Reports from Cuba: Spider’s web to trap investors
Spider’s Web to Trap Investors
HAVANA, Cuba – Some 53 years, 5 months and 17 days after the publication of Law 890, which provided for the expropriation of many locally owned and foreign firms, principally American, the regime just introduced the new Foreign Investment Law that goes into effect in 90 days.
The new ordinance replaces the norms in effect since 1995, when the sharpest and longest economic crisis suffered by the country forced the country to turn to foreign capital investments in Cuba, despite the purest principles of the Communist doctrine in which several generations have been (de)formed at the hands of this government. By then, some foreign businessmen were tempted to ensure themselves a space in the virgin market, while others discovered the a true tax haven in the Caribbean socialist inferno.
These capitalist outposts gave the regime the oxygen needed to overcome the imminent asphyxiation, and also made possible Castro I’s backing off from the “opening” that had allowed the return of small private property in the form of some family businesses–such as snack bars, restaurants and rooms for rent, among others–that had rapidly expanded throughout the island from the beginning of the 90s.
Now that foreign capital has ceased to be an evil that must be overcome by socialism and has been converted into a “necessary good” called on to boost the always promised and never reached “economic development of the country” (Juventud Rebelde (Rebel Youth), Sunday 30 March 2014).
It’s here that, among the surprises that the updating of the Raulist model holds for us, Powerful Mr. Money is destined to facilitate “the consolidation of Cuban socialism,” which this time–yes, now!–will be “prosperous and sustainable, thanks to that formerly demonized capital. That other ancient bearded one, Karl Marx, must be turning in his grave.
Retrospective: the negation of capital
In 1960, Article 1 of Law 890 declared: Nationalization is carried out through the forced expropriation of all industrial and commercial businesses, as well as factories, warehouses, deposits and other properties and members’ rights of the same.
Under this law, the state appropriated 105 sugar mills, 18 distilleries, 6 alcoholic beverage factories, 6 soap and perfume factories, 5 dairies, 2 chocolate factories, one flour mill, 7 packaging factories, 4 paint factories, 3 chemical producers, 6 metallurgists, 7 stationary makers, a lamp factory, 60 textile and apparel industries, 16 rice mills, 7 food factories, 2 vegetable oil makers, 47 food stores, 11 coffee roasters, 3 drug stores, 13 department store, 8 railroads, a printer, 11 cinemas and film circuits, 19 construction-related companies, a power company and 13 shipping companies.
In subsequent months the expropriations continued, given that the Revolutionary government had decided to “adopt formulas that finally liquidated the economic power of the privileged interests that conspire against the people, proceeding to the nationalization of the large industrial and commercial companies that have not adapted nor can ever adapt to the Revolutionary reality of our nation.”
Spider Web to trap the unwary
At present no one seems to remember the aforementioned Law 890. Nor do they allude to the fiasco of the entrepreneurs who dared to negotiate with the Castros in the 90s and suffered great material and financial losses in the adventure. Few earned the expected profits, much less kept their businesses on the island. It’s not known if there were indemnifications, although there were definitely damages to public opinion from the irresponsible actions of so many foreign investors and of the Cuban authorities. The government has not publicly acknowledged responsibility for its mistakes, and on the other hand, we Cubans have not seen the benefits from theses inflows of capital. Nothing guarantees we will realize them with the new legislation, the greatly over-used “judicial guarantees” are not for us.
The rights and benefits of Cuban workers were also enunciated: “There will not be free contracting of a labor force, so the figure of the employing entity will be maintained, the wages will be conditional upon the labor supplied, efficiency, and the value added that the company generates.” Furthermore, “The payment of the workforce will be negotiated between the employing entity and the foreign capital company.”
Thus, the State-Government, as the “employing entity,” will continue to be the owner and the Cuban employees the rented slaves, a detail that should serve to alert potential employers, given that the chronic low wages is the best incentive for theft and other forms of corruption, common among us as illegal, but legitimate, methods of survival.
The new Foreign Investment Law has not yet been published or circulated as a draft in tabloid form in recent days, so that the exact terms of its text, considerations for parties, etc. are unknown. However, it is expected to suffer some modifications to suit the needs of investors interested in trading in Cuba. The cupola will have to cede or pass away, but it will certainly seek huge profits.
It simply remains to be seem how many unsuspecting entrepreneurs fall this time in the murky legal webs of Castrolandia. Forgive me if I don’t wish them success.
* Official Gazette of the Republic of Cuba (Special Edition Havana, Thursday Oct. 13, 1960, Year LVIII, Vol Fortnightly, No. XIX).
Cubanet, 4 April 2014, Miriam Celaya