Seventh Congress of Communist Party of Cuba

New Cuba Constitution Draft Recognizes Right to Private Property

Since Cuba’s election of a new president this past April, an official commission has been drafting a new constitution for the island nation. Recently, the commission presented the draft to the 7th Plenum of the Central Committee of the Party and the Council of State, in which each of its precepts was “deeply analyzed.” On July 21-23 the draft will be presented for approval to Cuba’s national assembly (the National Assembly of the People’s Power), and later this year to the people in a national referendum.[1]

On July 14, an official website of the Communist Party of Cuba, published a summary of the current draft of the new constitution that said it recognized both a free market and private property. More specifically, it said the draft “ratifies constitutionally the importance of foreign investment for the economic development of the country, with due guarantees. Regarding private property on the land, a special regime is maintained, with limitations on its transmission and the preferential right of the State to its acquisition through its fair price.”

On the other hand, this summary reaffirmed that state enterprise and central planning are the pillars of the economy and that the Communist Party would remain as the dominant political force.

Cuba expert Luis Carlos Battista at the Washington-based Center for Democracy in the Americas cautioned that the acknowledgement of private property did not mean the government wanted to give private enterprise a greater role. Last week, he noted, the government published a set of regulations tightening control on the self-employed and hiking possible fines to include property confiscation.[2]

Other changes in the draft are the creation of the position of prime minister as the head of government, making the president the head of the national assembly with a limit of two consecutive five-year terms and creating a new presumption of innocence in the criminal justice system. It will maintain religious freedom.

In addition, the draft expressly calls for “the promotion of respect for international law and multipolarity among States; the repudiation of all forms of terrorism, particularly State terrorism; the rejection of the proliferation and use of nuclear weapons, of mass extermination or others with similar effects; the protection and conservation of the environment and the fight against climate change, as well as defends the democratization of cyberspace and condemns its use for subversive and destabilizing purposes of sovereign nations.”

The proposed new constitution, according to Cubadebate, was made necessary by “the experience of the years of the revolution [since 1959], the new directions drawn from the implementation of the guidelines for Economic and Social Policy approved by the Sixth Party Congress [in 2011], the objectives emanating from the First National Conference [of the Party in 2012], as well as the decisions adopted in the Seventh Party Congress [in 2016].”[3]

The commission is headed by Raúl Castro while one of its members is the new president, Miguel Diaz-Canel.

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[1] Know the main aspects of the Draft of the new Constitution, Cubadebate (July 14, 2018); Reuters, Communist-Run Cuba to Recognize Private Property in New Constitution, N. Y. Times (July 14, 2018); Assoc. Press, Cuba to Reshape Government With New Constitution, N.Y. Times (July 14, 2018).

[2] See these posts and comments on dwkcommentaries.com: Cuba announces New Regulations for Private Business (July 10, 2018); More Details on New Cuban Regulations on Private Business (July 11, 2018); Comment: Yet More Details on New Cuban Regulations on Private Business, (July 13, 2018).

[3] See these posts to dwkcommentaries.com: Raúl Castro Discusses Cuba-U.S. Relations in Report to Seventh Congress of the Communist Party of Cuba (April 18, 2016); Raúl Castro Discusses Scio-Economic Issues in Report to Seventh Congress of the Communist Party of Cuba (April 19, 2016); Conclusion of Seventh Congress of Communist Party of Cuba (April 20, 2016).

Answers to Cuba’s Questions About the U.S. Presidential Policy Directive on U.S.-Cuba Normalization

Granma, the official newspaper of the Communist Party of Cuba, poses 10 questions about the recent U.S. Presidential Policy Directive—United States-Cuba Normalization.[1]

Here are those questions with my answers.

(a) Will the U.S. ever recognize that the embargo/blockade has been an illegal and unjust policy of aggression that has caused Cuba economic damages and incalculable human losses?

Answer: No. As Ambassador Samantha Power stated at the U.N. on October 26, the U.S. believes that the embargo has been legal. As mentioned in an earlier post, I have suggested that the dispute over this issue could be and should be resolved by an independent panel of international arbitrators, such as those provided by the Permanent Court of Arbitration at the Hague in the Netherlands.

(b) Is the U.S. willing to compensate the Cuban people for damages and losses [allegedly] caused by the embargo/blockade?

Answer: No. The major premise for the Cuban damages claim is the contention that the embargo/blockade is illegal. The U.S. does not accept this contention. Nor, I assume, does the U.S. accept the Cuban calculation of such alleged damages. The amount of any alleged damages undoubtedly would be challenged by the U.S. in the international arbitration proceedings previously mentioned. After all, even Cuba admitted in presenting its most recent resolution against the embargo at the U.N. General Assembly that there are many other reasons for Cuba’s poor economic record, including its own mistakes.

2. [Will the U.S. end its occupation of Guantanamo Bay?]

Answer. No. The Directive clearly states that the U.S. believes that its lease of Guantanamo Bay from Cuba is legal and that the U.S. will not voluntarily return the territory to Cuba. Cuba, on the other hand, persistently asserts that the U.S. use of the territory is illegal. As a previous post suggests, this dispute should be submitted to an international arbitration panel similar to the one previously mentioned. In such a proceeding both parties would submit evidence and legal arguments, and the arbitration panel would render a decision. At any time the parties could settle this dispute by negotiating a new lease at a much higher annual rental.

Should the U.S. terminate its so-called “Democracy Assistance” programs?

Answer. Yes, as this blog has consistently argued, these programs are counterproductive and illogical.[2] One cannot promote democracy with anti-democratic and undercover programs. But the U.S. continues to do so, and I will continue to object to them and call for their abolition.

What does the Directive mean when it says that “democracy assistance” programs will be more “transparent” and “consistent with programming in other similarly situated societies around the world?”

Answer. I do not know what is meant by “transparent,” unless it means the U.S. Government publicly solicits applicants to conduct such programs. But such programs are not “transparent” when conducted secretly or undercover as such programs have done so in Cuba.

Should the U.S. end its Radio and TV Marti?

Answer. Yes. This blog previously has called for the ending of such programs as antithetical to promoting democracy and human rights in Cuba. Now there is less need for such programs given the increasing availability of the Internet with its overwhelming information in Cuba. As the Directive states, “increased access to the internet is boosting Cubans’ connectivity to the wider world and expanding the ability of the Cuban people, especially youth, to exchange information and ideas.”

What is the point of applying [U.S.] measures only benefiting a small part of the population, [the 24% currently in the] private sector?

Answer. The U.S. clearly believes that private enterprise and the private sector will enhance Cuban prosperity and that this sector needs and deserves external assistance. And President and First Secretary Raúl Castro said essentially the same thing at last April’s Seventh Congress of the Communist Party of Cuba.

7. Why [does the U.S.] maintain the restriction on creating joint ventures [with Cubans] for the development and marketing of these products, [I.e., medicines and vaccines]?

Answer. As the Directive states, the U.S. “will promote joint work [with Cuba], such as development of vaccines, treatments, and diagnostics; partner with Cuba to prevent, detect, and respond to infectious disease outbreaks; collaborate in the field of cancer control, treatment programs, and joint research; and exchange best practices related to access to healthcare.” This blogger does not know if there are restrictions against joint ventures in this area, but he clearly favors elimination of the U.S. embargo and other restrictions on U.S.-Cuba business and trade.

Does [the U.S.] acknowledge that Cuba’s socio-economic model, based on the public control over the fundamental means of production, guarantees achievements in two spheres strategic for the nation’s future, [i.e., medical care and education]?

Answer. Yes, as the Directive states, the U.S. recognizes, “Cuba has important economic potential rooted in the dynamism of its people, as well as a sustained commitment in areas like education and health care.” In addition, President Obama in his March 2016 speech in Havana said, “Cuba has an extraordinary resource — a system of education which values every boy and every girl” and “no one should deny the service that thousands of Cuban doctors have delivered for the poor and suffering.”

Why are U.S. companies still prohibited from investing in Cuba, with the exception of the telecommunications sector, approved by Obama in 2015?

Answer. This blogger does not know, but he clearly favors elimination of the U.S. embargo and other restrictions on U.S.-Cuba business and trade.

Is President Barack Obama willing to continue using his executive prerogatives to make the policy change toward Cuba irreversible?

Answer. This blogger does not know the answer to this question, but to the extent President Obama has executive authority to enact additional liberalizations of restrictions on business and trade with Cuba in his remaining weeks in office, I hope he will do so.

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[1] Ten key questions, Granma (Oct. 27, 2016). The Presidential Policy Directive is replicated in a previous post.

[2] See posts listed in “U.S. Democracy Promotion in Cuba” in List of posts to dwkcommentaries—Topical: CUBA.

Washington Post Editorial Blasts Cuban Human Rights

On October 18 a Washington Post editorial blasted certain aspects of Cuban human rights while simultaneously criticizing the Obama Administration for not doing more to combat these concerns.[1]

First, the editorial states, “The Castro regime has arrested almost as many peaceful opponents so far this year (8,505) as it did in all of 2015 (8,616), according to the nongovernmental Cuban Commission for Human Rights and National Reconciliation. The ranks of the repressed include dissident lawyer Julio Alfredo Ferrer Tamayo, who was thrown in prison Sept. 23. His law firm was also ransacked and documents were taken.”

While I have no independent knowledge about the validity of the statistics cited by the editorial, a prior post did criticize the Cuban police raid on the law firm (Cubalex) and the arrest of Senor Ferrer.

Second, the editorial said, “Havana’s municipal government has just banned new licenses for private restaurants and instructed existing ones that it will start enforcing onerous taxes and regulations more tightly. It was, Reuters reported, “a new sign that Cuba’s Communist-run government is hesitant to further open up to private business in a country where it still controls most economic activity,” following similar retrenchment in agriculture and transportation last year.”

The Post’s reactions to the latter restrictions may be overstated.[2] The restrictions on new licenses may just be temporary, and one restaurant entrepreneur said her recent meeting with officials over regulations “gave her peace of mind. I thought it was going to be very tense, but it was not. [The officials] were very communicative. They even told us that our businesses are important to the economy and that there were irregularities not only in private business, but in state-owned businesses as well.” Moreover, some of the problems mentioned in the meeting “are real.” The authorities mentioned as major issues the use of public parking to accommodate restaurant customers, buying supplies on the black market, tax violation and money laundering and even prostitution rings and illegal drugs used in some places.

I also suggest the recent Havana measures regarding private-owned restaurants may be driven more by economic problems, than human rights concerns. As Raúl Castro admitted and welcomed in his speech to last April’s Communist Party of Cuba’s Congress last April, Cuba needs the private-enterprise restaurants and other tourist-oriented businesses to generate foreign-exchange earnings, and as a result, Cuba’s plan allocated more electricity to them while restricting power to residents and state-owned enterprises.[3] The recent Havana actions against such private-enterprise restaurants may suggest that electric power for residents and state-owned enterprises might be being squeezed too severely.

Finally, as discussed in a recent post, the U.S. and Cuba on October 14 had a meeting about human rights issues. Although the U.S. State Department has not commented on what the U.S. mentioned at this meeting, presumably the U.S. criticized the recent arrests of Cuban dissidents.

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[1] Editorial, Obama to the Castro regime, do whatever you want, Wash. Post (Oct. 18, 2016).

[2] Reuters, Havana suspends new licenses for private restaurants, owners fret (Oct. 18, 2016); Fernández, Cuba suspends new licenses for private eateries and warns of tighter control, InCubaToday (Oct. 17, 2016).

[3] Raúl Castro as First Secretary of the Communist Party of Cuba at its April 2016 Congress bluntly laid out Cuba’s economic problems, including state-owned enterprises’ inefficiencies, and the need to facilitate the growth and prosperity of private-owned businesses. (See Raúl Castro Discusses Socio-Economic Issues in Report to Seventh Congress of Communist Party of Cuba (April 19, 2016)). See also, e.g., Other Signs of Cuban Regime’s Distress Over Economy (April 21, 2016); Cuban Press Offers Positive Articles About the Island’s Private Enterprise Sector (June 1, 2016).

Economists Discuss Cuba’s Current Economic and Political Situation

On July 28, Cuba’s “Current Economic and Political Situation” was the opening session of the annual meeting of the Association for the Study of the Cuban Economy, a U.S. non-political, non-profit organization dedicated to promoting “research, publications, and scholarly discussion on the Cuban economy in its broadest sense, including on the social, economic, legal, and environmental aspects of a transition to a free market economy and a democratic society in Cuba.”[1]

The presenters at this session were (1) Joaquín P. Pujol, International Monetary Fund (retired); (2) Omar Everleny Pérez Villanueva, Cuban Economist, Temas Magazine;[2] and (3) Jorge R. Pińón, Researcher, Center for International Energy and Environmental Policy, University of Texas at Austin.

Economists’ Comments

Joaquín P. Pujol discussed “Cuba: Great Expectations, but How Real Are They?” Cuba is facing problems in servicing its foreign debt, unifying its unwieldy dual currency system, fixing its decrepit infrastructure and promoting sluggish foreign investment. “The Cuban government now finds itself again in need of foreign financing and they’re not going to get it. In fact, it has turned to Miami” as Cuban relatives and friends have become an important source of funding for small start-up businesses in Cuba.

Omar Everleny Pérez Villanueva discussed “Cuba: Economia y Desafios” [Cuba: Economy and Challenges]. Although the government has projected the Cuban economy will grow by 1 percent this year, “I’m not sure it will reach that this year.”

Even though final figures for 2015 haven’t been announced yet, he said Cuba would show a deficit in goods and services trade. And even though tourism is growing briskly, he said taking into account expenditures in the tourism sector, the yield can be disappointing.

Jorge R. Pińón’s subject was “Cuba’s Energy Crisis: Truth or Fiction?” Faced with mounting energy problems, Cuban officials announced strict energy savings measures at state enterprises earlier this month in hopes of avoiding blackouts during the sweltering summer months. Officials have said Cuba will have to cut fuel consumption by 28 percent during the second half of the year.

Cuba produces about 50,000 barrels of crude oil a day and has relied on Venezuela for the other 80,000 to 90,000 daily barrels it needs. But with Venezuela on the ropes economically, continued oil supplies are uncertain. Indeed, over the last six months, he said, total Venezuelan oil production has come dangerously close to dropping below 2 million barrels a day. “In our business that’s catastrophic.”

“As of last week there was enough oil . . . [in Cuba] to keep the lights on,” Piñón said. “June and July deliveries were sufficient.”

Some analysts, looking only at declines in oil arriving in Cuba directly from Venezuela, have predicted an even worse outlook for the island, but Cuba also receives oil from offshore Venezuelan facilities.

Cuba also has been stockpiling oil, and there is an estimated 60-day supply on the island. The question is what happens with Venezuelan deliveries in August and September. “The [economic] hurricane is coming in Venezuela and it’s a Category 5 hurricane. The question is: Will it hit Cuba?”

Already hours have been cut for some state workers, fleets at nonessential enterprises have been parked and some neighborhoods have reported blackouts, drawing comparisons to the 1990s “special period” when after the collapse of the Soviet Union and the end of its generous subsidies, there were severe shortages in Cuba in everything from fuel to food.

Indeed, Raúl Castro in his recent speech to the National Assembly said, “There is speculation and rumors of an imminent collapse of our economy and a return to the acute phase of the special period.” Raúl Castro said during a recent speech to Cuba’s National Assembly. But he said the island was “in better conditions than we were then to face them.”[3]

The surge in Cuban tourism and the growth of private enterprise also is putting more pressure on Cuba’s energy sector. About 68 percent of oil consumption in Cuba is fuel oil for its inefficient electrical power sector. The government has said it will protect the tourism sector and private businesses from cutbacks.

If Venezuelan oil supplies dry up, it’s unlikely Cuba would be able to find another benefactor like Venezuela in Algeria, Angola, Russia, China or any other country, forcing it to go to the world market to buy about $1 billion worth of petroleum annually.

In recent years, Cuba has actually been receiving more oil from Venezuela than it needs and has been selling the excess on the world market as refined petroleum products. But Piñón suggests it would be cheaper and more efficient for Cuba to shut down its refineries and buy gasoline and jet fuel than buying crude and refining it.

Other Gloomy Outlooks [4]

An even gloomier outlook was voiced by Pavel Vidal, a former Cuban central bank employee who is now a professor at Colombia’s Pontificia Universidad Javeriana Cali. He said, “Under current conditions, [Cuban] gross domestic product will dip into negative territory this year and decline 2.9 per cent in 2017. If relations with Venezuela fall apart completely, GDP could decline 10 per cent.”

Another economic negative is anticipated declines in Cuba’s export of medical services (its foreign medical missions), especially to Algeria, Angola and Brazil. In 2014 such medical services earned Cuba about $8 billion or 40% of its total exports.

Karina Marrón, deputy director of Granma, has warned of possible street protests. “A perfect storm is brewing . . . this phenomenon of a cut in fuel, a cut in energy. This country can’t withstand another ’93, another ’94.”Rapid response brigades in the 1990s were formed to quell social unrest; they are now reportedly on alert.

“Just when we thought we were going forward, everything is slipping away again,” says Havana retiree Miriam Calabasa. “I am worried people are going to decide enough is enough: then what?” A mechanic, Ignacio Perez, stated, “Nothing will get better any time soon; it can only get worse. The roads won’t be paved, schools painted, the rubbish picked up, public transportation improved, and on and on.”

But foreign businesses hope these great economic challenges may speed economic opening. “Venezuela’s problems increase the chance of Cuban reforms. This government only acts when it has to,” says one Spanish investor on the island.

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[1] Whitefield, Economists debate how hard Venezuela economic storm will hit Cuba, InCubaToday (July 28, 2016).

[2] As mentioned in a prior post, Omar Everleny Perez was one of the Cuba’s best-known academics, an expert in developing economies and a consultant for Castro’s government when it launched a series of market-oriented economic reforms in 2011. This last April (three weeks after Obama’s visit to Cuba), he was fired by the University of Havana for allegedly having unauthorized conversations with foreign institutions and informing “North American representatives” about the internal procedures of the university. Perez said he believed he was fired because of his critical writings about the slow pace of economic reforms.

[3] President Castro’s recent speech to the National Assembly was discussed in a prior post. His earlier speech to the Congress of the Communist Party of Cuba also touched on Cuba’s economic problems; this speech was covered in another post.

[4] Frank, Venezuela’s Economic Woes Send a Chill Over Closest Ally Cuba, Fin. Times (July 25, 2016).