Cuban Economics

The Castro Regime and doing business in Cuba

by

(My new American Thinker post)

Last December, many welcomed President Obama’s opening to Cuba as an opportunity to bring prosperity to the island. It went something like this: American tourists will spend money in Cuba and freedom will blossom. The other version went like this: our past approach has not worked so let’s try something new. Another one went like this: Cubans will talk to Americans and demand multiparty elections and a free press.

Sorry, but U.S.-Cuba relations have not worked out as planned or dreamed. There are two big reasons. The first reason is that the Castro regime is not about to relax political control. On the contrary, there has been a rise in repression and more and more dissidents find it difficult to express themselves. The second reason is that the Castro regime wants to keep control of the cash flow. This is from Fox News Latino:

The Cuban government, Lee said, still clearly “prefers to channel all business opportunities to state-run enterprises.”

And why not?  The Obama approach has been completely one sided. The U.S. gives up everything and Cuba gives nothing. The Castro brothers have concluded that they will ask and Obama will provide. So far so good for the dictatorship.

The Cuban government needs these state enterprises under the Castro Inc. holding company. It allows the Castro brothers to get wealthy, it keeps property ownership from the Cuban people and turns the island into a Spanish speaking Vietnam with good baseball players.

Mauricio Tamargo, an attorney, wrote recently about Cuban finances,or better put, the Castro family finances:

Forbes Magazine used to list both Castro brothers on its list of the top 100 richest people in the world. Forbes later removed the Castro brothers from the “Top 100” after the Cuban government objected, indicating those Swiss bank accounts in both Fidel and Raul’s names are held by the Castro brothers on “behalf of the Cuban people.”

Again, why should the Cuban government want to give up control of the economy? “Fidelismo” has been very good for the family bank accounts, the gang that surrounds and protects the dictator and all of those state enterprises that collect dollars and pay Cubans in worthless pesos.

The Obama administration moved too fast and never demanded concessions from a cash starved dictator about to lose his energy subsidy from Venezuela. We had all of the cards and could have done more for the Cuban people. Instead, the Obama team pleased the left wing college professors in U.S. universities and threw the Cuban people under the bus.

Prosperity coming to Cuba? It won’t happen until there is a regime change.

P.S. You can listen to my show (Canto Talk) and follow me on Twitter.

Raul Castro wants ‘los capitalistas americanos’ to bail out ‘los socialistas cubanos’

by

(My new American Thinker post)

The Cuban government has just announced the latest version of “foreign investment reforms.”

Before you go and put a dime in Cuba’s corrupt communist government, please consider what my friend Alberto de la Cruz posted yesterday:

“The most important flaw that is obvious from the outset is the legal aberration of expressly excluding the rights of Cubans on the island to participate as investors in their own country, an issue that is unparalleled in any civilized nation, and that alone disqualifies the best intentions beforehand. Another issue, no less twisted, is the exclusion of free contract (that is, allowing foreign investors to hire Cuban workers directly).

Both elements are unsustainable since they are not justified or serve any function other than to maintain absolute control over the population to prevent the weakening of political power.”

In other words, the Castro family, or “Castro Inc,”  wants you to invest in Cuba but only if you align yourself with Raul and his sick older brother.

The new “reforma” does not allow you to negotiate directly with Cuban workers, or the essence of a free market economy where you can hire and fire based on your economic necessities.

In other words, Cuban workers are not allow to form ‘a union,” as they used to do before the communists came to power!

For example, my father was a banker in Cuba and a member of the “bankers union.”  It allowed Cuban workers like my dad to negotiate with the many Cuban private banks or employers.

Pre-communist Cuba enjoyed living standards that no one in the island today enjoys today, as CONTACTO published a few years ago:

“In 1958, an industrial worker in Cuba earned an average salary of the equivalent of $6 US dollars per each 8-hour work day, while an agricultural worker earned the equivalent of $3 US dollars.

Cuba then ranked number eight (8) in the world as far as salaries paid to industrial workers…..”

By the way, you didn’t learn that by watching “Godfather II” or your Latin America studies class in school.

Don’t get your Cuban history from watching “Godfather II” or a leftist professor.  Instead, talk to my father and the others who were actually there and remember the bloody communist takeover.

So don’t get too excited about Raul’s cynical “reformas,” as reported by Cross-border debt and equity specialist, William A. Wilson.  In simple terms, how can you invest in a country that does not respect property laws?  Just ask Cubans, or others, who had their properties expropriated by the same Castro brothers who now want you to invest in the island!

The bottom line is that Raul is not looking to improve Cuba’s economy.

He is just hoping that foolish investors will bail out Castro “socialismo.”

Raul needs a “sugar daddy” now that the USSR is dead or most countries don’t want to finance “la revolucion” that doesn’t pay back its loans.

P. S. You can hear CANTO TALK here & follow me on Twitter @ scantojr.

 

Pre-Castro Cuba had problems but “a worthless peso” was not one of them!

by

My father has a copy of a pre-Castro Cuban peso framed in his home office.  I see it every Sunday when we visit my parents and enjoy some of my mom’s Cuban food.

It’s been on that wall for a long time, together with that quote from Jose Marti:

“Nunca son más bellas las playas del destierro que cuando se les dice adiós.” (Thanks to my friend Jorge Ponce for writing about this)

The Cuban peso and the Marti quote have always reminded us of Cuba.

They bring back  Cuba and the stories that we would hear daily at the dinner table growing up in Wisconsin.

My parents were completely committed to the proposition that we’d always remember Cuba.  I am very happy that they were!

The following story about life in the island brought my father’s Cuban peso back to life. .

We just learned today that Cubans have something else to worry about:

“Cubans are taking another hit to their wallets as the government announces an increase in the cost of powdered milk, a staple of every home with children and basic to the diet of nearly everyone on the island.

The measure will not affect the state-subsidized supply of powdered milk to children aged seven and under.

They receive three kilograms of powdered milk at the equivalent of 40 U.S. cents a kilogram, paid for in ordinary Cuban pesos.

But at hard-currency stores, the price of a half-kilogram package will go up 45 cents from $2.90 to $3.35. A kilogram package will go up by 85 cents or from $5.75 to $6.60.

These stores sell in Cuban convertible pesos (CUC) comparable to the U.S. dollar and already have a 240 percent markup on their products.

The average state employee earns the equivalent of between $20 to $30 USD a month and spends up to 80 percent of their income just on food so any price hike puts the family budget into a tailspin.

“Everything is difficult and this price rise will make them more difficult,” said Magdalena, a 45-year-old woman who has a 15-year-old daughter and a 19-year-old son.

“If prices go up in the shops, the price on the black market will also increase so we won’t be able to buy as much.””

Another day and another failure “para la revolucion”!

By the way, pre-Castro had its problems and we’ve been very frank about them. The island had its share of political problems and corruption was a factor.  My parents were there in the 1950’s and they are the first ones to recognize the island’s shortcomings.

At the same time, “milk problems” caused by a weak and worhtless currency was not one of them.

There was lots of “leche cubana” (Cuban milk) to go around and a strong Cuban peso to handle any imports if bad weather or some other reason, made that necessary.

Imported milk, or price fluctuations of such imports, was not something that our mothers or “abuelas” (grandmothers) had to worry about.  They had plenty of milk brands to choose from when they went to “la bodega”.

The island produced enough milk and had sound money, as we see here and many other studies.

Again, another failure for “la revolucion” and more pain for the ones in the island!

And another reminder of how bad “esta revolucion” has been for Cuba and Cubans!

P.S. You can hear CANTO TALK here & follow me on Twitter @ scantojr.

Cuba today: “Los Castros no quieren cambio”

by

(This is my new Cuba post over at American Thinker)

We’ve seen this movie many times before.  It starts with a country giving Cuba a line of credit or going around the US embargo.  It is followed by high expectations that Cuba will change once Cubans in the island greet foreign tourists or Spaniards build hotels.

However, the movie always ends the same way: Cuba can’t pay the loans and Cubans are still living in a repressive state.

We’ve seen that movie several times since the collapse of the Soviet Union in ’92. Just ask all of the countries who’ve had to reschedule their loans to Cuba or just forgive old ones.

This is why I’ve supported the US embargo.

I have not seen any evidence that lifting the embargo will bring democracy to Cuba or help the Cuban people.  On the contrary, lifting the embargo will simply bail out the communist state and put more dollars in the Castro family accounts.

Our policy should be very clear and simple:

First, no talks at any level until Cuba releases Mr. Allan Gross unconditionally.  Simply hand him over to the Red Cross so that he can be reunited with his family. No meeting or talks until that happens first;

Second, the world should demand a democratic transition in Cuba. No more “wishful thinking” about reforms that don’t really reform or “expectations” of change that never comes.

This is the moment for the US to draw the line and say “enough” in Cuba.

P. S. You can hear CANTO TALK here & follow me on Twitter @ scantojr.      

 

Latin America leaders in Cuba: ‘Abrazo si, dinero no’

by

This is my American Thinker post about all of this “love” between Latin American leaders and the Cuba dictatorship.  Don’t take it at face value, specially Mexico and Cuba.

“My Cuban American friends are furious about Latin American leaders visiting Cuba and showing so much praise for the aging Fidel Castro..  (Check out the latest from Alberto De La Cruz at Babalu)

I agree with all of my friends in Miami, and Carlos Puig in Mexico, that this whole thing smells bad.

It’s a shame to see a self proclaimed reformer, like President Pena-Nieto, shaking hands with the longest running dictatorship in Latin America. (I understand President Fernandez of Argentina, who wouldn’t mind hiding in Cuba given the collapse of Argentina’s economy.)

Also, dissidents were not allowed to come anywhere near the meetings and some were locked up during the events.

At the same time, don’t overlook the real reason for the picture and the handshake.

Let me speak about Mexico, a country that I am very familiar with.

After college, I worked in Mexico for a US company for several years.   I was active in local chambers of commerce and had a chance to meet some business and political leaders.

We had chats about Cuba and Mexico very often.  I got hot many times but my Mexican hosts would always tell me to look behind the curtain.

They taught me this about Mexico and Cuba:  Do not take Mexican presidents very seriously when they shake hands or hug “el commandante,” as President Lopez-Portillo used to say.

It’s all a big farce intended to throw a few crumbs to the very powerful and loud Mexican left.

Over the last 20 years, Mexican presidents have made the left very unhappy.

First, there is NAFTA, an agreement that the left believes killed small Mexican businesses and filled stores with foreign goods.

Second, there is Plan Merida, a deal negotiated between President Bush and President Calderon to provide US arms to fight the cartel war.    (The left really hates this one)

Don’t forget that President Pena-Nieto has just tackled two of the left’s scared cows, energy reforms (PEMEX) and the teachers’ union.

The left is furious with President Pena-Nieto and has every desire to destroy his presidency. They are staging rallies, causing traffic jams and so on.  Have you taken a flight to Mexico City lately?  Have you seen the street rallies?  Have you been tied in an endless traffic jam?

I am not justifying President Pena-Nieto’s hypocrisy, or “reforma para todos menos Cuba.”   (Reform for all except Cuba)

It makes me as angry as it makes you!

At the same time, he has to worry about Mexico not Cubans.  That’s the blunt reality.

Fidel or Raul Castro got a handshake and a hug but NOT “the credit” that they desperately need.

That’s the bottom line of President Pena-Nieto’s visit:  “Un abrazo pero no un centavo”!  (“A hug but not one cent”)

My guess is that Fidel would have preferred a line of credit rather than another Mexican president using him for domestic reasons. The Castro dictatorship needs “cash” not more Mexican lefties singing the praises of the revolution.”

Let me repeat.  I hate this “hug” as much as you do.  However, I know that it’s not real.  It is a cynical political step for Mexican domestic consumption.

Yes, “esa es la verdad”…..

P.S. Follow my Tweets!.

Enjoy my chat with Carlos Eire about Cuba, 54 years after Castro

by

Our friend Carlos Eire is a real treasure.  We love his books and the many posts on Babalu.

A year ago, Carlos recalled the 54th anniversary of the Castro regime:

“Today is a grim day for me, and many Cubans. Every new year marks the same hideous anniversary….”

We did a show about the post and it’s one of my favorites of 2013.

Click below and listen:

 

“La agencia Los Hermanos Castro” has a big car sale in the island!

by

The Castro dictatorship has just announced “la ultima reforma“:

“The Communist Party newspaper, Granma, said the Council of Ministers approved new regulations on Wednesday that “eliminate existing mechanisms of approval for the purchase of motor vehicles from the state.”

As a result, Granma said, “the retail sale of new and used motorcycles, cars, vans, small trucks and mini buses for Cubans and foreign residents, companies and diplomats is freed up.”

The Cuban state maintains a monopoly on the retail sale of cars.”

So la “nueva reforma” means that the rules have been relaxed but you still have to buy your car from “La Agencia de los Hermanos Castro”?

I guess that every “reforma” always has a connection to the pockets of the Castro brothers.

“Oye compay, que semana”: We talk Cuba with Jorge Ponce!

by

Jorge Ponce and I looked back at this big “semana” of Cuba news.

It started with the handshake, talk of Dr Gross, calls for lifting the embargo, to more of Alberto’s posts about human rights violations in the island.

Even Elian made the news this week.  Wonder if someone told Elian that his mother died to bring him to the US?

It was quite a week!  We spoke with Jorge Ponce about it.

Listen here:

http://www.blogtalkradio.com/cantotalk/2013/12/14/us-cuba-issues-the-embargo-handshake-and-the-status-of-mr-gross

 

“No ayudes a la dictadura”: A word to all of those spending their vacation dollars in Cuba!

by

We’ve read often in this blog about repression, torture and complete violations of human rights in Cuba.

I have a message for those who travel to Cuba and subsidize the corrupt Castro regime:  You are not helping the Cuban people!  You are subsidizing a corrupt dictatorship sustained by your dollars!

I wrote about this at American Thinker this morning:

“Elsa Morejon is Dr Biscet’s wife and a human rights activist.

It was great to see her article in The Washington Post:

“A few weeks ago, President Obama invited my husband, Oscar Elías Biscet, and me to a dinner to celebrate the 50th anniversary of the creation of the Presidential Medal of Freedom.

Many thought that in light of Obama’s efforts to improve relations between the United States and Cuba, Gen. Raúl Castro, Cuba’s president, would approve a passport for Oscar so that he could attend. Such was not the case.

Oscar is a physician, but he is not allowed to practice medicine. Amnesty International has named him a prisoner of conscience for his years in jail for defending human rights. He is a follower of the philosophy of Gandhi and King.

In 2007, President George W. Bush awarded Oscar the Medal of Freedom. But he could not receive the award in person because he was in prison, where he had been sentenced to a term of 25 years.

Oscar was released in 2011, but in many ways he’s still a prisoner because he can’t leave the island.”

Elsa speaks for so many and it was good to see a major US newspaper give her the space to tell the world the truth about Cuba.

Remember Dr Biscet the next time that you hear of all of those “bargains” about traveling to Cuba!

Show your support for Dr Biscet and other dissidents by taking “your vacation dollars” elsewhere!

Help us bring down Castro.  Stop spending money in Cuba!

Cuba & Mexico: “Toma chocolate….(NO) paga lo que debes”

by

Our friend Alberto De La Cruz reported on Cuban foreign debt yesterday.

This is simply the latest episode in a movie that we know very well:  “Castro no paga”!

Over at American Thinker, I opined on a couple of reasons for this Mexican generosity.

The official explanation is that Mexico wants to improve domestic relations with Cuba.  The  PRI is back in power and wants to “warm up” relations after the chill under PAN President Fox and Calderon.

Don’t buy that.  This is about Mexico’s domestic politics.  It’s always been about domestic politics between Mexico and Cuba.

I recall when Cuba built a huge embassy in Mexico City.  It was intended to rival the US Embassy and project Cuba as an international leader.

Here is my AT post:

“So you improve relations with a country by writing off their debts?  I am anxious to hear how Mexicans will react to this “generosity toward Cuba.”

I spoke to a couple of friends in Mexico on Sunday and they don’t understand this move.

One businessman said:  “I sell to Cuba and we are down to cash up front before we ship anything.”

It makes no sense for Mexico to waive so much Cuban debt.  My guess is that President Pena Nieto is “throwing a big bone” to the left.  As we’ve reported before, President Pena Nieto has tackled a couple of the left’s sacred cows, the teachers’ unions and PEMEX, the oil monopoly.

He needs to distract the left and waiving Cuban debt is a good way to do it.”

Let me repeat:  This is about Mexico and another president pandering to the left.   The left is about to explode in Mexico over PEMEX reforms and that’s what this is about!

President Pena-Nieto is reminding the left that Mexico still loves Cuba and he is “eating” millions of dollars to prove it.

It’s also a recognition that Cuba is a terrible investment.  In fact, it’s such a lousy investment that Mexico has to write off almost $500 million!