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).

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).

U.S. Secretary of State Tillerson Criticizes Aspects of U.S.-Cuba Normalization          

U.S. Secretary of State Rex Tillerson on June 13 criticized at least some aspects of U.S. normalization of relations with Cuba. He did so during a Senate Foreign Relations Committee hearing over the State Department’s proposed budget for Fiscal Year 2018 (October 1, 2017—September 30, 2018) that is 30% less than the current budget, including a total elimination of funding for so-called democracy promotion programs through the U.S. Agency for International Development (USAID). [1]

The Committee Chair, Bob Corker (Rep., TN), said that he knew President Trump would announce certain changes to Cuba policy this Friday in Miami and asked Mr. Tillerson to explain these upcoming changes. The Secretary responded as follows:

  • “The general approach is to allow as much of this continued commercial and engagement activity to go on as possible because we do see the sunny side…we see the benefits of that to the Cuban people. But on the other hand, we think we have achieved very little in terms of changing the behavior in the regime in Cuba, its treatment of people, and it has little incentive today to change that. In fact, our concern is they may be one of the biggest beneficiaries of all of this, which just again promotes the continuance of that regime. As we’re developing these business relationships and as we’re enjoying the benefits of the economic and development side, are we inadvertently or directly providing financial support to the regime? Our view is we are.”

Senator Corker said he understood that American businesses are eager to operate in Cuba, but cited Cuba’s continuing shortcomings in free expression and other civil liberties. The Senator added, “I do hope we end up with a policy that, over time, will cause the Cuban people themselves to be able to reach their aspirations. It’s a country that has incredible potential.”

Tillerson also said the Obama policy of engagement had “financially benefited the island’s government in violation of U.S. law” and that Cuba “must begin to address human rights challenges” if it wants the U.S. to continue such normalization. Tillerson acknowledged that normalization has led to an increase in U.S. visitors and U.S. business ties. However, Tillerson added: “We think we have achieved very little in terms of changing the behavior of the regime in Cuba …. and it has little incentive today to change that.”

Tillerson agreed that moves toward more normal relations with the United States have helped some Cubans lift themselves out of poverty and provided opportunities for U.S. companies. But, he observed, there is a “dark side” to relations with Cuba, noting that the government in Havana continues to jail political opponents and harass dissidents. “We are supportive of the continued economic development, as long as it is done in full compliance with our existing statutes to not provide financial support to the regime,” Tillerson said. “That’s the focus of our current policy review.”

The State Department’s proposed budget’s elimination of so called “democracy promotion” programs for Cuba and other countries through the U.S. Agency for International Development (USAID) drew the attention of Senator Robert Menendez (Dem., NJ), a Cuban-American and fierce critic of U.S.-Cuba normalization. He said, ““I am appalled that you have completely zeroed out Democracy Assistance for countries including Cuba, Venezuela, and Nicaragua. As brave citizens continue to risk their lives advocating for the basic freedoms we enjoy here, this budget sends a message that the United States is no longer on their side, and abandoning the pursuit of justice. It effectively withdraws American leadership around the world, pushing the door open for Russia and China to increase their scope of influence.”

As a result, Menendez asked Tillerson, “Does this administration believe that support of democracy and human rights is a reflection of American leadership and values?” After Tillerson said “Yes,” Menendez asked, “How can you say that then when the budget completely zeros out assistance for democracy assistance?” Tillerson then tried to avoid the question by saying that other parts of the budget could be used for the task.”

More generally at the hearing Committee members, both Democrats and Republicans, expressed great skepticism over the proposed budget’s 30% reduction. Senator Corker said he and his staff had quit trying to analyze the details of the proposed budget because such an effort was “a total waste of time” as the proposed budget “is not going to be the budget that we’re going to deal with. It’s just not.” Another member, Senator Lindsay Graham (Rep., SC) became almost “derisive” as he contrasted global needs with the proposed budget that, he said, was putting the lives of U.S. diplomats at risk.

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[1] Rumors of Upcoming Trump Administration Rollback of U.S. Normalization of Relations with Cuba, dwkcommenetaries.com (May 25, 2017): Reuters, Tillerson Signals Tough Trump Administration Stance on Cuba, N.Y. Times (June 13, 2017); Harris, Will Cuts Hurt Diplomacy? Tillerson Tries to Ease Senate’s Worries, N.Y. Times (June13, 2017); Schwartz, Trump Plans Rollback of Obama Cuba Policy, W.S.J. (June13, 2017); Press Release: Corker Credits Secretary Tillerson for Unprecedented Outreach (June 13, 2017); Press Release: Menendez Pushes Tillerson on Cuts to State Department Human Rights (June 13, 2017); U.S. State Dep’t, FY 2018 Budget Testimony (June 13, 2017).

 

Trump Administration Reportedly Planning Reversal of Some Aspects of U.S. Normalization of Cuba Relations   

Next Friday, June 16, in Miami, President Trump reportedly will announce certain changes in U.S. policies regarding Cuba. These changes will be the result of an overall review of such policies that has been conducted from the first days of this administration. Not surprisingly the review process has revealed conflicts between leaders of various federal departments favoring continuation of normalization, on the one hand, and political opponents of normalization from Florida, on the other hand. Supposedly the political cover for the rumored over turning at least some of the normalization is the U.S. desire to combat human rights problems on the island.[1]

While President Trump reportedly still has overall support from most Republicans in the Senate and House, on June 8, seven Republican Congressmen sent the president a letter urging continuation of normalization with Cuba. They were Representative Tom Emmer (MN), who is the Chair of the House Cuba Working Group, along with Jack Bergman (MI), James Comer (KY), Rick Crawford (AR), Darin LaHood (IL), Roger Marshall (KS), and Ted Poe (TX). The letter made the following points:

  • “Given Cuba’s proximity, it is a natural partner for strategic cooperation on issues of immediate concern. Since the thaw in U.S.-Cuba relations, the [U.S.] and Cuba have signed nine formal bilateral agreements that have improved efforts to combat human trafficking, illicit drug trade, fraud identification, and cybercrime. A rollback of Cuba policy would threaten these efforts and in turn, the safety of the American people.”
  • “More concerning, if we fail to engage politically and economically, our foreign competitors and potential adversaries will rush to fill the vacuum in our own backyard. For instance, Russia is already strengthening its ties with Cuba, supporting infrastructure investment and resuming oil shipments for the first time this century. China is also expanding its footprint in Cuba as well. China is now Cuba’s largest trading partner and heavily invested in providing telecommunications services, among other investments, on the island.”
  • “Reversing course would incentivize Cuba to once again become dependent on countries like Russia and China. Allowing this to happen could have disastrous results for the security of the [U.S.]. Alternatively, we can counter the growing threat of foreign influence in our region by engaging with our island neighbor. We can empower the Cuban people by providing high quality American goods and supporting Cuba’s growing private sector through increased American travel.”
  • “We urge you to prioritize U.S. national security and not return to a policy of isolation that will only serve to embolden adversarial foreign power in the region.”

This letter was personally delivered to the White House on June 8 by Representative Emmer and three of the other signers of the letter. Afterwards Emmer told Reuters, “My hope is that when the administration is done with their review, they don’t let one or two voices overwhelm what is in the interest of the United States.”

For advocates of normalization, like this blog, this policy review reportedly has bad news and good news regarding U.S. diplomatic relations with Cuba, U.S. business with Cuban state or military enterprises, Americans travel to Cuba and U.S. “democracy promotion” programs on the island.

U.S. Diplomatic Relations with Cuba

Good news: severing U.S. diplomatic relations with Cuba seems very unlikely.

Business with Cuban State or Military Enterprises

Bad News. Reuters says the Administration is considering “tightening restrictions on U.S. firms doing business with Cuban state or military enterprises. Such a restriction could have far-reaching consequences for existing deals, such as the one last year by Starwood Hotels and Resorts last year to manage hotels in Cuba — one of which is owned by the military conglomerate Gaviota — and effectively freeze future ones, since the military in Cuba has a hand in virtually every element of the economy.”

Such restrictions would cost U.S. manufacturing and chemical companies through January 2021 (the end of the term for the Trump presidency) an estimated $929 million, adversely affecting 1,359 jobs. In addition, imposing new restrictions on U.S. agricultural and medical exports to Cuba, for the same time period, are estimated to cost the U.S. an additional $3.6 billion and 3,087 jobs.

On the other hand, there also is internal resistance in the Administration to making it more difficult for U.S. businesses and agricultural interests to do business with Cuba. Similar resistance exists in Congress as evident with various pending bills to end the U.S. embargo of the island, in whole or in part, as discussed in an earlier post.

Americans Travel to Cuba[2]

Bad News. There are rumors that the Administration may cut back on the ability of Americans to travel to the island. Again, however, there are pending bills in Congress that would prevent this.

Presumably, however, the Trump Administration would be hesitant to adopt measures that would be harmful to U.S. travel companies. U.S. cruise operators and airlines, for example, are estimated to lose around $712 million in annual revenues under enhanced travel restrictions with resulting risks to U.S. employment in these businesses. Especially at risk are jobs in south Florida involved in the cruise business. Through January 2021 (the period for the current term of the U.S. presidency), these costs are estimated at $3.5 billion, adversely affecting 10, 154 jobs.

These adverse effects were echoed at an early June aviation industry conference by Alexandre de Juniac, the Director General of the International Air Transport Association: “Restricting the network of aviation and access to Cuba would be bad news for aviation. Generally we welcome the extension of access to any country by plane.”

In addition, making it more difficult for Americans to travel to Cuba would adversely affect the relative prosperity of the island’s emerging private enterprise sector, which acts as a counterweight to the state-owned enterprises and as a force for liberalization of various aspects of Cuban society and government. According to Engage Cuba, a U.S. coalition of businesses and others supporting normalization, Cuba’s private business sector currently accounts for 1/3 of Cuba’s workforce, has greatly expanded Cubans’ earning potential, has gained a larger share of the island’s food service industry, is providing almost 1/3 of all rooms available for rent in Cuba, and through tech entrepreneurs is helping to modernize the economy.[3]

Just recently some of the Cuban entrepreneurs have formed the Association of Businessmen to help, advice, train and represent the members of the private sector. The group applied in February for government recognition. The official deadline for a government response has passed without approval or rejection, thereby leaving the group in the peculiar status known in Cuba as “alegal” or a-legal, operating unmolested but vulnerable to a crackdown at any time.

U.S. “Democracy Promotion” Programs in Cuba

Good News. As noted in a prior post, the Administration’s proposed Fiscal 2018 State Department budget eliminates funding for the so-called covert “democracy promotion” programs in Cuba conducted by the U.S. Agency for International Development (USAID).

However, it also has been reported that the president is weighing an increase in funding for USAID programs that promote democracy in Cuba, initiatives that the Castro government has long condemned as covert efforts to overthrow it.

Cuban Human Rights[4]

A White House spokesman, Michael Short, recently observed, “As the President has said, the current Cuba policy is a bad deal. It does not do enough to support human rights in Cuba. We anticipate an announcement in the coming weeks.”

This issue also was highlighted in a recent article by U.S. Ambassador to the U.N., Nikki Haley, which severely criticized the U.N. for electing human rights violators, like Cuba, to membership on the Human Rights Council. Cuba’s government, she said, “strictly controls the media and severely restricts the Cuban people’s access to the Internet. Political prisoners by the thousands sit in Cuban jails.” Therefore, she was proposing that “membership on the Council must be determined through competitive voting to keep the worst human rights abusers from obtaining seats.”

However, at a Council meeting in Geneva on June 6, Ambassador Haley did not mention Cuba in a short statement to emphasize the U.S. “strong conviction to the protection and promotion of human rights” and the importance of the Council’s “resolutions [that] can give hope to people who are fighting for justice, democracy, and human rights, and they can pave the way for accountability.”

Later that same day in Geneva at what she described as a Council “side-event,” she spoke about “Human Rights and Democracy in Venezuela.” As the title of her remarks suggest, she focused on that country’s current abuses of human rights and democracy and complained about Venezuela’s being a [Council] member in good standing . . . [and using] that membership to block any meaningful discussion of its human rights violations. The . . . Council has no excuse. It cannot consider itself the world’s leading human rights organization and continue to ignore the violations and abuses that are occurring in Venezuela.” Although Cuba is a strong ally of Venezuela and frequently dismisses the latter’s critics, Ambassador Haley made not mention of Cuba in these remarks.

Cuba, however, returned to her remarks later the same day, June 6, at Geneva’s

Graduate Institute, where her focus was the Council’s failure “to act properly – when it fails to act at all – it undermines its own credibility and the cause of human rights. It leaves the most vulnerable to suffer and die. It fuels the cynical belief that countries cannot put aside self-interest and cooperate on behalf of human dignity. It re-enforces our growing suspicion that the Human Rights Council is not a good investment of our time, money, and national prestige.”[5]

One example of the Council’s failure, she said, was Cuba, where “the government continues to arrest and detain critics and human rights advocates. The government strictly controls the media and severely restricts the Cuban people’s access to the Internet. Political prisoners by the thousands continue to sit in Cuban jails. Yet Cuba has never been condemned by the . . . Council. It, too, is a member country.”

In addition, according to Haley, Cuba uses its membership in the Council as proof that it is a supporter of human rights, instead of a violator. The Cuban deputy foreign minister called Cuba’s 2016 re-election to the Human Rights Council, “irrefutable evidence of Cuba’s historic prestige in the promotion and protection of all human rights for Cubans.

Whatever the merits of the U.S. allegations about Cuban human rights, reversing any aspect of the current status of normalization, in this blogger’s opinion, will not cause Cuba to change its own policies and practices. Instead, any reversal may well harden Cuban resistance to change and provide opportunities for other countries, like Russia and China, to enhance their relations with Cuba. Finally such reversals are hypocritical in light of the recent U.S. embrace of Saudi Arabia with a poor human rights record.

Conclusion

A New York Times editorial summed up this controversy by criticizing the rumored return to the “hard-line sanctions-based approach [that] was in place for more than 50 years after the 1959 revolution and never produced what anti-Castro activists hoped would be the result, the ouster of Cuba’s Communist government in favor of democracy. Isolating Cuba has become increasingly indefensible.”[6]

In contrast, said the editorial, “Mr. Obama’s opening to Havana has enabled the freer flow of people, goods and information between the two countries, even as significant differences remain over human rights. It has produced bilateral agreements on health care cooperation, joint planning to mitigate oil spills, coordination on counternarcotics efforts and intelligence-sharing. In April, Google’s servers went live in Cuba and thus it became the first foreign internet company to host content in one of the most unplugged nations on earth. Mr. Obama’s approach also encouraged Latin American countries to be more receptive to the United States as a partner in regional problem-solving.”

All U.S. supporters of normalization need to express their opinions to the White House, the U.S. State Department and members of Congress.

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[1] Rumors of Upcoming Trump Administration Rollback of U.S. Normalization of Relations with Cuba, dwkcommentaries.com (May 25, 2017); Reuters, Trump Administration Nearing Completion of Cuba Policy Review: Sources, N.Y. Times (May 30, 2017); Davis, Trump Considers Rolling Back Obama’s Opening With Cuba, N.Y. Times (May 31, 2017); Mazzei, Gomez, Kumar & Ordońez, How Cuba policy, and its inevitable drama, ensnared Trump’s White House, Miami Herald (June 1, 2017); Trump Reversing Cuba Policy Would Cost $6.6 Billion, Over 12k Jobs, Engage Cuba (June 1, 2017); Reuters, Trump Expected to Unveil New Cuba Policy as Early as Next Friday: Sources, N.Y. Times (June 9, 2017); Mazzei, Trump to reveal Cuba policy in Miami Next Friday, Miami Herald (June 9, 2017); Reuters, Some Republican Lawmakers Urge Trump Not to Reverse Cuba Opening, N.Y. Times (June 9, 2017); Letter, Representative Tom Emmer and six other Republican Congressmen to President Trump (June 8, 2017);Werner, Many in GOP unshaken by Comey’s testimony against Trump, StarTribune (June 10, 2017).

[2] Reuters, U.S. Travel Sector to Suffer if Trump Reverses Cuba Detente: Report, N.Y. Times (June 1, 2017); Glusac, How a Shift in U.S. Policy could Affect Travel to Cuba, N.Y. Times (June 1, 2017); Assoc. Press, Cuban Entrepreneurs Start first Private Business Group, N.Y. Times (June 1, 2017); Reuters, U.S.-Cuba Policy Looms at Aviation Industry Conference, N.Y. Times (June 7, 2017).

[3] 5 Facts About Cuba’s Private Sector, EngageCUBA (Feb. 24, 2017).

[4] Assoc. Press, Trump Faces Tough Task Unwinding Obama Cuba Policy, N.Y. Times (June 2, 2017); Haley, The U.N. Human Rights Council whitewashes brutality, Wash. Post (June 2, 2017); Haley, Remarks at a Human Rights Council Side Event: “Human Rights and Democracy in Venezuela (June 6, 2017); Haley, Remarks at the U.N. Human Rights Council (June 6, 2017); Cumming-Bruce, U.S. Stops short of Leaving U.N. Human Rights Council, N.Y. Times (June 6, 2017).

[5] Haley, Remarks at the Graduate Institute of Geneva on “A Place for Conscience: the Future of the United States in the Human Rights Council,” (June 6, 2017).

[6] Editorial, Undoing All the Good Work on Cuba, N.Y. Times (June 5, 2017).

Economic Problems Bedevil Cuban Government and President Raúl Castro

A prior post reported that Cubans want greater economic growth and opportunity while also expressing pessimism about that happening. The grounds for that pessimism are highlighted in a Miami-Herald article about the many economic challenges facing President Raúl Castro In the last year of his presidency.[1]

This is the article’s big picture. “Many state enterprises are barely limping along, there are jitters as the economy of Cuba’s Venezuelan benefactor spirals downward, the rules of the road are murky for private businesses, salaries are low, a messy dual currency system still needs to be unified and Cuba is in dire need of much more foreign investment.”

These problems will not be easy to solve. “Many of Cuba’s economic problems are interrelated and the timing may not be good for any drastic moves — especially with Cuba’s relationship with the United States still up in the air.”

Yes, it is true that “Cuban officials are estimating economic growth of around 2 percent this year, but that figure is based on the assumption that oil prices will go up and tourism will keep growing.” According to Cuban economist Omar Everleny Pérez Villanueva, the 2 percent growth objective is “very ambitious.” He could have said “unrealistic” as His model puts the Cuban economy in negative territory with a decline of between .3 percent and 1.4 percent in 2017.”

Here are specifics on some of the economic challenges facing the island:

Maintaining Exports of professional services. Medical services by Cuban health care professionals on foreign medical missions in recent years have provided the Cuban government with a major source of foreign currency. In recent years, however, this source of foreign currency has declined with the implosion of the Venezuelan economy being a major factor.

Coping with Venezuela’s Economic Implosion. Venezuela’s problems for Cuba go beyond the decline in foreign medical mission income for Cuba. Since last July, oil deliveries from Venezuela have dropped as much as 60 percent. Venezuela used to send crude oil to Cuba for blending at the latter’s Cienfuegos refinery, but production at the Cuban refinery has fallen by half with the reduction in shipments from Venezuela.

Eliminating Cuba’s dual currency system. Cuba has two currencies: the Cuban peso (CP), which is generally used by the Cuban population and the Cuban convertible peso (CUC), which used by tourists and foreign companies, and the Cuban government for years has had a goal of eliminating this system. According to Carmelo Mesa-Largo, a Cuban economist and professor emeritus at the University of Pittsburgh, “In 2016, the budget deficit was 7.3 percent of GDP, and because of the already difficult economic situation, they have had to print money. The budget deficit may be even higher this year — perhaps 12 percent — generating even more inflation.”

Increasing public salaries. “There are constant complaints about low public salaries. A private cab driver, for example, can earn more than a physician or other professionals. According to Mesa-Lago, even though salaries went up in 2015, buying power was just 62 percent of what it was in 1989. Nominal salaries could be increased by printing more CP, ”but with inflation, they would have to raise salaries even more to have real wage growth.” And that could set off a further inflationary spiral.

Attracting foreign investment. The Cuban government has made it clear that foreign investment is a cornerstone of Cuban economic development going forward, but so far investment is lagging. “Diplomats, business executives and members of the U.S. Congress who favor lifting the embargo all concur that Cuba needs to reform its legal system to offer foreign investors better legal guarantees, make it easier to sign contracts and allow them to directly hire their Cuban employees.” The Cuban government, however, does not want to do anything that potentially could be destabilizing and cause a weakening of political control.

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[1] Whitefield & Torres, The next year will determine Raúl Castro’s economic legacy, Miami Herald (Mar. 23, 2017)   Previous posts in this blog have discussed many aspects of the Cuban economy as listed in the “Cuban Economy” section of List of Posts to dwkcommentaries—Topical: CUBA.

Fraud in Cuban Foreign Medical Mission

Cuban medical professionals who have served in Cuba’s medical mission to Venezuela (Barrio Adentro) have reported fraudulent overstatement of the mission’s statistics.[1]

Venezuela pays Cuba on the basis of the number of patients the medical professionals treat or the educational workshops they teach. As a result, the Cuban authorities do not want low numbers of such patients to affect their income and, therefore, set daily quotas for the number of patients that are seen and treated.

According to some Cuban dentists and ophthalmologists in particular, they were unable to meet their quotas and, therefore, regularly submitted reports that falsely overstated the number of patients they had seen.

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[1] Wyss, Bario Adentro Mission in Venezuela: Lying White Lace, el Nuevo Herald (Jan. 28, 2017).

Washington Post Endorses Continued Normalization with Cuba

The Washington Post opens its January 10 editorial by properly recognizing that the “lasting foreign policy legacy of a president often doesn’t become clear until years after he leaves office. That may be particularly true of President Obama, because some of his most distinctive initiatives were, in large part, bets on long-term results. . . . [T]he president’s decision to reopen relations with Cuba without requiring any political liberalization by the Castro regime will be judged on whether greater engagement with the United States eventually helps to bring about that change.”[1]

The editorial concludes by urging President-elect Donald Trump to “improve on . . . [President Obama’s policy of normalizing relations with Cuba]. A break with Havana would dash the hopes of millions of Cubans who still expect the [U.S.] to use its leverage to promote real change. Mr. Trump should freeze contacts with the regime’s security agencies and link any further U.S. economic concessions to an increase in political freedom.”

In between these words the editorial laments what it sees as a Cuban escalation of “[r]epression against the political opposition . . . since the death of Fidel Castro;” the decline of U.S. exports to the island; and what it sees as the slow pace of expansion of Cuban self-employment financed, in part, by U.S. remittances to Cuban family and friends.

Conclusion

I applaud the editorial’s recognition that the process of normalizing relations with Cuba is a long-term project that Trump should not abandon, but instead seek to improve.

The editorial, however, fails to acknowledge that Cuba is going through its own long-term project of moving from a state-owned to a mixed economy. This is not an easy task. Indeed, last April Raúl Castro in a speech to the Congress of the Communist Party of Cuba criticized the old habits of many within the state-owned enterprises; praised the economic contributions of the self-employed, now 30% of the national economy; and complained about some low-skilled workers like gas-station attendants earning more money than high-skilled workers like physicians.[2]

This Cuban long-term project is made even more difficult by the economic collapse of its ally Venezuela and the resulting reductions of the latter’s economic support of Cuba, which is briefly mentioned in the editorial along with the 1% decline of the Cuban economy in 2016.

Cuban repression of what we see as political dissent may be factually well founded. But our criticism of such repression needs to be tempered by recognition that the U.S. continues to conduct covert or under-cover so-called “democracy promotion” activities in Cuba and that Cuba has legitimate reasons to be concerned about such activities. This blog, for example, has repeatedly criticized such “democracy promotion” programs and urged that they be conducted only with the cooperation of the Cuban government.[3] Moreover, it would be short-sighted to condition further U.S. economic liberalization on improvements in Cuban human rights; this approach failed in its implementation from 1959 through December 2014.

Finally the U.S. needs to recognize and support Cuban entrepreneurs, many with funding from U.S. remittances, who are improving their own lives and those of their employees and who are becoming an important non-state source of ideas and advocacy.[4]

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[1] Editorial, How Trump could bring real change to Cuba, Wash. Post (Jan. 10, 2017).

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

[3] See posts listed in “U.S. Democracy Promotion Programs in Cuba” in List of Posts to dwkcommentaries—Topical (Cuba).

[4] Here are some of the dwkcommentaries.com posts that touch on the Cuban economy: Cuba to Legalize Small and Medium-Sized Private Business, (May 25, 2016); Cuba Press Offers Positive Press About the Island’s Private Enterprise Sector, (June 1, 2016); Economists Discuss Current Cuban Economic and Political Situation, (Aug. 1, 2016); Cuba Faces Economic Challenges (Dec. 14, 2016); Cuba’s Economic Ties with Venezuela Are Fraying (Dec. 14, 2016); U.S. and Cuba’s Efforts To Continue Normalization (Dec. 9, 2016).