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Before this week’s news, an interview with Cuban economist Ricardo Torres
Last Thursday, Cuba’s President Miguel Díaz-Canel and the Council of Ministers announced a series of economic reforms to confront the severe economic crisis the island is currently facing. The measures aim to prioritize domestic food production, reduce imports, legally recognize micro, small, and medium-sized companies, legalize non-agricultural cooperatives, and expand self-employment. In general, there is a move to grant greater autonomy to private and state enterprises and foster a partnership between both sectors. The Council of Ministers stated that they will provide more details in the future.
In the coming weeks, CDA will be interviewing Cuban experts to hear their initial reactions. This week, we interviewed Ricardo Torres Pérez, Professor of Economics and Deputy Director of the Center for the Study of the Cuban Economy (CEEC) at the University of Havana. Below are excerpts from our interview with Ricardo. The full interview is available under the “In Cuba” section.
CDA: What are the main takeaways from Cuba’s announcement on Thursday? Why was the announcement made now? What is unique about the current moment?
Ricardo: There are two main processes that will gain traction in the near future. On one hand, a further advancing of dollarization, which is expected given the dire state of Cuba’s external finances. On the other hand, the expansion of the private and cooperative sectors. It has to be seen whether this time dollarization is used as a mere revenue source or as a vehicle for structural transformation of the economy. The expansion of the private and cooperatives sectors is in line with meaningful economic restructuring.
The pandemic exacerbated economic problems to a point something radical had to be done. These difficulties made possible otherwise politically unfeasible reforms, like many other times in the past. And the government can well say it’s only fulfilling the mandate from the VII Party Congress.
It’s good to hear that they want to do as much as possible simultaneously. The situation is very serious, the world economy is also in trouble, society is not as homogenous as it was back in the nineties, and the government does not take its legitimacy for granted. The only way out: looking inwards and dealing with its domestic mess.
To continue reading the full interview with Ricardo Torres, go to the “In Cuba” section of our news brief.
Cuba reports 55 active COVID-19 cases at the time of publication. There have been no COVID-19 related deaths in almost two weeks.
CDA is seeking two fall interns! Interns work in three key areas: Policy and Advocacy; Communications and Social Media; and Nonprofit Development. The deadline to apply is August 5. Visit our website to learn more about the internship and to read reflections from past interns.
This week, in Cuba news…
On Tuesday, the San Francisco Board of Supervisors unanimously passed a resolution urging the U.S. and Cuba to cooperate to combat COVID-19, 48Hills reports. Cuba manufactures drugs that have reportedly succeeded in treating COVID-19, including Interferon Alpha 2B, but the Trump administration has banned the purchase and testing for it and other Cuban drugs. According to Reuters, the drug, which has been used by other countries including China and Italy, has partially contributed to Cuba’s 4.1 percent COVID-19 death rate, which is below Latin America’s average of 5.9 percent.
One of the sponsors of the resolution, Supervisor Hillary Ronen stated that Cuba’s advanced pharmaceutical industry has developed drugs which should be available in the U.S. She stated, “Cuba is among the top countries that found effective treatments for Ebola and Swine Flu… Limiting cooperation with [Cuba] makes no sense.” San Francisco joins the Berkeley and Richmond city councils who have passed similar resolutions, all of which are part of a broader national campaign. According to 48Hills, proposals will soon be submitted to the city councils of Oakland, Santa Cruz, and East Palo Alto, as well the state legislatures of Massachusetts and Minnesota. The activists behind the campaign hope to achieve cooperation between doctors in Cuba and the U.S. and an eventual return to Obama-era Cuba policies. Long-term, they hope for the U.S. to fully restore diplomatic relations with Cuba, allow U.S. travel to the island, and end the U.S. embargo. Supervisor Ronen stated that these grassroots efforts are a demonstration of public pressure for the next president, whether it is Biden or Trump.
On Wednesday, Senators Marco Rubio (FL), Ted Cruz (TX), and Robert Menéndez (NJ) introduced a bill to honor the late Cuban dissident Oswaldo Payá by changing the name of the street outside of the Cuban Embassy in Washington to “Oswaldo Payá Way,” the Florida Daily reports. Mr. Payá founded the Christian Liberation Movement in 1988. The group used non-violent resistance to promote democracy and civil liberties in Cuba. Mr. Payá died in a car accident in 2012; some suspect Cuba’s government was at fault. When introducing the bill on the floor, Sen. Rubio stated “By renaming the street in front of the Cuban embassy in our nation’s capital as ‘Oswaldo Payá Way,’ Americans will honor this martyr’s life, and also remind those who seek freedom and oppose democratic values in Washington, D.C. of Payá’s everlasting legacy.”
Continued: CDA’s interview with Cuban economist Ricardo Torres
CDA: Cuban economist Pavel Vidal predicts that Cuba’s GDP will shrink 10 percent in 2020 and continue shrinking in 2021. What do you believe will be the tangible impact of these measures on the economy? What do you think is missing?
Ricardo: Dollarization may allow the government to collect much needed foreign currency to ease balance of payments tensions. However, other sources of revenues will remain depressed for the time being. The expansion of the private and cooperatives sectors is a welcome move, but its impact will be felt mostly in the medium and long terms. Lack of domestic demand and scarcity of inputs will inhibit robust growth in those sectors.
We need to wait for details and implementation. I think radical restructuring of state companies is critical. Most are very inefficient and a drag on the economy. That would be another way for the government to save hard currency and divert it to more promising projects. We do not know yet the details of the much anticipated “National Development Plan 2030” but given the new global scenario, Cuba needs to rethink its economic strategy. For instance, the coming years will be tough for international tourism.
CDA: What are the most relevant changes for the development of the private sector? What types of licenses, professional services, and non-agricultural cooperatives do you think should be prioritized?
Ricardo: It’s encouraging to see how we moved from stopping the issuance of new licenses in critical activities for over a year to the current situation. So far, the possibility of engaging in foreign trade and the access to a domestic wholesale market are steps in the right direction, albeit only in foreign currency. I anticipate more flexibility and more categories to set up businesses. I think it’s time to allow talented Cubans to enter more sophisticated activities; that’s been one of the handicaps of the private sector since the early nineties. IT, consultancies, design, architecture and other creative industries are promising areas. Cuba is much more than just beaches, restaurants and salsa.
The challenge will be to create enough higher quality jobs not only to curb emigration but also to help the restructuring of the public sector and curtail the expansion of the informal economy. Today, almost 35 percent of the working age population lack a formal job.
A critical factor is to convince the population and relevant foreign actors that this time the change is permanent. It seems that every 3 or 4 years the Cuban government has second thoughts about reforms. We know investment levels are suboptimal when uncertainty is dominant. It does tremendous damage to the economy.
CDA: Cuba announced the elimination of the 10 percent tax on U.S. dollars. Do you see this as a move toward currency unification? Why or why not? Many Cubans do not have access to tradable currencies or remittances. How will the new stores which only accept hard currencies impact inequalities for Cubans across the island?
Ricardo: Partial dollarization and currency and exchange rate reforms are connected but different processes. Authorities stated that a monetary reform is going to happen in the near future. Cuba’s trouble is that it has two national currencies and neither is convertible.
The dropping of the 10 percent tax is helpful because it eliminates an unnecessary distortion in the determination of the market price of the US dollar. It actually created a huge informal market and deprived the government of valuable revenues for more than 15 years.
A big problem with the advance of dollarization right now is that there is no mechanism to buy foreign currency in a formal market. Neither the CADECAs (state-owned currency exchange offices) nor the banks are selling hard currency. People’s access to foreign currencies depends on remittances or the informal market. Tourism is down now. We may well see workers demanding their companies to pay bonuses in hard currency, at least in the export and travel industries.
Inevitably, like in the nineties, this move will exacerbate inequalities. And that’s something very sensitive and clearly the government does not feel comfortable with the situation. Economic differences will rise in an already unequal society.
CDA: How will current U.S.-Cuba policy impact these proposed reforms?
Ricardo: Economic restructuring needs resources. Some industries die and others rise. The current U.S. policy aims at curtailing Cuba’s access to foreign cash, making the process more painful than it otherwise would be. Without foreign clients the private sector will have a hard time setting and growing new business. The same applies to foreign trade. If permanent, the reforms are a smart move. The state is retaking the initiative and giving a blow to those who say that under attack, the only option is to go conservative.
Today, confrontation between the West and China is becoming the norm, isolation and punishment will only push Cuba to whichever country offers a lifeline, Russia, China and so on. It will be very disappointing to see a repetition of the Cold War, with Cuba and the U.S. in opposite camps.
On Monday, Cuba opened stores that only accept purchases in tradable currencies and removed the 10 percent tax on the U.S dollar, AP News reports. Cubans who want to make purchases at these stores must open a bank account using U.S. dollars, euros, or other tradable currencies and can only make purchases using their bank card. Cubans obtain U.S. dollars and other tradable currencies through remittances from relatives abroad or by trading Cuban currencies informally. The state-owned dollar stores offer food and hygiene products which are missing from the national currency stores, AP News reports. The government aims to open 72 of these stores over the coming months and announced that it will continue to stock stores in Cuba’s two currencies, the convertible peso (CUC) and Cuban pesos (CUP), as well as the monthly quota of basic goods.
Cubans have had mixed reactions to these stores. According to Reuters, some consider them a good option amid the shortages, while others complained that the stores lack basic products like detergent, oil, and ham. Many Cubans have taken to social media to mock the high prices of some goods. Others are resentful after seeing the government suddenly fill the dollar stores with food while stores selling goods in CUC and CUP have lacked items the past few months. The Miami Herald reports that access to goods in these stores may be difficult for those Cubans who do not receive remittances from families living abroad.
Cuban economist Pavel Vidal, a former Cuban central bank economist and current professor at Colombia’s Universidad Javeriana Cali, said “To ensure that at least some sectors and markets work, they have to dollarize them.” Professor of economics Arturo López-Levy believes that “the Díaz-Canel administration is using the political credit of its successful management of the pandemic to implement economic reforms postponed for more than a decade.” On the other hand, Emilio Morales, President of The Havana Consulting Group, sees it as a “desperate” measure to save the island’s economy and worries that the government will not implement truly transformative reforms to the economic model. In a press statement, the Cuba Study Group stated “Cubans at home and abroad will be watching closely, and their expectations will be high. So will Washington.” The last time Cuba sold basic goods for hard currency was the 1990s during the Special Period, after the collapse of the Societ Union, Reuters reports. The U.S. dollar was later withdrawn from circulation in 2004. The newly opened stores continue the dollarization process, which started last year in stores that sell only household appliances.
This year, the pandemic has exacerbated the already dire situation of the Cuban economy by also halting tourism, a major source of revenue for the island. The economic crisis has resulted in widespread scarcity of basic goods and long lines outside stores to purchase the few goods which are available.
One hundred thirty days after the first COVID-19 cases were identified in Cuba, Cubans celebrate having no new domestic cases, Reuters reports. On Sunday, Dr. Francisco Durán, National Director of Epidemiology at the Ministry of Public Health, took his mask off for the first time during his daily national broadcast with COVID-19 updates, to share this major accomplishment. Most of the island has been free of COVID-19 for nearly a month, with the few new cases being limited to Havana and Matanzas provinces. Havana and Mayabeque provinces remain in phase one and two, respectively, of the three-part reopening plan while the rest of the island has entered phase three.
On Monday, the Cuban food delivery service Mandao announced the launch of its mobile application, the first one of its kind in Cuba. Through the application, which is available in the Apple store and Google Play, users may order dishes from 40 private local restaurants in Havana and have them delivered. According to Mandao’s co-founder Marta Deus, the service is not only convenient for customers, it also “gives restaurants a new way of interacting with clients,” especially under circumstances imposed by the COVID-19 pandemic. Since the beginning of the COVID-19 pandemic in Cuba in early March, Mandao has experienced an increase in demand. Mandao hopes to expand their offers as Havana progresses in its post-COVID-19 recovery. The delivery service also takes orders through phone and delivers to homes, offices, and hospitals.
CUBA’S FOREIGN RELATIONS
On Thursday, Carlos Vecchio, Venezuelan opposition leader Juan Guaidó’s ambassador to the United States, announced he will be investigating whether Cuba is reselling oil and fuel sent to the island by Venezuela, Reuters reports. Ambassador Vecchio said that Venezuela is “getting nothing back” from its oil deliveries to Cuba. He also asserted that Cuba doesn’t need such a large amount of oil and is probably reselling some of it, referring to the 14.1 million barrels of oil Venezuela sent to Cuba between January and June. According to Reuters, in 2019, Cuba consumed about 145,000 barrels of oil per day in power plants, industrial complexes, gas stations, airports, and homes. The U.S. has issued several rounds of sanctions on Venezuela’s oil shipments to Cuba because of the island nation’s support for the Maduro government. The late, former President Hugo Chavez said that the oil shipments were payment for the services of Cuban doctors in Venezuela. Ambassador Vecchio believes this oil should instead go to international organizations such as the United Nations or Red Cross “to provide humanitarian assistance in an impartial manner.”
On Tuesday night, the Italian city of Turin illuminated the Mole Antonelliana, the most emblematic local landmark, with the words “Grazie Cuba” to honor Cuban doctors from the Henry Reeve Medical Brigade for their help in fighting the COVID-19 pandemic, Cubadebate reports. The event was a collaboration between the Agency for Cultural and Economic Exchange with Cuba (AICEC) and the Cuban Embassy in Italy. This was the first time that lighting the building was used to pay tribute to a foreign country.
Human Rights Watch released a report this week detailing abuses in the program, such as a restriction on health workers’ freedom of movement and freedom of expression. In Cuba, healthcare workers are also a “regulated” population which require special permission to leave the country before obtaining a passport.
Luis Daniel del Risco and Carlos del Pino, both members of the Federación Cubana del Béisbol (FCB) (Baseball Federation of Cuba), have accepted positions at the Confederación del Caribe del Béisbol (Caribbean Baseball Confederation), OnCuba News writes. Del Risco, the current treasurer of the FCB, will become Vice President of the Umpiring Commission. Del Pino, will be President of the Committee on Statistics.
RECOMMENDED READINGS AND VIEWINGS
Biden will lead on Venezuela and Cuba, not spout meaningless promises,Dan Restrepo, the Miami Herald
If elected president, former Vice President Joe Biden would be “a champion of the democratic and economic aspirations of people throughout the hemisphere,” Dan Restrepo writes in his opinion piece. Mr. Restrepo, who served as Special Assistant to the President and Senior Director for Western Hemisphere affairs at the National Security Council from March 2009 to July 2012, states that President Trump’s current approach to Venezuela and Cuba is based on an empty promise represented by the three words “something will happen.” Mr. Restrepo argues that if the hope is that citizens of Venezuela and Cuba rise up to overthrow their governments, the U.S. should empower them not isolate them.
Pedro Monreal: The positives and negatives of the recent economic reforms in Cuba [Spanish], El Toque
The recent economic reforms announced last Thursday by Cuba’s government have raised a lot of questions and concerns, El Toque reports. In this interview, Cuban economist Pedro Monreal discusses the reforms and focuses on the newly opened foreign currency stores which have stirred intense debate among Cubans. How will Cubans access the hard currencies when they receive remittances through Western Union in CUC? What kind of products will the new dollar stores offer? Will the new stores deepen socioeconomic inequalities in Cuba? Dr. Monreal spoke about these topics in the interview and used it as an opportunity to clarify general questions about the economic reforms.
Revisiting reforms. First impressions about the new economic reforms in Cuba [Spanish], David Pajón Espina, OnCuba News
The COVID-19 pandemic intensified the already dire economic situation in Cuba, but it also seems to have served as a catalyst for the implementation of the new economic reforms, David Pajón Espina writes. Despite leaving many unanswered questions, the new economic reforms seem to be headed in the right direction. The reforms revisit the measures which were proposed in 2010 in an effort to overcome the economic crisis of that time. The announced changes will favor the private sector by allowing them to expand their range of activities, legally recognizing them, and allowing them to engage in external commerce. Cuba’s government still has much to explain about the implementation of this plan, but according to Mr. Pajón Espina, there is potential for positive changes as long as Cuba remains open to a progressive and evolutionary approach.
Survival Skills: Compassion and Belonging with john a. powell and Tania Singer, Sarah Stephens, Cuba Platform and Care Lab
The Survival Skills podcast, a production of the Platform for Innovation and Dialogue with Cuba and Care Lab hosted by CDA’s founder Sarah Stephens, just released its first episode, “Compassion and Belonging” with john a. powell and Tania Singer. The podcast aims to share inspiring conversations and explore ideas to help make the world a better place. In this first episode, Ms. Stephens continues a conversation with john a. powell, Director of the Institute for Othering & Belonging at the University of California, Berkeley and Dr. Tania Singer, social neuropsychologist of the Max Planck Society in Germany, on how we can move away from current inequalities and polarization, and generate a greater sense of belonging and compassion. The podcast is available on Apple Podcasts, Spotify, and Stitcher.
‘Queen of the night:’ Martha Flores, Cuban exile radio pioneer, dies in Miami, Daniel Shoer Roth and Arturo Arias-Polo,The Miami Herald
Martha Flores, a beloved radio personality in Miami’s Cuban exile radio community, died Saturday at age 92, Daniel Shoer Roth and Arturo Arias-Polowrite. Mrs. Flores had been diagnosed with pancreatic cancer in late May. Known as “la Reina de la Noche” (Queen of the Night), she served as an announcer and journalist for Radio Mambí 710 AM on her program La Noche y Usted. After being on the airwaves for over 60 years, she hosted the last session of the show live on Friday night. A trailblazer, she was the first Cuban woman to host her own radio program in Miami. She is survived by her husband, Rosendo Soriano, her son José, her daughter-in-law Gricel Acosta, and her granddaughters, Chelsea Durán and Jocelyn Janes.
Daniel Muñoz Borrego, known as El Dany, died Saturday in Havana, according to Billboard. The 31 year old artist was part of the musical duo Yomil y El Dany with Roberto Hidalgo Puentes. The two created “trapton” music which they described as their own unique sound that combines trap, dembow, and reggaetón. The duo first appeared on Billboard charts after their 2016 album Sobredosis was number eight on the Billboard Top Latin Albums chart for one week. The exact cause of death is still unknown. El Dany was hospitalized in Havana’s Calixto García Hospital for pain in his legs. On Sunday the Provincial Public Health Department of Havana released a statement saying he died as a result of a cardiovascular issue. El Dany is survived by his wife, Iraisel, and his daughter, Daniela.
Cuban girls who are turning fifteen during the COVID-19 pandemic, are wearing a new accessory in their celebration pictures, a face mask, Reuters reports. This photo collection shows how girls in Cuba are using face masks as a fashion accessory by matching them to their outfits, and as a symbol of the unique circumstances of their coming-of-age moment. Whether in front of a colorful graffiti wall, the beach, the countryside or the streets of Havana, face masks are a part of the 2020 Cuban quinceañeras experience. In Cuba, like in many Latin American countries, turning fifteen is a major rite of passage for a young woman.
Despite the lack of assigned bike paths, traffic rules, bike racks and other aspects to ensure a safe and smooth ride, Jesse Host writes that Havana has become the “ideal biking city.” The author shares how biking around Havana is often the most practical alternative to move between places, especially when you have to be in multiple places at once, public transportation is insufficient, and private transportation services are unreliable or too expensive. Mr. Host explores the sociopolitical symbolism of riding a bike versus owning a car, connects it to an analysis of the dire economic situation of the country, and gives an insight into how biking culture influences the life of Cubans. Mr. Host explains how the bicycle can be a metaphor of the past, the present, and the future, as well as an effective means of transportation in an uncertain reality.
Living Away Website, Living Away Fest, July 20-26
The Living Away Fest is a multidisciplinary art festival which will include live performances, short films, workshops, radio programs, self-guided practices, poetic walks, and video games created by more than 25 artists around the world, many of whom are Cubans living inside and outside of the island. Due to COVID-19, this year the festival has been modified to present the artworks through an online platform. You may find a promotional video for the event here. For tickets and more information, visit the Living Away Fest website.
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