Why is the Cuban Government Trying To Slow Down the Private Sector? 

                                                                                                              Yesterday’s post described the Cuban Government’s suspension of the issuance of new permits for certain self-employment categories and closing down some paladares (private restaurants).

Why is this happening and what is its impact on Cubans?

Nora Gámez Torres of the Miami Herald reports that certain experts say the suspension is the government’s fear of the emergence of a truly successful entrepreneurial class on the island as a future political opponent of the government. As Ted Henken, a U.S. sociologist and expert on Cuba’s private sector, put it this way: “hardliners in the Cuban government are afraid of the private sector, not only because it competes with state monopolies but because economic autonomy ‘can lead to more political freedom and independence, and create a powerful lobby with a different agenda than those in power currently.’”[1]

This move by the Cuban government is seen as against its economic interest as the private sector generates more than $2.5 billion and up to 18% of the economy’s revenues while the implosion of Cuba’s ally, Venezuela, has a major negative impact on Cuba’s economy.

Meanwhile Cubans planning to open new businesses are upset.  Here are some of their reactions.[2]

  • Sara in anticipation of renting a house in Vedado said, “I have spent months and money invested in arranging the house to rent it to foreign tourists, I already had contacts and I was planning to apply for my license in September.”
  • Sergio, a taxi driver who was planning to move to a home buying and selling office, said he lost more than 1,000 CUCs between chairs and other items he bought to set up an office. The government’s suspension of new licenses “demonstrates that no one can make more than four pesos.”
  • Brian, who already had bought equipment to open an appliance repair shop in Havana, has seen his aspirations frustrated, as he had not yet submitted his license application. “Right now I do not know what to do because I owe money to several people for the purchase of equipment.”
  • The owner of a cafeteria in Havana said that in just two months she planned to open a restaurant in the same place. “Now what do I do with all the cutlery, glasses and even an electric coffee maker I bought? I have to sell them or keep them until they reopen the licensing, but no one knows when that will be. The government wants us to be starving all our lives.”
  • Marta, a bookkeeper who looks for accountants to manage her payments at the bank, said that these closures “affects her a lot. As new entrepreneurs do not emerge, it makes it more difficult for me to get new clients. I have been put into China by these bastards since I only had a few months in this activity.”
  • Lázaro, “They do not want a middle class to emerge and they say they take these measures because there are many raw materials and equipment of illicit origin, and where do these illicit products come from? That comes from the lack of control and disaster of state companies,” he said. “They really screwed us up.”

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[1] Torres, Fear is driving Raúl Castro to punish Cuba’s new entrepreneurial class, experts say, Miami Herald (Aug. 2, 2017).

[2] Fernandez, ‘There is no one here to raise their heads,’ they complain affected by the brake on private work, Diario de Cuba (Aug. 2, 2017).

Subdued Commemoration of Second Anniversary of U.S.-Cuba Rapprochement    

December 17, 2016 was the second anniversary of Presidents Obama and Castro’s joint announcement that their two countries had embarked on the path of normalization and reconciliation. The U.S. commemoration of this date was subdued. The White House held a small gathering that was not widely publicized .The Cuban government, on the other hand, apparently did not hold any such event. But two Cuban publications published sketchy comments on the anniversary.

White House Commemoration[1]

On December 15, the Obama Administration hosted a private gathering across the street from the White House at the Eisenhower Executive Office Building. President Obama did not attend, but did send a letter to the 20 or so attendees encouraging them “to carry forward the work of strengthening our partnership in the years ahead.”

The gathering was addressed by Benjamin Rhodes, Deputy National Security Advisor; Jeffrey DeLaurentis, the acting U.S. ambassador in Havana; and three high-level officials from the U.S. Commerce, State and Treasury departments. Another speaker was

José Ramón Cabañas, the Cuban Ambassador in Washington. Also in attendance were U.S. Senator Patrick Leahy of Vermont and U.S. Representative Kathy Castor of Tampa, Florida, both Democrats.

Rhodes and DeLaurentis touted the administration’s accomplishments and, at different times, got emotional — Rhodes remembering support from Cuban-American friends in the wake of stinging criticism over his work, and DeLaurentis describing his work in Cuba, where he began and might end his diplomatic career, as the most rewarding of his life.

The attendees were Cuban Americans, Cuban government officials and business partners in Washington, including Miami entrepreneur Hugo Cancio, who publishes an arts magazine in Cuba; Felice Gorordo, founder of the Roots of Hope nonprofit; former U.S. Commerce Secretary Carlos Gutierrez; John McIntire, head of the Cuba Emprende Foundation; Miami attorney Ralph Patino; Giancarlo Sopo, founder of the CubaOne foundation, and Miami Foundation president and chief executive Javier Alberto Soto.

Another attendee, Ted Henken, a Baruch College sociology professor and Cuba expert, observed, “It was partly a celebration of what has been achieved, and a mourning” for the intense political fight that awaits.”

As Ric Herrero, former head of the pro-engagement Cuba Now group and the current president of Manos Americas, a social entrepreneurship nonprofit, put it, the gathering was “bittersweet. There was just a lot of gratitude toward the administration for their commitment to this cause and to everything they’ve done.” But they all were left with the questions: “What next? Where do we go from here? Because there is no certainty.”

Indeed, a chief concern among attendees was that Trump’s “volatile” personality could ignite a war of words with the Cubans, who have so far kept silent about the president-elect’s Cuba statements. On the other hand, attendees noted, Trump doesn’t have a clear political ideology, and could be more interested in showing up Obama on Cuba by negotiating more concessions.  However, Rhodes said, “We would like nothing more than the new administration to succeed beyond what we did.”

Obama supporters at the meeting thought that Trump had a willingness to keep negotiating with Raúl Castro’s government and that U.S. regulatory changes, following a top-to-bottom policy review, could take time–so long, perhaps, that by then Castro might near his own retirement, scheduled for February 2018.

“We’re living through a lot of uncertainty, but there’s a pretty strong consensus that Trump is going to realize that turning back the clock is going to be very difficult,” said Carlos Saladrigas, president of the Cuba Study Group. “Returning to a failed policy doesn’t make any sense.”

However, at a December 16 “thank You” rally in Ordlando, Flordia, Trump told the crowd, “America will also stand with the Cuban people in their long struggle for freedom. Their support has been unbelievable. The Cuban people. We know what we have to do, and we’ll do it. Don’t worry about it.”[2]

Cuban Observance

No Cuban commemoration event was found in searching Cuban public sources, Instead, two articles on the subject were found.[3]

The CubaDebate article reviewed some of the key things that had happened since December 17, 2014, while reiterating Cuba’s fervent desire for the U.S. to end its embargo (blockade) and to return Guantanamo Bay to the island. It also alleged that President Obama had done “much less than he could, given the broad executive powers that he [allegedly]possesses and that [allegedly] would have allowed him to reduce the blockade to its minimum expression.”

Nevertheless, the article stated, on December 7, 2016, Josefina Vidal of the Cuban government reaffirmed Cuba’s willingness to continue this process and expressed its hope that President-elect Donald Trump will take into account, when he takes office on January 20, what has been achieved” over the last two years.

These same points were essentially repeated in the article in Granma, the official newspaper of the Communist Party of Cuba. It also added the following points:

  • Obama had acknowledged for the first time that the U.S. policy of “aggression” [“hostility” would be more diplomatic] against Havana was a failure and had ended up isolating the U.S. itself. It also alleged that the U.S. methods were changing, but not its objective – regime change in Cuba.
  • The U.S. still has a ban on US investment in Cuba, except in the area of telecommunications.
  • The Cuban state sector, where more than 75% of the labor force is employed, remains deprived of selling its products to the U.S. with the sole exception of pharmaceuticals and biotechnology.Also, Cuban imports of goods produced in the U.S. that the state-owned enterprise can make are very restricted.
  • Although several months ago the US approved the use of the U.S. Dollar by Cuba in its international transactions, it has not yet been possible to make deposits in cash or payments to third parties in that currency, due to international banks’ fears of fines by the U.S.
  • The U.S. has not yet ended Radio and TV Marti programs aimed at Cuba.

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[1] Mazzei & Torres, Muted White House celebration marks Obama Cuba anniversary, Miami Herald (Dec. 17, 2016).

[2] Lemmongello, Trump thanks Florida at Orlando rally, Orlando Sentinel (Dec. 116, 2016).

[3] Cuba-US: After two years, much remains to be done, CubaDebate (Dec. 17, 2016); Gomez, The keys of December 17, Granma (Dec. 16, 2016).

 

Conclusion of Seventh Congress of Communist Party of Cuba

The final three days (April 17-19) of the Seventh Congress of the Communist Party of Cuba featured criticism of President Obama’s words during his March visit to Cuba, adoption of the Party’s Central Committee’s report, election of the Party’s leaders for the next five years, a concluding speech by Raúl Castro and a surprise appearance of Fidel Castro.[1] These topics will be discussed in this post. Prior posts provided an overview of the Congress, Raúl Castro’s discussion of Cuba-U.S. relations and his discussion of socio-economic issues.

Criticism of President Obama

Bruno Rodriguez
Bruno Rodriguez

The most direct criticism of Obama came from Cuba’s Minister of Foreign Affairs, Bruno Rodriguez Parilla. He said, “Obama came to stand here and dazzle the non-state sector of the economy [the so-called cuentapropistas] as if he was not the defender of big corporations but the defender of those selling hot dogs and small businesses in the U.S.”

Moreover, according to the Foreign Minister, “In this visit, there was a deep attack on our ideas, our history, our culture and our symbols.” However, “Socialism and the Cuban Revolution are the guarantees that there can be a non-state sector that is not that of big North American companies. ”

The Foreign Minister also referred to Cuba’s constitutional referendum in the near future as “a battle” in a different context, with “a very heterogeneous society…in which there are changes in the perception of the enemy, which remains the enemy. And it is there, in the North.”

René González, one of the Cuban Five, said Obama was “the ‘Pied Piper’ . . . [who] came to play to our children and steal their hearts. He played the flute very well, because he has specialists who tell him how to play it.”

But Rene González also made an unusual call for the consideration of political reform in Cuba by saying the Party had focused excessively on the economy for 10 years. “Let the party [now] call for a broad public discussion that goes beyond concepts of economic development. Let’s arrive at the eighth party congress [in 2021] for the first time in human history with a consensus on that human aspiration that some call democracy, and that’s possible through socialism.”

Another member of the Cuban Five who was released from U.S. prison on December 17, 2014, Antonio Guerrero, dedicated a few verses from Cuban poet Cintio Vitier to Obama and his policy of rapprochement: “Don’t attempt with your delicacy to have me betray myself. Do not pretend you are going to believe in my situation.” According to a report in Juventud Rebelde, Guerrero turned to poetry, “as a resonant symbolic exercise against those who approach us today with fake softness.”

Adoption of the Central Committee Report

As reported in an earlier post, on April 16 Raúl Castro as the First Secretary of the Communist Party of Cuba, spent two hours reading the report of the Party’s Central Committee.

Miguel Diaz-Canel
Miguel Diaz-Canel

Two days later Miguel Diaz-Canel had the important, but boring, job of making a resolution for the Congress’ adoption of that report, which meant that he had to re-read that report. This included the report’s criticism of the Cuban governmental bureaucracy as having obsolete ways of thinking led both to inertia in enacting reforms and “a lack of confidence in the future. Along with other deficiencies, there’s a lack of readiness, high standards and control, and little foresight or initiative from sectors and bureaucrats in charge of making these goals a reality.”

That resolution was adopted unanimously by the 1,000 delegates to the Congress.

Election of Party Officials

Castro y Machado Vedntura
Castro y Machado Vedntura

Raúl Castro was re-elected as the Party’s First Secretary as was 85-year-old Machado Ventura as Second Secretary, who is known as the enforcer of Communist orthodoxy and an opponent of some of the biggest recent economic reforms. Raúl added that the “inexorable law of life” means that the Seventh Congress will be the last headed by the historical generation.

There had been speculation that Miguel Diaz-Canel might have replaced Machado Ventura as a clear sign that Diaz-Canel was the successor to Raúl as President. But Diaz-Canel was re-elected to the Political Bureau of the Party.

Raúl addressed the composition of the Party’s Political Bureau, noting that its 17 members include a four women, five Black or mixed-race members, two heads of mass organizations, five Council of State vice presidents, three Council of Ministers vice presidents, and four generals, including the First Secretary. Five new members were elected to this body.

The Central Committee was composed of 142 members, of which more than two-thirds were born after the triumph of the Revolution and the average age was 54.5 years, lower than in 2011. More than 98% of Central Committee members have university-level education, the representation of women has grown and now reaches 44 or 37% and blacks and mestizos with 35 or 92%

Fidel Castro’s Valedictory Remarks

Fidel Castro
Fidel Castro

I’ll be 90 years old soon [in August],” Castro said in his most extensive public appearance in years. “Soon I’ll be like all the others. The time will come for all of us, but the ideas of the Cuban Communists will remain as proof on this planet that if they are worked at with fervor and dignity, they can produce the material and cultural goods that human beings need, and we need to fight without a truce to obtain them.”

“This may be one of the last times I speak in this room,” Fidel Castro said. “We must tell our brothers in Latin America and the world that the Cuban people will be victorious.”

Raúl Castro’s Closing Speech

In a reprise of his two-hour speech on Saturday, Raúl Castro said the development of the national economy, with the struggle for peace and ideological firmness, was the main task of the Party. “This will be a revolution of the humble, by the humble and for the humble, as defined by comrade Fidel.”

Conclusion

I agree with other U.S. commentators that the harsh language against Obama at the Party’s Congress is a sign that the Cuban people had and still have a very positive opinion of President Obama, his speech to the Cuban people and his meeting with Cuban entrepreneurs. As Richard Feinberg, a former national security adviser to U.S. President Bill Clinton, put it, “The harsh rhetorical push-back by the ideological wing of the Communist Party suggests their heightened sense of vulnerability.”

“Clearly the Cubans are on the defensive after President Obama’s trip,” said Ted Piccone, a Cuba analyst at the Brookings Institution in Washington. Ted Henken, a Cuba analyst at Baruch College in New York, said Mr. Obama’s visit “was very effective in rattling” the regime. “Instead of taking Obama’s visit as a chance to open up and speed up the transition to a younger generation, they have circled the wagons.”

Carlos Alberto Pérez, who writes under the name La Chiringa de Cuba, said that he was not surprised by the party’s decision to keep President Castro and Mr. Machado in place. “The transition is planned for 2018 when Raúl steps down. Anyone who thought there would be a change now was dreaming.”

“Party leaders are trying to set up continuity in the context of reform — but it will be the type of reform managed by conservative politicians,” said Arturo Lopez-Levy, a lecturer at the University of Texas, Rio Grande Valley, and a former Cuban intelligence analyst. He added, “Generations do matter. Their formative experiences are different. The younger leaders will take up their posts at a time when the party is becoming more nationalist and less Communist. Younger militants also are less adverse to market mechanisms in the economy than their elders.”

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[1] Reuters, Cuba Calls Obama Visit ‘an Attack’ as Communists Defend Ideology, N.Y. Times (April 18, 2016); Assoc. Press, Cuban Leaders Criticize Both Bureaucracy and Private Sector, N. Y. Times (April 18, 2016); Assoc. Press, Cuba congress says state’s obsolete mentality is holding back economy, Guardian (April 18, 2016); Loforte, There is, and will be, a single Party, Granma (April 18, 2016); Torres, Riled Cuban Communists deploy colorful arsenal against Obama, InCubaToday (April 18, 2016); Whitefield, Cuba’s Communist Party Congress wants change, but also more of the same, Miami Herald (April 18, 2016); Raul Castro: The development of the national economy, with the struggle for peace and ideological firmness, main tasks of the Party, Granma (April 19, 2016); Assoc. Press, Fidel Castro gives Rare Speech Saying He Will Die Soon, N.Y. Times (April 19, 2016); Reuters, Cuba’s Castro Keeps Top Job but Leadership Changes to Come, N.Y. Times (April 19, 2016); Torres, Fidel Castro bids final farewell to his Communist Party comrades, Miami Herald (April 19, 2016);Whitefield, Raúl Castro and hardline deputy remain at helm of Cuba’s Communist Party, Miami Herald (April 19, 2016); Burnett, In Farewell, Fidel Castro Urges Party to Fulfill His Vision, N.Y. Times (April 19, 2016); Morales, Raúl reelected as First Party Secretary, Granma (April 19, 2016); Assoc. Press. Cuba’s Aging Leaders to Remain In Power Years Longer, N.Y. Times (April 20, 2016); Córdoba, Raúl Castro Re-Elected to Top Post in Cuba’s Communist Party, W.S.J, (April 20, 2016).