Rob Sequin | Havana Journal
I was fortunate to attend the Cuba information session at the Caribbean Central America Action conference on Friday December 4, 2010.
It is held every year at the beginning of December in Miami.
Earlier this month, I interviewed Dr. Tim Ashby and Jay Crowley about the economic transition in Cuba.
Cuba experts on the panel
• Rafael Romeu, Economist at IMF
• Jay Brickman, Crowley Maritime Corporation
• Teo Babun of Babun Consulting Group Inc.
• Dr. Timothy Ashby of Pembury Capital Inc.
(Note: His comments do not reflect the views of the IMF.)
Mr. Romeu works with the Association for the Study of the Cuban Economy and produced a flyer with “nowcasts” showing the current state of Cuba’s economy featuring graphs depicting the diminished growth prospects visible in low imports, slow recovery of tourist arrivals and moderate export prices.
He spoke in great detail about the economy and the changes underway in Cuba. He suggests that Cuba should cut travel costs (paperwork and luggage fees) for Cuban Americans and Cuban residing abroad to encourage them to come to Cuba. There are many economic benefits and would most likely be a cost-neutral solution for the Cuban government. He went on to say that Cuba needs to increase supplies at home in order to lower the dependence on imports into Cuba.
Mr. Brickman made it very clear that US exports into Cuba are down dramatically recently for several reasons. First, since all US agricultural goods have to be paid for in advance for cash, Cuba is finding other countries to import from that are offering cheaper prices and/or terms of credit. For example, Vietnam is selling cheap rice into Cuba with terms of credit. US grain sales to Cuba are down along with other commodities.
It is very difficult for US based producers to sell into Cuba. They need an OFAC license from the US Treasury and a commerce license from the Department of Commerce. However, the processing of license requests has been quicker this year.
Also, on the Cuba side, the purchasing agency of Alimport has had its duties and decision processes realigned to include other agencies so now there is more bureaucracy to sell food to Cuba. For new businesses seeking purchasing contacts in Cuba, they are now required to direct all communications through the Cuban Interests Section in Washington DC so that makes sales more challenging too.
Further exacerbating the situation is that Venezuela, China, Vietnam and Iran now have very close economic ties with Cuba so the US is less important as a source of imports. Lastly, he believes that it will be very difficult to get positive legislation from the US Congress and that the President may even be reluctant to announce changes. However, there may be productive dialog between the US State Department and MINREX in Cuba.
Mr. Babun talked about the new self-employment opportunities in Cuba, licenses and taxes. He also made comments about the upcoming Communist Party Congress scheduled in Cuba for April 2011: He expects new leaders to emerge, leaders to be a combination of market reformers and hardliners. Both types will defend the Revolution but they may have very different views about the economic path for Cuba.
He commented that all these changes in Cuba may cause for some civil misconduct in Cuba but it is expected to be minimal.
Dr. Tim Ashby
Dr. Ashby was in Havana last month and Washington DC last week. He said he talked with his many Cuban friends and acquaintances in Cuba that he has known for 25 years and there is no doubt that serious changes are happening right now in Cuba.
He said many people are openly criticizing the Cuban economy and he has witnessed or heard about work stoppages and other limited acts of civil disobedience in such a way that have not happened in the past. There is a “de facto” privatization of the retail sector that is desperate for capital.
With regards to state run enterprises that are mostly controlled by the military, these are efficient and will most likely play a bigger role in the economic transition in Cuba. He also expects to see extended members of the Castro family to be actively involved at high levels of the Cuban government after the Congress in April.
He also confirms that US Cuba relations are dead probably for the next two years and that there may even be a movement to tighten US Cuba policy. He understands that there is a directive, signed by President Obama that is sitting idle for political reasons and is skeptical that this directive to ease people to people travel restriction will even be implemented. The Cuban government has not seen any positive changes from the US so they do not have any near term expectations for friendlier US Cuba relations.
This could all change if Alan Gross is released from Cuba. On December 3, the US State Departments said “continued detention of Alan Gross is a major impediment to advancing the dialogue between our two countries”
Questions and Comments
As people from the audience addressed the panel, it was clear that many people in the room were Cuba experts in their own right. There were Ambassadors from several countries who made knowledgeable comments about Cuba and US Cuba relations.
The topic of self-employment in Cuba was discussed and a couple panelists noted how they have seen people on flights from Miami to Havana with arms full of power tools and other supplies that are obviously intended to assist this fledgling sector of the Cuban economy.
It was mentioned that there is a program in place to assist these new Cuban entrepreneurs with a “business in a box” type solution for micro enterprises and that this organization helped more than 1200 people in Cuba with self-employment.
It’s interesting to me that there is only one session in three days of the Caribbean Central America Action conference dedicated to Cuba, the largest island in the Caribbean. However, I want to credit the organizers who certainly put together an excellent panel of Cuba experts offering a very high level of intelligence that was educational for everyone in the room.
One Ambassador, from Jamaica I think, commented positively on Cuba and its decades long assistance with medical services and he said something that was very interesting… “Cuba has the mystery of an island but the power of a continent”.
Let’s hope these new economic changes are the start of Cuba’s ability to become the economic powerhouse of the Caribbean that it should be.