A Banner Year for Change

Last Friday, the Confederate Flag was lowered on the State House grounds in Columbia, South Carolina.

Next Monday, the Cuban Flag will be hung in the State Department lobby and wave over the building in Washington that will once again serve as Cuba’s embassy.

Later this summer, the flag of the United States of America will be hoisted in Havana at the newly-reconstituted U.S. embassy by Secretary of State John Kerry.

In these weeks, flags – so often invoked as symbols of resilience or an unchanging national character – represent the capacity of nations and their people to grow and change.

It took a while. For sixteen years after President Eisenhower closed our embassy in Havana and severed diplomatic relations with Cuba, an aggressive U.S. policy to reverse the Cuban revolution was frozen in the amber of its own ineffectiveness.

President Jimmy Carter, who wrote in a National Security Directive issued in 1977, “I have concluded that we should attempt to achieve normalization of our relations with Cuba,” tried to see past the Cold War into a future where diplomacy would heal the breach between our countries opened by the Cold War.

Under his direction, an agreement between the U.S. and Cuba resulted in the opening of Interests Sections in their respective capitals, which Carter hoped would soon evolve into embassies, if the bilateral relationship could be righted under his leadership.

But neither the Cuban reality nor U.S. domestic politics would align with Carter’s hopeful vision, and so his dream of restoring full and formal diplomatic relations waited another thirty-seven years to be realized.

Those of us who came to work on the Cuba issue more recently should acknowledge the debt we owe public servants like President Carter and Ambassador Wayne Smith, and to the experts and activists who worked over the decades, and the people we once called “moderate” Cuban Americans – they are the mainstream now, but sacrificed much to get there – so we could all see this new day arrive.

Their spirits never flagged.

Thanks to them, we now see history as if it were on fast-forward; Presidents Obama and Castro restoring diplomatic relations, freeing prisoners, sitting together at the Summit of the Americas, and opening reciprocal opportunities for travel and trade. The people of Cuba and the United States are seeing the same changes we are, and like what they see.

We expect to see tough negotiations ahead over real differences on human rights and on U.S. programs that continue to press for regime change in Cuba. But we never expected to see the Cuban National Assembly live tweeting reactions to a Castro speech about forging a new kind of relationship with the United States.

History isn’t just on fast-forward; in 2015, it is moving at warp speed.

 

 

U.S.-CUBA RELATIONS

Congressional sources say U.S. to upgrade Cuba’s status on human trafficking list

According to Congressional sources, the U.S. State Department plans to upgrade Cuba’s status on its annual Human Trafficking report. Reuters says Cuba will be moved from Tier 3, considered the worst offenders, to the Tier 2 Watch List. The State Department has declined to comment on the forthcoming report until it is finalized and released.

The State Department is required by the Victims of Trafficking and Violence Protection Act of 2000 to compile a human trafficking report annually, “with respect to the status of severe forms of trafficking in persons.”

Nations covered by the report are rated and placed into four categories: Tier 1 countries, whose governments fully comply with the Trafficking Victims Protection Act’s (TVPA) minimum standards; Tier 2 countries, whose governments do not fully comply with the TVPA’s minimum standards, but are making significant efforts to bring themselves into compliance with those standards; Tier 2 Watch List countries, whose governments do not fully comply with the minimum standards, but are making significant efforts to bring themselves into compliance with those standards, and may still have problems like lack of evidence of their efforts to combat trafficking; and Tier 3 countries, whose governments do not fully comply with the minimum standards and are not making significant efforts to do so.

Cuba was not listed in years 2001 and 2002, but began appearing as a Tier 3 nation in 2003. Tier 3 countries can be subject to U.S. economic sanctions, though Cuba remains subject to a comprehensive trade embargo codified by the 1996 Helms-Burton Act. As with its now-lapsed designation as a state sponsor of terror (1982-2015), Cuba has fiercely rejected claims of the U.S. government that the nation engages in trafficking and voiced resentment that it was stigmatized accordingly.

Josefina Vidal, the Cuban Foreign Ministry’s Director General for the United States, and Cuba’s lead negotiator in the diplomatic talks, condemned Cuba’s continuing inclusion on the list last year:

“The Cuban government rejects categorically as unfounded this unilateral move offending our people. . . Cuba has not requested the U.S. assessment, nor needed recommendations from the United States, a country with the gravest problem on trafficking children and women in the world.”

Last year’s report cited continuing concerns over sex trafficking, including of minors between the age of 16 (the age of consent in Cuba) and 18. The 2014 report also noted:

“There have been allegations of coerced labor with Cuban government work missions abroad; the Cuban government denies these allegations. . . Reports of coercion by Cuban authorities in this program do not appear to reflect a uniform government policy of coercion; however, information is lacking.”

Should Cuba’s status be upgraded, it could join Bolivia, China, and Jamaica, as well as U.S. allies Panama and Qatar, who were designated Tier 2 Watch List nations in 2014.

At the second round of high level bilateral talks last February in Washington, negotiators agreed to include human trafficking on their agenda for future talks.

 

Cubans rush to U.S. shores before easy entry ends

USA Today examines the uptick in Cuban emigration to the U.S. amid fears that the policy favoring fast-track citizenship for Cubans is in jeopardy, as we have previously reported.

The 1966 CAA grants fast-track citizenship to Cuban immigrants who make it to the U.S. without being intercepted by U.S. authorities under the so-called “wet foot, dry foot” policy. Authorities in the U.S. have publicly stated that the CAA has not been changed under the new policy direction, but this has not stopped many Cubans from attempting the journey.

Cubans, such as horseshoe maker Duniseky Alvarez, are increasingly choosing to make the dangerous journey across the Florida Straits on makeshift boats, motivated by rumors that the Cuban Adjustment Act (CAA) would be changed as relations normalize with the U.S.

According to projections by USA Today, 2,485 Cubans will be intercepted by the U.S. Coast Guard in the Florida Strait before reaching land in 2015. This compares to a recent high of 2,059 in 2014 and 422 in 2010.

Embargo supporters such as Senator Marco Rubio (FL) have said that the CAA should be reexamined to focus on political refugees, and not apply to Cubans seeking greater economic opportunities. This view is shared by Jaime Suchlicki, director of the Institute for Cuban and Cuban-American Studies at the University of Miami, who argues that the law should “be strictly for people that are involved in political activities against the Cuban government, the dissidents.”

Ric Herrero, executive director of CubaNow, contends that it is “immoral to tell the Cuban people that we are going to close the door on them coming to the United States, while at the same time keeping a policy that tries to strangle their economy.”

The CAA is an anomaly in U.S. policy. Miami immigration attorney Ira Kurzban points out that there is no precedent for such a specific preferential treatment policy, and believes that the persistence of the CAA is rooted in the political clout of Cubans who fled Fidel Castro’s Revolution and settled in Miami.

This is some cause for mixed emotions among Cubans as well. Duniseky Alvarez, a recent Cuban immigrant stated, “If we’re going to have normal relations, they should get rid of [the CAA]. But there are so many people back there who want to do exactly what I did. I just don’t know.”

 

New Cuba PAC posts strong fundraising haul

New Cuba PAC, a new Political Action Committee launched in May to support normalization of relations between the U.S. and Cuba, has raised $178,000 in its first three months, reports the Wall Street Journal.

This compares with the $200,000 reportedly raised by the pro-sanctions U.S.-Cuba Democracy PAC over the two first quarters of 2015 combined. Although the U.S.-Cuba Democracy PAC has dominated political fundraising around Cuba policy since 2004, the figures suggest that New Cuba PAC could match or even outraise its more established rival in its very first year.

“This is something that’s been missing for a long time,” noted New Cuba PAC director James Williams. “When we approached it, the hard liner, pro-embargo side was incredibly skeptical and with this filing it shows they were wrong. People who care about this issue put their money where their mouth is.”

Mauricio Claver-Carone, who serves on the U.S.-Cuba Democracy PAC’s Board of Directors, says he’s not worried about being out-raised by the new pro-normalization PAC. “At the end of the day what’s important when it comes to political fundraising is consistency and reliability. Over the past 10 years we’ve raised nearly $5 million.”

According to data available on the Federal Election Committee website, Claver-Carone’s pro-embargo PAC figures peaked in the 2006 and 2008 election cycles at more than $800,000 raised in each two-year period, but those figures have trended downward over the last three election cycles, when it raised $636,000, $509,000 and $555,000.

New Cuba PAC’s strong start could be a sign that recent policy changes initiated by President Obama have energized pro-normalization donors. Williams reported that half of New Cuba PAC’s approximately 100 donors are Cuban American and include Manny Díaz, former Mayor of Miami.

 

Beltway firm seeks to drive U.S. settlement claims against Cuba to fore

The Center for Responsive Politics reports that Alexandria, Virginia lobbying firm Poblete & Tamargo has been hired to represent ten American families seeking to enforce property claims on assets seized by the Cuban government after the 1959 revolution.

These families represent a fraction of the more than 6,000 property claims recognized by the United States government with a cumulative value of between $7 and $8 billion (including interest and inflation). Many of the claims were made decades ago, but the recent detente in U.S.-Cuban relations has spurred renewed interest in pursuing compensation for seized assets; eight of Poblete & Tamargo’s ten clients signed on with the firm since the December 17th announcement that the U.S. and Cuba would begin normalizing relations.

According to Roll Call, the firm’s name partners Jason Poblete, who has caricatured President Obama’s diplomatic opening as a ‘surrender to totalitarianism’, and Mauricio Tamargo, a former aide to Rep. Ileana Ros-Lehtinen, registered two years ago as lobbyists for Hon. John L. Loeb, Jr., a former U.S. Ambassador to Denmark under President Ronald Reagan. Loeb’s father invested and later sold his company’s holdings in Cuba’s sugar industry prior to the fall of Batista.

The claims of Poblete & Tamargo’s clients – and others similarly affected – could present a roadblock to restoring a normal relationship between Cuba and the U.S. Under the Helms-Burton Act passed in 1996, the United States is obliged to resolve claims of seized property before proceeding to restore full diplomatic relations with Cuba. However, some observers believe that Cuba’s government will seek to reach a deal with the United States to shrink their obligations.

A number of Spanish individuals are also seeking compensation from the Cuban government for assets seized during the revolution. Jordi Cabarrocas, of Spanish investment firm 1898, represents clients claiming almost $2 billion in lost assets. Their case for compensation is considerably more complicated than Poblete’s clients’ case, due to a 1986 agreement in which the Spanish and Cuban governments agreed to forgive Cuba’s debt in return for $40 million in compensation paid over a 15-year period, much of which was paid in tobacco rather than pesos or dollars.

 

IN CUBA

Cuba’s economy grows by 4.7% in first half of 2015

Economy Minister Marino Murillo reported to the National Assembly Wednesday that Cuba’s economy grew 4.7% in the first half of 2015, surpassing Murillo’s previous estimate of 4% growth contained in a presentation to the Council of Ministers in November of last year.

Contributing factors cited by Reuters include growth in agriculture, particularly sugar, manufacturing, and construction. Although tourist arrivals in Cuba increased more than 15%, Reuters says that currency fluctuations caused earnings to lag behind.

Going forward, the process of U.S.-Cuba normalization is likely to drive export earnings through the increase of U.S. travelers to the island. Bloomberg reports a 15% increase in the number of tourists in the first five months of 2015 as compared to the same period in 2014. Several steps are being taken to allow Americans easier access to Cuba; last week, we reported that the U.S. government had given approval to Carnival Cruise Lines to enter the market, and today Spanish company Balearia announced it had been granted a U.S. license to run a Cuba-Florida ferry.

The expansion of U.S.-based cruise lines and airlines traveling to Cuba will likely accelerate the number of visitors to the island and further fuel Cuba’s economic growth.

 

Mariel port and economic zone gain momentum as foreign firms set up shop

Although the Mariel port and surrounding Special Economic Development Zone opened in January 2014, it is only just beginning to gain traction and attract foreign investors, according to the Associated Press. Eighteen months after the port opened, seven firms have received approval to operate in the Mariel Zone, two of which are domestic Cuban firms.

Ana Teresa Igarza, Director of the Special Economic Development Zone at Mariel, says that the pace of investment has finally picked up since a slow start, and that they are currently approving “almost one company a month” to operate in the Zone.

Currently, the only foreign firms represented are from Mexico, Belgium, and Spain; however, as we reported in June, the Alabama-based tractor company Cleber LLC is the first U.S. firm invited by the Cuban government to apply to operate in Mariel.

 

CUBA’S FOREIGN RELATIONS

Former IMF chief to advise Cuba on economic relations

Dominique Strass-Kahn, a former French finance minister who served as head of the International Monetary Fund (IMF) until a sex scandal forced him to resign his post, is planning to advise Cuba’s government on its economic relationship with the United States, reports Politico.eu.

Following his June acquittal in a trial where he faced “aggravated pimping” charges, friends of the former IMF chief say he is positioning himself for a comeback, if not in French politics then at least on the international economic stage.

It is unclear what advice Strauss-Kahn might offer Cuba on engaging with the U.S., but he could be an instrumental advisor in a discussion about Cuba joining international finance institutions such as the IMF. Cuba exited the IMF in 1964. According to IMF historian William Broughton, Havana secretly reached out to the IMF in 1993, following the collapse of the Soviet Bloc, and with it, their primary source of financing. After several meetings, some of which included Fidel Castro and other high level officials, Cuba formally requested technical assistance from the Fund. The request was declined due to active opposition from the United States, as required under the embargo.

In a January 2015 article exploring the possibility of Cuba rejoining the IMF, Broughton explains that while the 1996 Helms-Burton Act requires the U.S. Treasury Secretary to vote against Cuba’s re-admittance (unless s/he can certify that there is a democratic government in Havana), the U.S. does not have veto power over a simple majority vote of the IMF executive board. In the past, pressure from the U.S., which has a 17% voting share, would have influenced the outcome of a vote to readmit Cuba. Today, especially if the Obama Administration made clear that it would not actively oppose it, even while voting no as required by law, Cuba could very well gain re-admittance.

In his 2011 report for the Brookings Institution’s Latin America Initiative, Richard Feinberg, a former economic advisor in the Clinton Administration and professor at the University of California at San Diego, also explored Cuba’s possible re-entry into the International Financial Institutions. Feinberg spoke to a senior Cuban diplomat, who noted that, “Cuba has no principled position against relations with the IMF or the World Bank.” In Feinberg’s estimation, that choice of words was not an evasion; it was the Cuban equivalent of “an endorsement.” If Cuba is interested in being readmitted to the IMF, it must submit an application. But even if it is not ready for full membership, Feinberg pointed out, it could always explore other types of ties, including technical assistance.

 

Cuba plans renewable energy projects with foreign investment

Cuba has set sights on foreign investment to finance a series of seven new wind farms, reports The Australian. The new wind capacity is to play an important part of Cuba’s plans to generate 24% of the island’s electricity using renewable sources by 2030. Currently, renewable energy represents just over 4% of the island’s electricity production. Thirteen new wind facilities are planned to supplement four existing plants.

Reporting to the National Assembly this week, Energy and Mines Minister Alfredo Lopez said that increasing power generation from sources such as wind, photovoltaic solar, and hydroelectric plants could save $780 million annually. Cuban officials aim to attract $600 million in foreign investment.

Officials did not identify specific foreign investors in the new wind and solar projects; however, during his visit to Cuba last week, Italian Deputy Foreign Minister Mario Giro said that Italian firms are looking at several projects, including wind farms. Spain has also shown interest in renewable energy on the island.

While Cuba seeks to expand its renewable capacity, it is also still poised to explore offshore oil. Reuters reported this week that Cuban officials said that Angolan oil firm Sonagol would be ready to produce oil off Cuba’s coast by 2017, if U.S. embargo restrictions were lifted.

 

President Raúl Castro condemns sanctions on Russia, criticizes NATO expansion into Eastern Europe

President Raúl Castro spoke out this week against the sanctions regime levied by the United States and the European Union on Russia, reports the International Business Times. Castro argued that the sanctions will “damage Europe, increase instability and bring new threats.” He extended his criticism to the recent expansion of NATO’s military presence in Eastern Europe.

The U.S. and EU sanctions on Russia were initially imposed following Russia’s annexation of Crimea in March 2014, and include asset freezes and travel bans for high-ranking Kremlin officials. Economic sanctions have also been imposed, which the EU voted to extend through at least January 2016.

Nevertheless, Cuba’s relationship with European countries continues to evolve following the diplomatic breakthrough reached between Presidents Castro and Obama last year, as well as the on-going normalization talks between Cuba and the EU. Frank-Walter Steinmeier will be the first German Foreign Minister to visit Cuba since German reunification in 1990, as reported by Politico.

 

Recommended Reading

Ex-Commerce Secretary Gutierrez: Cuba must recognize business needs to make a profit, Mimi Whitefield, Miami Herald

Former Commerce Secretary Carlos Gutierrez spoke to a conference organized by the Atlantic Council this week to address the Council’s recently published report on the reintegration of Cuba into the world economy. Gutierrez focuses primarily on the importance of Cuba joining international financial institutions such as the IMF.

US / Cuba Relations: the Trouble with Normal, Jose Pertierra, CounterPunch

Immigration attorney Jose Pertierra writes about the contradictions inherent in current U.S. policy towards Cuba.

Opening for Business, Jon Lee Anderson, The New Yorker

This New Yorker piece follows former Cuban refugee Hugo Cancio as he expands his business interests in Cuba and leverages his contacts in the Cuban government to aid Cuban and American entrepreneurs in setting up shop on the island.

Crown Jewel of Cuba’s Coral Reefs, Erica Goode, The New York Times

This article and photo essay explores how Cuba’s pristine coral reef, Jardines de la Reina, has thrived while many other reefs and ocean habitats are being destroyed.

Tania Bruguera, an Artist in Havana, Has a Great New York Week, RandyKennedy, The New York Times

 The New York Times speaks with Cuban-born, New York City-based artist Tania Bruguera, who has been stranded in Havana since December due to a controversial piece of performance art. This week, the Mayor’s Office on Immigrant Affairs named Tania their first artist-in-residence, and New York’s MoMA purchased Bruguera’s performance and video piece “Untitled (Havana 2000)”.

Cuba WeekQuartz

Quartz is publishing a four-part series on the opening of U.S.-Cuba relations this week, touching on topics such as art and real estate.

Beyond “Bailando”: Getting to know Cuba’s Gente de Zona, Judy Cantor-Navas, Billboard

Billboard interviews Gente de Zona founder Alexander Delgado, who, after highly successful collaborations with Enrique Iglesias, Marc Antony, and Pitbull, plans a Gente de Zona solo album. On making it in the U.S. market, Delgado notes, “We’ve shown that it is possible to walk the red carpet, to perform on the most important awards shows, and that it doesn’t have to be seen as some kind of political statement.”

 

Recommended Viewing

Interviews from Havana – Engage Cuba, Cristina Escobar, TeleSUR

Cristina Escobar interviews James Williams, President of Engage Cuba, to talk about progress in U.S.-Cuba relations since December 17th and the work of Engage Cuba in pushing Congress to end travel and trade restrictions.

An Inside Look at Cuba’s Music Scene and the Artists Moving the Nation to a New Era, Ned Sublette, Billboard

Billboard steps inside the world of Cuban music, visiting prominent venues and speaking with street musicians to discover what makes Havana one of the great music capitals.

Youth Culture in the New Cuba, Sebastian Liste, The New Yorker

Photo essay exploring Havana’s youth culture, street life and arts

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