summary of the evidence, it is difficult for me to see how this is a valid basis for the criminal charges against Judge Garzon.

Conclusion

As a U.S. lawyer, I find these cases difficult to understand, especially through rough English translations of articles from a major Spanish newspaper, and I plead for comments by those more knowledgeable about Spanish law and procedure to clarify or correct my accounts of these cases.

At least the Franco-era case against the Judge is being tried by seven judges on the Supreme Court of Spain. This is contrary to U.s. practice as justices of the U.S. Supreme Court do not try cases, and almost all trials, criminal and civil, are conducted by a single trial-court judge. This Spanish procedure, therefore, seems strange and made me wonder whether the Judge would have any right to appeal any adverse decision in these cases.

Wikipedia says Spain’s Supreme Court has 74 judicial positions organized into five chambers, one of which is the criminal chamber. Presumably each chamber has 14 or so judges, potentially leaving seven other judges of that chamber to hear any appeal. An article in el Pais, however, said that crimes allegedly committed by individuals with privilege like judges are tried by the Supreme Court’s Criminal Chamber without any appeals.

Thus, I still wonder if Garzon has any right of appeal from an adverse decision. If not, this seems to me to be a denial of what we in the U.S. call due process of law.

Another feature of Spanish law and procedure that is difficult for this U.S. lawyer understand is the ability in Spain of private citizens or groups to act as criminal prosecutors, especially over the objections of public prosecutors. This does not happen in U.S. law with a few exceptions not relevant here.

If a U.S. trail court judge in a position equivalent to Judge Garson commits errors in the conduct of a case, as sometimes happens, the remedy is to seek appellate court review and reversal of the erroneous decisions. In rare instances, it might be appropriate to seek discipline of the judge by the agency that regulates their conduct under rules of judicial ethics. It is difficult, if not impossible, however, to imagine situations in which a U.S. trial court judge would be subject to judicial discipline or criminal sanctions for doing things similar to what Judge Garzon did in the first two of these cases in which he has been charged with crimes.

As I understand these cases, Judge Garson had legitimate legal reasons for doing what he did. He did not make decisions that totally “were off the wall,” to use an American slang phrase. Most significantly, in the Franco-era case, there is abundant international law that amnesties may not immunize people for genocide, crimes against humanity and war crimes (all of which are now well defined in international law). Therefore, Judge Garzon’s conclusion that Spain’s amnesty law did not bar the instigation of the criminal case regarding the Franco-era abuses was supported by law. There certainly are some counter arguments to this legal conclusion, but, in my opinion, they are weak.

I pray that Judge Garzon is acquitted of all of these charges and that he will return to the bench to continue to be an independent jurist who seeks to apply Spanish and international law in an objective and fair manner to crimes of the gravest concern to the international community.