The strangest thing happened this week in the House Foreign Affairs Subcommittee on the Western Hemisphere. The hardliners put together a hearing, which they designed as a platform for criticizing Cuba and other governments they oppose in the region, but they ran it under a banner with a most unexpected message: “U.S. Disengagement from Latin America: Compromised Security and Economic Interests.” This seems to us a very fair critique of the Cuba policy they’ve championed for more than fifty years. Was this their idea of post-modern irony, or didn’t they get the joke? For example, could you find a better description of the U.S. embargo they defend so tirelessly, as a policy that leaves our country isolated and disengaged from the big transitions taking place in Cuba’s economy? Tomorrow, Cuba’s National Assembly is likely to enact a law designed to increase foreign investment on the island. What does it contain? According to Reuters:
- The Cuban foreign investment law will include big tax cuts! It eliminates the labor tax and cuts the profit tax in half to 15 percent.
- It contains eight-year incentives for investors to sign agreements and stay in Cuba to do business.
- It exempts investors from the income tax.
- It cuts (dare we say it?) “red tape” from the approval process.
- It doesn’t require Cuban participation in investments, allowing instead foreign investors to own 100% shares.
The intent is to bring more capital into Cuba’s economy, speed growth, encourage more job creation, and enable more Cubans to leave the state’s payroll and find employment in the non-state sector. Cuba is making this decision on foreign investment to meet its own needs, to march to its own drummer, but the byproduct of this decision on foreign investment – as with economic reform overall – is entirely in line with the humanitarian goals of U.S. foreign policy. It gives everyday Cubans more choices and more control over their own lives. If only U.S. businesses were there to see it and participate. But they can’t. The embargo championed by the people who hosted – and who testified at the Subcommittee’s hearing – bans U.S. companies from investing in Cuba. Even more, they want to cut off U.S. travel to Cuba, the most important people-to-people diplomatic effort we’ve got. One witness actually called upon the Congress to prohibit transactions that make non-tourist travel to Cuba possible which would, of course, leave our country even more isolated and disengaged than we are now. This is also a characteristic of their diplomacy. One story we feature this week quotes Andris Piebalgs, the development minister of the European Union, who is calling on the EU to make more rapid progress in its negotiations for a bilateral agreement with Cuba. His view is that the EU’s development and political goals for Cuba are more likely to be met, more quickly, the faster the EU replaces its Common Position – which isolated the EU from Cuba – with a foreign policy that emphasizes engagement. Some of our diplomats would love to follow exactly the same path. But they can’t. Here in the U.S., laws like the Helms-Burton Act leave the U.S. vulnerable to international scorn and rebuke, and act as obstacles to the kind of smart diplomacy the EU is pursuing today. The hardliners are the biggest isolators, the biggest advocates of disengagement we’ve got. They have so confused U.S. interests – so mixed up the means of Cuba policy with the ends our country seeks – they couldn’t even get the name of their hearing right.
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Cuban officials have provided details to journalists about a bill to update Cuba’s Foreign Investment Law, reports Reuters. The law will be debated Saturday, March 29th, by Cuba’s National Assembly.
Under the proposed law, foreign investors can own 100% of a venture operated on the island, though the heaviest incentives to investment will be offered to companies that enter into joint ventures with Cuba’s government. Currently, all but a handful of foreign ventures on the island are restricted to a 49% ownership by the foreign companies, reports El Nuevo Herald. In the proposed law, taxes on profits for joint ventures would be halved, and investors may be exempt from paying taxes for eight years.
Though, historically, only state companies in Cuba have been able to enter in joint ventures with foreign companies, under the new law, farm and non-farm cooperatives will be permitted to enter into such agreements. Cubans living abroad will also be allowed to invest on the island, though those living in the U.S. are still restricted by the U.S. embargo. Individual Cubans on the island will not be able to enter ventures with foreign companies.
Nearly all areas of Cuba’s economy will be open to investment under the proposed law, with the exception of the health and education sectors, as well as the military, although “business systems” of the military will be open to investment. Cuba’s military runs many of Cuba’s tourism companies, as well as companies in other sectors of the island’s economy. A current requirement that investors hire workers through the state will remain.
The purchase of property by companies will be permitted, for private housing, tourism, or offices, reports Progreso Weekly. The bill also includes language that bans the expropriation of foreign property, with the exception of cases already established by Cuba’s government that are in the public interest and which would allow for investors to be compensated.
As the AP notes, there is a lot riding on this new law, as Cuba seeks to woo foreign investors in an effort to bolster its economy with much-needed hard currency. Investors have historically been weary of investing on the island due to a high perception of risk, lengthy and complicated bureaucratic processes for approvals, difficulties in hiring workers through state enterprises, and high taxes, among other challenges. Increased foreign investment would also provide new jobs for Cubans, another goal of Cuba’s economic reforms.
While it is expected that Cuba’s National Assembly will pass the legislation with little amendment, José Manuel Pallí, in his analysis for Cuba Standard, writes:
“The assumption is -as it has always been- that Cuba’s National Assembly is little more than a rubber stamp for the…directives of the Castro brothers. But anyone paying close attention … should have noticed those speakers seemed to go out of their way to emphasize the extent to which the proposed law was examined and debated at different levels of Cuban society, while pointing out that every question asked and every issue raised during that consultation process would be reconsidered during the course of the next three days. Cuba apparently wants to show their version of democracy is wide open to the participation of all its citizens – whether you choose to believe this or see it as just another Castro ploy that is your prerogative.”
A “Cuba Optimist” fund in the U.S., with shares in companies investors expect to benefit from the ending of the embargo has already seen increased training, reports Barron’s. Reuters Factbox provides a helpful breakdown of the differences in the proposed law and Cuba’s current foreign investment law.
The University of Havana has launched a course for small business owners, Granma reported this week. The course, “Entrepreneurship in Cuba: The Creation and Development of Businesses,” began on March 3rd and ends on April 25th, and has 33 students. The class is being organized by the university’s Economics Department, and includes the participation of various other departments and research centers. The number of entrepreneurs in Cuba has reached nearly 500,000, though as in many countries, many who venture to open their own businesses end up closing shop. This program hopes to bring the rates of business failure down by educating current and aspiring entrepreneurs, and preparing them to manage their businesses.
Home and vehicle sales increased 3% and 20%, respectively, over the course of 2013, reports EFE. The Ministry of Justice released the figures based on its notary and civil registry offices, which handle such transactions. Cuba legalized the purchase and sale of homes and automobiles in November 2011. Previously, only housing “swaps” were allowed, and only cars that were in Cuba before the 1959 revolution could be freely purchased and sold, though often Cubans made such transactions on the black market. Both reforms were included in the government’s series of adjustments aimed at updating Cuba’s economic model, released in November 2010.
Granma, the official newspaper of Cuba’s Communist Party, recently redesigned its website. The new website design allows readers to leave comments on on articles. The newspaper’s international website maintains the previous design, which does not include a comments section. Other official news outlets such such as as Juventud Rebelde and Cubadebate have long permitted comments on articles, though some complain that comments are censured.
Recent outbreaks of fires in the forest area bordering the San Felipe plateau have increased environmental concerns in Cuba, reports EFE. One week after a forest fire destroyed more than 8,200 hectares of vegetation, a new forest fire in the same zone placed an additional 1,500 hectares of vegetation and underbrush in danger. Preliminary investigations cite “vehicle negligence” as the cause of the first fire. Last year, there were 342 forest fires, which damaged 3,895 hectares of forest; more than 90% of these fires were caused by negligence.
Illegal logging is also of increasing concern in Cuba as it threatens the ecosystem, reports EFE. In 2013, the Forest Ranger Assembly/Body of Cuba imposed nearly 20,000 fines totaling more than 3 million pesos for illegal logging, and confiscated some 2,200 cubic meters of timber. While officials argue that illegal logging negatively impacts Cuba’s natural resources, carpenters interviewed in the newspaper Juventud Rebelde claim that there is no state entity where they can purchase the wood materials needed to develop their trade, especially without completing lengthy paperwork. Self-employed workers often cite the absence of a state wholesale market to obtain the equipment and materials necessary for practicing their trades as one of the main difficulties of entrepreneurship.
Cuba’s state telecommunications company ETECSA has announced that a special lower fee for cell phone use will go into effect in ten towns in Cuba, in addition to the three areas where a pilot program for lower fees was already in place, reports Juventud Rebelde. Calls from cell phones will cost $0.20 CUC, decreasing to $0.10 CUC between the hours of 11:00 pm and 7:00 am. The lowered fees will be offered in: Manuel Tames in Guantánamo province, CristinoCristino Naranjo in Holguín, Cautillo in Granma, Guayabal and Majibacoa in Las Tunas, Santa Cruz del Sur in Camagüey, Punta Alegre in Ciego de Ávila, Banao in Sancti Spíritus, Corralillo in Villa Clara, and Santa Lucía in Pinar del Río. Lower fees were already being offered in El Cobre in Santiago de Cuba, Abreus in Cienfuegos, and in Minas de Matahambre, the province of Pinar del Río.
The Subcommittee on the Western Hemisphere of the House Foreign Affairs Committee held a hearing on March 25th entitled “U.S. Disengagement from Latin America: Compromised Security and Economic Interests.” The hearing included presentations from Otto Reich, who held various diplomatic and administration positions under the Reagan and both Bush administrations, Ilan Berman of the American Foreign Policy Council, Mauricio Claver-Carone of Cuba Democracy Advocates, and Michael Shifter, President of the Inter-American Dialogue.
In his testimony, Reich condemned the Obama administration for openings in Cuba policy, including the allowance of remittances and additional categories of travel. Claver-Carone warned that Cuba is working “systematically against democratic institutions in Latin America” and warned that the U.S. must “work systematically to protect and promote… democratic institutions.” Berman warned of Russian collaborations with Cuba and Moscow’s influence in Latin America. For his part, Michael Shifter explored reasons for waning U.S. influence in the region. Their testimony is available in full here.
Uruguay’s President José Mujica announced last week that he will accept the U.S. request to transfer detainees currently held at the U.S. base at Guantánamo Bay, Cuba, reports Reuters. Last week, State Department spokesperson Jen Psaki told reporters:
“As with many governments, we remain engaged with the Government of Uruguay to discuss the issue of closing the detention facility at Guantanamo…There’s obviously a process in place for how these decisions are made, including through working with Congress and others.”
President Mujica stated in a radio interview on Monday that Uruguay will accept five detainees – four Syrians and one Palestinian – and said that the prisoners are not dangerous, reports the AP. Mujica added that even if the U.S. requests that the detainees remain in Uruguay for two years, he will consider them refugees, who will be “in no way” prevented from traveling freely. The prisoners were approved for transfer from Guantánamo in 2010.
Congress requires the administration to work with the receiving country to mitigate the risk that a released detainee will harm the U.S. According to sources cited by the Miami Herald, this has included asking receiving countries to restrict the travel of released detainees. In 2012, two former Guantánamo captives were sent to El Salvador, and left 17 months later.
After announcing his willingness to accept the detainees last week, Mujica requested that the U.S. release the remaining members of the Cuban Five in return, reports El Nuevo Herald. Julissa Reynoso, U.S. Ambassador to Uruguay, stated there would not be any such “exchange,” as the acceptance of prisoners is a “humanitarian act” on Uruguay’s part and therefore should take place without conditions, reports El País.
The Caribbean Community (CARICOM) reiterated its calls for the U.S. to end its trade embargo against Cuba, reports the Latin American Herald Tribune. CARICOM Secretary-General, Irwin LaRocque of Dominica, made remarks while accepting the credentials of Cuba’s new envoy to the organization, Julio César González Marchante. He stressed CARICOM’s commitment to unity and the coordination of foreign policy as one of the pillars of its “integration movement.” He stated,
“We have, as a bloc, joined with like-minded states to both advance and protect our interests and support causes and initiatives of priority concern to us. This is why we have consistently supported United Nations resolutions aimed at ending the U.S. embargo on Cuba and will continue to do so.”
Cuba also asked CARICOM’s support in advocating to be taken off of the U.S. State Department’s list of State Sponsors of Terrorism, reports the Jamaica Observer.
CUBA’S FOREIGN RELATIONS
Andris Piebalgs, the European Commissioner for Development at the European Commission – the executive body of the European Union – has requested rapid progress in the EU negotiations for a bilateral agreement with Cuba, so that the EU may provide assistance as soon as possible to Cuba, reports EFE. He stated that many have the wrong perception of Cuba, based on statistics, rather than the reality that Cuba “clearly needs help.” While acknowledging that Cuba faces challenges, Piebalgs says that they have the potential to be addressed quickly thanks to elements such as good basic education. He remarked,
“I would ask the negotiators to begin the negotiations as soon as possible in order to reach agreements that will permit us to unlock development funds that could help create jobs and greater prosperity in Cuba.”
The Commissioner made these comments at the EUROsociAL conference where it was announced that the EU will give 2.5 billion Euros in support to Latin America between 2014 and 2020. EU and Cuban officials are currently preparing to begin official negotiations, which will include a political dialogue and discussion of trade.
Gustavo Rodríguez Rollero, Cuba’s Minister of Agriculture, met with Brazil’s former president Luiz Inacio “Lula” da Silva while in Brazil to participate in the Global Agribusiness Forum, reports CubaDebate. Cuba’s Ambassador to Brazil, Marielena Ruiz Capote, was also present.
Brazilian conglomerate Odebrecht announced new plans for its sugar production in Cuba last week, including plans for ethanol production, reports Cuba Standard. Odebrecht’s subsidiary in Cuba plans to increase production by 110,000 tons over the next seven years at its 5 de Septiembre sugar mill in Cienfuegos. According to the report, the company, which holds an agreement for production administration – not a joint venture – with state-run Azcuba, also plans to generate electricity and produce ethanol at the plant.
This project will take place using technology that Odebrecht has developed at nine sugar mills in Brazil, in which electricity and ethanol are also produced. The combined electricity production of those nine mills in Brazil currently generates around 30% of the energy that Cuba consumes now.
Odebrecht and Brazil’s government have played large and increasing roles in Cuba’s economy, funding Cuba’s Mariel Port project and participating in the country’s sugar production, while Cuba has sent 7,400 doctors to Brazil. Just this week, a delegation of representatives of 32 Brazilian companies from the food, construction, medical, and machinery production industries traveled to Cuba to look at the possibility of trade through Cuba’s new Mariel Port, reports EFE.
Cubans with money revel in booming social circuit, Peter Orsi, Associated Press
Peter Orsi features the social scene around privately operated bars and nightclubs that are becoming increasingly popular in Cuba, attracting Cubans with more disposable income. Since these venues cost more than typical establishments, customers primarily include artists, those who receive remittances from abroad, and some of Cuba’s successful entrepreneurs.
In Cuba, U.S. embargo elicits a shrug, Ben Piven, Al Jazeera America
Piven profiles different perspectives and stories about the U.S. embargo on Cuba, through policy experts and Cubans. Julio Álvarez, co-owner of Nostalgicar who came to Washington, D.C. in 2013 to speak at a CDA conference on economic changes in Cuba, stated, “The embargo is bad mainly for the Cuban people as we are not a government-affiliated venture.”
U.S.-Cuba people-to-people exchanges effective, Collin Laverty, the Miami Herald
Collin Laverty, president of Cuba Educational Travel and CDA advisory board member, writes to the Miami Herald about the effectiveness of people-to-people travel to Cuba. He writes: “these people-to-people exchanges are life-changing for both the Cubans and Americans involved. What we need to do is find ways to allow more people on both sides to participate.”
Economics and politics of foreign investment, Phil Peters, The Cuban Triangle
Phil Peters discusses how Cuba’s new foreign investment law will benefit the country’s economy, and asks key questions about what changes will be made and how they will be implemented. Peters writes: “I’ll read the fine print of the new foreign investment law, but I think that what matters most – for Cuba’s own benefit – is whether Cuba develops a new foreign investment attitude. Plenty of investments have occurred under the law currently on the books; what prevented more was reticence on Cuba’s part.”
More Cuba Hypocrisy in the U.S. Senate, Arturo López Levy, Foreign Policy in Focus
López Levy gives his observations on the recent confirmation process for President Obama’s nominee to Ambassador to Argentina. He writes, “Both senators expressed astonishment that Mamet, if confirmed, would play a central role in shaping U.S. policy toward a country he had never before visited. But what if we hold the senators to their own standards? Menendez and Rubio have dedicated much of their political lives to one foreign policy issue: Cuba…. Yet neither Menendez nor Rubio has ever set foot on the island.”
Hijacked Cuban planes still caught in limbo, Christine Armario, Associated Press
Christine Armario follows the story of three Cuban planes that ended up in the United States between 2002 and 2003. The planes represent a piece of history, and the twists and turns that have kept them from being returned to Cuba are reflective of the complicated relationship that the United States and Cuba have.
Horses dance, bulls buck at Cuba rodeo, Peter Orsi and Ramon Espinosa, AP Photos
Take a look at this photo series from Cuba’s eight-day international rodeo festival. Teresa González, the rodeo’s national statistics keeper says “You know that Cuba’s national sport is baseball. In second place, then, are the rodeo stadiums…Whenever there’s a rodeo, across the whole country, the stadiums fill up.”
Cuba on My Mind: Book Spotlights Ramiro A. Fernández Collection, Women’s Wear Daily This slideshow provides a preview of Ramiro A. Fernández‘s collection of vintage photographs as shown in his new book, “Cuba Then: Rare and Classic Images From the Ramiro A. Fernández Collection.”
Photos: Cuban cigar sales rising, despite US embargo, Ben Piven, Al Jazeera
America This photo gallery, which accompanied the “In Cuba, U.S. embargo elicits a shrug” article by Ben Piven, takes a look at the half-billion dollar cigar industry in Havana, Cuba.
CDA is hiring!
CDA is offering a paid, full-time, ten-month position in Washington, D.C. for a uniquely qualified applicant with a special interest in Cuba, a thirst for activism, and an interest in pursuing a professional career in the foreign policy NGO community. The Stephen M. Rivers Intern will work side-by-side with CDA staff on projects that advance our goal of forging a new policy toward Cuba and the region. The intern will be paid a monthly stipend. Please see this posting for more information.
We are recruiting undergraduate and graduate students, as well as recent graduates, for a full-time summer internship. The intern will work directly with the CDA staff to assist with conference and delegation preparation, web site updates, drafting and editing publications, research support, and other tasks. Please see this posting for more information.