Cuba dissolves a bureaucracy and opens a housing market; Essay recounts visit with Alan Gross

According to news accounts, Cubans lined up yesterday morning to buy newspapers that explained the biggest change to their economy in decades.

Cuba has created a private market for housing. Effective November 10, Cubans will have the right to buy and sell their homes at prices they set. While the government will collect a modest 4% tax at both ends of the transaction, this economic reform will have ripple effects for Cuban families and the Cuban economy that are far-reaching, irreversible, and real.

As Marc Frank wrote in the Financial Times:

The easing of restrictions on property ownership is likely to reshape Cuban cities, spur real estate development and speed renovation of Cuba’s picturesque but dilapidated housing stock. It is also expected to reconfigure Cuban conceptions of class as some homeowners cash in their properties and areas of Havana are gentrified.

Under the current system, Cuban housing has been in crisis. While Cubans were guaranteed places to live, the inability to buy and sell their properties curtailed mobility. Generations of families are crowded into homes, many run down, sometimes with divorced couples living together, because, as the Wall Street Journal succinctly said, “there was nowhere else to go.”

A decision to move from one house to another – which entailed informal efforts to locate properties that people were willing to trade and permission from the government – forced Cubans into grey market activities on one hand and into a cumbersome bureaucracy on the other.

“What happens now is that all that bureaucracy and all that hassle will disappear,” says Dr. Carlos Alzugaray Treto, a long-time diplomat and professor at the University of Havana, who explained in this exclusive interview what this new law means for Cubans.

The immediate benefits are clear. Cubans, especially those with family supporters abroad, will be able to invest in housing and renovate their homes, which will in turn create demand for construction and other services offered by the newly-legalized small businesses in Cuba, raising incomes and adding new private sector jobs. “To say that it’s huge is an understatement,” said Pedro Freyre, an expert in Cuban-American legal relations who teaches at Columbia Law School, in an interview with the New York Times.

President Obama, who has been responsible for incremental but positive reforms in U.S. policy toward Cuba, has time and again voiced his skepticism about the sweep and significance of the Cuban economic reform process, telling Spanish speaking reporters in September this year: “We have not seen evidence they have been sufficiently aggressive in changing their policies economically…”

We suppose that depends on what your definition of “sufficiently aggressive” might be. If it means Cuba must completely undo its economic and political system as required by the Helms-Burton law, we need not hold our breath. Cuba is not going to do that.

But if it means creating private markets in housing for the first time since the revolution, giving Cubans the pride that comes with owning and fixing up their own homes, opening opportunities for capital formation, establishing clear regulations and liberties under the Rule of Law through organic changes that come from within, all of which give Cubans the opportunity to lead more prosperous and independent lives, we think the President of the United States ought to applaud and acknowledge that.

Next week, the Center for Democracy in the Americas will release our comprehensive report – Cuba’s New Resolve: Economic Reform and its Implications for U.S. Policy – that carefully examines what is taking place in Cuba now. The report features interviews with Cubans from all walks of life, it tells the story of the reform process, it highlights the benefits and short-comings of what has been implemented to date, and ends with constructive ideas for U.S. policy moving forward. It will be available for download at no charge beginning on Tuesday.

Before then, we offer the big news of this week. We cover reporting on fears in the U.S. Congress about Cuba’s plans to drill offshore for oil, troubling news about Guillermo Fariñas, and concerns reported by at least one Florida newspaper that Senator Marco Rubio isn’t representing the entire state or every Floridian when he makes decisions on U.S.-Cuba policy.

Finally, we republish a moving and important essay written about Alan Gross, by the Rabbi who visited him last week in prison, who says Mr. Gross has a pretty clear formula for gaining his release and returning home.

IN CUBA

Cuba creates housing market  – Cubans to buy and sell homes starting November 10

Cubans can now buy and sell homes under a law enacted by Cuba’s government that will have broad implications for everything from when Cubans choose to marry and form families to their ability to accumulate capital.

The change was announced in state newspaper Granma. The new law will go into effect on November 10, The New York Times reports. The text of the law in Spanish, allowing the purchase and sale of property, is available here as it appears in the Gaceta Oficial.

The law outlines new regulations for buying, selling, and swapping homes, as well as procedures for the transfer of property in cases of death, or of a homeowner leaving the country, and the process for registering a property and/or updating its official registration.

A Cuban who is currently a permanent resident in a home that he or she does not own is now permitted to purchase a house. Cubans are allowed to possess a vacation or summer home in addition to their permanent residence, but may only own one permanent residence. The address of this residence must be inscribed in the municipal and national registries.

The government will impose a 4% tax on the purchase and sale of homes. The swapping of houses, or permutas, will still be permitted, however, the two parties are now allowed to exchange an agreed-upon amount if one of the houses is deemed of higher value. In this case, the same 4% tax will be imposed on the amount paid, and such transactions will no longer require government approval.

Cuba’s GDP grew 1.9% in the first half of 2011, Government seeks more foreign investment

Rodrigo Malmierca, Cuba’s Minister of Exterior Commerce and Foreign Investment, announced that Cuba’s GDP grew 1.9% in first semester of this year, EFE reports.

Malmierca discussed this and related economic matters at the opening of the International Fair of Havana, an annual exposition aimed at attracting foreign buyers of Cuban exports. This year, the fair attracted 1,500 representatives from 57 countries.

During his talk, Malmierca addressed the current economic changes taking place on the island, emphasizing that Cuban businesses need to “gain authority and specialization,” and to work with “increased agility and integrality” in order to facilitate relations with foreign companies.

Brazil’s Foreign Minister José Eduardo Martins, in statements at the Fair on Wednesday, expressed his country’s support for Cuba’s reform process and affirmed that “…the Brazilian business community is not only coming here to sell, but also to help in the effort of ‘updating’ the Cuban economic model and in the effort of Cuba to increase its export capacity and reduce imports,” EFE reports

Malmierca underlined the government’s efforts to stimulate the export of services, especially in the area of health. He also said that GDP would increase 2.9%, as the government previously projected, by the end of the year.

Cardinal Ortega, who turned 75, is reconfirmed as Archbishop of Havana; Church spokesman calls for migration reforms

Cardinal Jaime Ortega, who has served as Archbishop of Havana since 1981, celebrated his 75th birthday this week. In accord with canon law, he presented his resignation to Pope Benedict XVI, EFE reports. But he later announced that the Pope had reconfirmed him as Archbishop, AFP reports.

In a press conference announcing his confirmation, the Cardinal signaled that he would continue his dialogue with President Raúl Castro, and signaled that conversations would continue about “the economic changes that are planned in Cuba, changes that society is waiting for, that Cubans are waiting for, and that the Church has also encouraged, supported, and hoped for,” adding that he would like the current process of reform to continue “a little bit faster.”

Cardinal Ortega’s dialogue with President Castro, initiated in spring 2010, played a central role in promoting discussions among Cuba’s government, the Catholic Church, and the government of Spain that produced the release of scores of political prisoners on the island.

Orlando Márquez, spokesman for the Havana Archdiocese, pushed for reform of Cuba’s migration policy in a piece he wrote for Palabra Nueva, a Church publication. Márquez, arguing for the right of Cubans who have left the island to return, stated:

…those who immigrated are Cuban and, excepting those who publicly denounce their status as citizens, have more of a right than citizens of other countries to visit this country, their home country…What’s more, the motives that led to their departure – whether they were fleeing from the revolutionary government 50 years ago, were pressured for political reasons after, forced by family ties, or left in search of better economic opportunities – those reasons alone do not deprive these people of their condition as Cuban citizens, a condition that was acquired at birth, as is declared in the Constitution of the Republic.

President Raúl Castro previously stressed the need for a reform of the nation’s policy, which prevents the re-entry of some Cubans who have left the island and are deemed as “exiles,” and requires that any Cuban seeking to leave the island acquire an exit visa. However, no details have been announced thus far as to the specifics of proposed reforms, or when they would be instituted.

Guillermo Fariñas detained for two days in Santa Clara

Guillermo Fariñas, a well-known dissident leader, was detained for two days after being arrested while attempting to visit Alvides Rivera, a dissident who is on a hunger strike at a hospital in the central city of Santa Clara, EFE reports. According to Fariñas, while attempting to visit Rivera, he was beaten by guards at the hospital after they refused him entry. The guards then called a police unit which detained Fariñas, releasing him 40 hours later without charges.

Fariñas maintains that, as a psychologist, he had been approved to visit Rivera by the director of the center, and has stated that he plans to officially denounce the incident once he has recovered.

State communications enterprise starts pilot plan to make prepaid land lines payable in national currency

ETECSA, Cuba’s state communications enterprise, has introduced a plan which allows users to recharge phone cards for land lines with the national currency (CUP), in the cities of Havana and Holguín, Café Fuerte reports. This promotion is an attempt to increase the user base of the personalized rechargeable phone card (tarjeta propia).

Previously, these phone cards could only be purchased with convertible pesos (CUC), which are often inaccessible to many Cubans who cannot afford them because they lack access to hard currency. According to the release from ETECSA, the plan will be in testing stages in both cities until the end of January.

U.S.-CUBA RELATIONS

Subcommittee in U.S. Congress holds hearing on Cuba offshore drilling

The House Subcommittee on Energy and Mineral Resources held a hearing this week titled “North American Offshore Energy: Mexico and Canada Boundary Treaties and New Drilling by Cuba and Bahamas.” The subcommittee heard testimony from government representatives and experts in the areas of offshore drilling and environmental safety issues. U.S. government witnesses included Vice Admiral Brian Salerno, Deputy Commandant for Operations of the U.S. Coast Guard, and Director of the Interior Department Bureau of Safety and Environmental Enforcement, Michael Bromwich.

Bromwich and Salerno reported on plans, negotiated by the Interior Department, for Coast Guard representatives to inspect Scarabeo 9, the platform set to arrive in Cuban waters in January and begin drilling shortly thereafter. Regarding the agreement, Bromwich indicated that Repsol, the Spanish company that will use the rig to drill, “ha[s] an interest in backing up that pledge because they have interests in U.S. waters,” the Houston Chronicle reports. However, he added that the Interior Department does not currently have plans to reach out to other companies planning to drill in Cuba who do not possess U.S. drilling licenses as Repsol does.

Earlier this week, Rep. Ileana Ros-Lehtinen (FL-18), House Foreign Affairs Committee Chairwoman along with Representatives Albio Sires (NJ-13), David Rivera (FL-25) and Mario Diaz-Balart (FL-21) sent a letter to President Obama in which they criticize the U.S. government for providing “assistance, guidance, and technical advice to Repsol,” and suggesting that current interactions could be construed as violations of the Trading With the Enemy Act.

Clif Burns, a sanctions law expert at the Bryan Cave law firm, doesn’t think much of the Members’ arguments, as the following excerpt from his blog suggests:

Chairwoman Ros-Lehtinen’s tenure on the Foreign Relations Committee has, sadly, not caused her to learn much about U.S. export laws, as we’ve noted before, and this letter on Cuban drilling continues to demonstrate her confusion about applicable export and sanctions laws.

Moreover, in his testimony before the House Subcommittee, Jorge Piñon, former president of Amoco Corporate Development Company Latin America, argued that efforts to stop Cuban drilling by threatening Repsol would likely backfire:

Most noticeable throughout this debate has been the singularly focus on Spain’s publicly held oil company Repsol, while ignoring all other exploratory oil drilling activities in Cuba, Mexico and The Bahamas by a number of state-owned national oil companies such as; Malaysia’s PETRONAS, Russia’s Gazprom, India’s ONGC, Angola’s Sonangol, and Mexico’s Pemex among others.

Mexico, Cuba and The Bahamas are in the process of implementing the most up to date drilling regulations and standards; but do they have the resources, capabilities, assets, personnel, and experience to enforce them? Can these countries’ regulatory agencies appropriately police the operators?

Environmental advocates also warned the Subcommittee that current trade sanctions could prevent a timely U.S. response to a potential emergency. At the hearing, Daniel Whittle, a senior attorney at the Environmental Defense Fund, in his testimony advocated for the Treasury Department to issue a general license to allow oil spill response companies to respond in case of a disaster, Hearst News Service reports. Currently, such companies are required to seek individual licenses, a process that could produce harmful delays in the midst of a crisis.

Sarah Stephens of the Center for Democracy in the Americas, and Jake Colvin of the National Foreign Trade Council, recently outlined proposals for an effective government response to a possible crisis in this op-ed column.

German company reaches agreement with PayPal about Cuba products, leaves sanctions questions unanswered

German vendor DTW&S, whose account had been closed by PayPal due to claims regarding U.S. sanctions laws, has come to an agreement with the online payment service company, Prensa Latina reports. PayPal Europe, a subsidiary of the U.S. consortium eBay, had stated that they were subject to U.S. trade sanction laws despite the fact that the company is based in Luxembourg. The case against PayPal was supported by about a dozen other vendors whose accounts had also been closed.

DTW&S agreed to collect payment for Cuban products in other ways, according to the article, and the vendor’s PayPal account has been reopened. However, this agreement does not address questions as to the validity of PayPal Europe’s claim that they are subject to U.S. sanctions laws.

Cuban Interests Section inaugurates Hemingway Bar

The Cuban Interests Section, the diplomatic unit that represents Cuba in Washington, held the opening ceremony for its Hemingway Bar, WTOP reports. The bar, named after the American author who spent most of the last 21 years of his life on the island, has been described as a diplomatic space for special events. At the ceremony, Chief of the Cuban Mission in the U.S., Jorge Bolaños stated, “Very little has been said or written in the U.S. about the close relation this transcendental literary figure had with Cuba,” reports AFP. Bolaños expressed that he hopes the bar will show people how much the two countries have in common.

The Center for Democracy in the Americas has a photo gallery with images from inside Hemingway’s Cuban home, Finca Vigia, which can be viewed here.

U.S. softball teams to fly U.S. flag in Cuba

Senior softball teams traveling to Cuba from Eastern Massachusetts and Tampa have been asked by the Cuban Softball Federation to bring an American flag along on an upcoming trip, MetroWest Daily News. Gary Buxton, a leader of the trip, stated:

We were told to bring an American flag, so it’s a good bet probably that not only will they be playing the American anthem but they’ll be flying the American flag, and that’s never really been done…Nobody does anything in Cuba without the government saying it’s OK.

The teams traveled to Cuba in 2009, marking the first time that an amateur sports team visited the island, and have returned several times since. However, this is the first time they have been asked to bring the U.S. flag with them. Buxton added, “They think we are the beginning of the end of the embargo, and through softball our countries are getting closer and closer.”

CUBA’S FOREIGN RELATIONS

Cuba receives $684 million credit line from Iran

The Tehran Times has cited Abel Salas, Vice President of Cuba’s National Institute of Water Resources, as stating that Iran has given Cuba a $684 million credit line to be used for the reconstruction of the island’s energy system, Bloomberg reports. Salas, who did not provide details about the agreement, made statements at a meeting with Iran’s deputy energy minister in Tehran, according to the newspaper. Xinhua reports that the expansion of credit will also go to support a 2009 agreement through which Iran has been producing equipment for rail systems and synthetic media for Cuba.

Around the Region

Honduras expands police corruption probe

The Honduran Security Ministry has arrested 176 officers from the same unit as the ministry performs a joint military-police crackdown on violent criminal groups, AFP reports. These police officers were arrested due to their alleged ties to organized crime gangs linked with murder, kidnapping, robbery and drug trafficking, the BBC reports.

The most recent arrests follow the detention of eight officers from the same police unit who are suspected of involvement in the murder of two university students on October 22. While four of these officers remain in custody, the other four were released three days after their detention on the condition that they would return this past Sunday. However, none of those officers did return, and this generated a public outcry for justice in the death of the two students.

Venezuela’s already high inflation rate increased in October

Venezuela recorded a 1.8% inflation rate for the month of October, marking an increase from September’s 1.6% rate and bringing year-to-date inflation to 22.7% according to the central bank’s national price index, Reuters reports. Total inflation for 2010 was 27.2%, and officials are predicting a similar rate for this year. The increase was led by education prices, which increased 3.0%, and the cost of food and beverages, which rose 2.5%.

The release of the inflation data followed an  announcement by President Hugo Chávez of a nearly 50% increase in the federal budget, leading up to presidential elections in October 2012. Opposition leaders have criticized this increase in public spending as a tactic to increase support for Chávez’s reelection, the AP reports. Chávez has responded by stating that the increases are necessary to spur economic growth and decrease poverty.

Recommended Reading

Cuban Scholars Share Lessons of a Changing Economy, Anya Landau French, The Havana Note

“Yesterday I had the opportunity to attend a talk co-hosted by the Center for Democracy in the Americas, the American University School of Public Affairs and the American University Center for Latin American and Latino Studies, given by several visiting Cuban professors specializing in political science and economics. I came away with several clear lessons that the vast majority of Americans (and apparently whoever is giving President Obama advice on Cuba these days) do not yet understand about a radically changing Cuba.”

Rubio’s ill-considered action on Cuba travel, St. Petersburg Times

“U.S. Sen. Marco Rubio echoes the outdated thinking of a small and shrinking number of Miami hard-liners opposed to closer relations with Cuba. But he also represents millions of other Floridians in Tampa Bay and elsewhere who would greatly benefit from the Obama administration’s plan to make it easier and cheaper for families, academics and church groups to visit the island. Rubio holds statewide office, and he should act like it. He can start on Cuba by making the transition from politicking to governing.”

Recommended Viewing

CDA interviews Carlos Alzugaray about new housing law, Center for Democracy in the Americas

Cuba’s government announced that a new law allowing the purchase and sale of property — including legalizing the right of Cubans to buy and sell their own homes — will go into effect on November 10. Dr. Carlos Alzugaray Treto, a long-time diplomat and professor at the University of Havana, explains what this new law means for Cubans.

Cuba legalizes sale of private property, Al Jazeera

Cuba’s government has given its citizens the right to buy and sell their homes for the first time since the 1959 revolution. The long-awaited reform, published on Thursday in the government’s Official Gazette, is one of the most substantial reforms introduced by Raul Castro, Cuba’s president, to liberalize the island’s Soviet-style command economy while maintaining the communist system.”

A FINAL WORD

Last week, Alan Gross, the imprisoned U.S. subcontractor, received a rare prison visit by his Rabbi, David Shneyer, from the congregation Am Kolel, located in suburban Maryland. The Rabbi sent this essay to his congregation along with his weekly newsletter:

“I returned from Cuba with a heavy heart and deeper sense of wanting to do something to help bring Alan home. While his physical health is holding up, the anger and frustration he feels as a result of the deceptions and falsehoods that both sides have subjected him to is clear. The confinement is taking a toll on him and his family.

“Alan is located in a building on the grounds of the Carlos Finlay Military Hospital complex in Havana. I took a taxi there from the El Presidente Hotel last Thursday afternoon. Greeted by four men, a guard, a doctor, an official from the Ministry of the Interior, and a translator, they asked if I had a cell phone or camera. I was asked to leave two bags of books, magazines, foods, vitamins and Bev Mushinsky’s 5 lbs. of Alan’s favorite caramel peanut brittle on a table near the door to the waiting room while I met with him. His jailors created a comfortable space with two couches and a table with refreshments. Alan explained that normally the room is used for meetings with doctors.

“We met for about an hour and forty minutes. He told me about his two roommates, both Cubans. One had fasted with him on Yom Kippur. Alan performs a Shabbes ritual every Friday night in front of photographs of family and friends. He inquired about folks back home and gave me a couple a bracelets he made out of plastic bottle caps. He fashions these bracelets as gifts for friends and visitors, so that outside his cell, he is not forgotten.

“Having learned about the recent swap of Gilad Shalit for more than 1000 imprisoned Palestinians, he felt that the US and Cuba could do the same for him and the Cuban Five, five Cubans convicted of spying and serving sentences in the US from 15 years to life. Alan saw a photo of the September vigil coordinated by the Jewish Community Relations Council of Greater Washington in a Mexican newspaper. He hoped that future vigils would focus on the humanitarian aspects of his release.

“Alan was convicted and sentenced to a fifteen year term not so much for giving electronic equipment to some Jewish Cubans but because he was working for a company under a USAID contract, under a program designed to help undermine the Cuban government. While other contractors bring in similar equipment – illegal under Cuban law – only Alan has been arrested. In December, he will have been held for two long years.

“I feel that we must bear witness to Alan’s plight by keeping him in our prayers, by making regular calls to Obama, Clinton and Members of Congress, by attending vigils both at the Cuban Interests Section and also at the State Department as well as the White House. I’m hoping that a committee of Friends of Alan Gross can be convened soon to learn how to support him and his family.

“As my time was running out I asked Alan to join me in singing Min HaMetzer from Psalm 118. ‘From out of the place of confinement I call to God. Answer me with an encompassing relief.’ Holding each other’s hands tightly we sang.”

Mr. Gross received a fifteen-year sentence in March 2011 for “regime change” activities funded by USAID under the Helms-Burton law.

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