The Cuban Council of State called an extraordinary session of the National Assembly in order to debate and approve a new foreign investment law on Saturday, March 29, the state-run Granma newspaper announced Wednesday.
The new law is meant to replace that current cumbersome 1995 law that requires foreign companies to pay both a profit tax and a labor tax and is seen as a part of massive reforms taken under President Raúl Castro to aid the ailing Cuban economy. Along with the upgrading of the Mariel Port and the creation of the Special Development Zone that will exempt businesses from the 12 percent profit tax for 10 years, the Communist Party Congress approved over 300 economic reforms in 2011, including moving 20 percent of state workers into the non-state sector and authorizing the sale of homes and cars.
While details of the law remained unclear, it is expected to make Cuba more attractive to investors who have pulled out of the island over the past 12 years due in part to Cuba’s burdensome tax system. Cuba’s economy only grew 2.7 percent in 2013, and with its commercial relationship with Venezuela at risk due to ongoing protests in the South American country, the Cuban economy could contract 4 to 7.7 percent this year.
As tensions between the United States and Russia over the future of the Ukraine’s Crimean peninsula continue to rise, Moscow officials may look to beef up their country’s stronghold in Latin America.
Russian Defense Minister Sergei Shoigu announced on February 26 that his country is planning to expand its long-standing military presence in Cuba, Venezuela and Nicaragua, possibly bringing the U.S. and Russia’s icy diplomatic standoff into the Western Hemisphere.
Although Shoigu mentioned that Russia would also boost its armed presence in Vietnam, Singapore, the Seychelles and several other countries, Moscow’s anticipated embankment in Latin America will surely be perceived as a threat to U.S. defense policymakers.
“The talks are under way, and we are close to signing the relevant documents,” Shoigu said in a press conference in Moscow. “We need bases for refueling near the equator, and in other places,” he explained.
It is still unclear, however, whether Russia will construct new Moscow-owned bases in the proposed countries. Russia may only seek permission from already-existing naval defense ports to increase its access to military stations with refueling, maintenance and repair capabilities. The country’s only naval base outside the country is located in Tartus, Syria.
The United States released the second member of a group of five Cuban prisoners—known as the “Cuban Five”—from an Arizona prison on Thursday. Fernando González, 54, was convicted in 2001 of spying on military bases and Cuban exiles in South Florida, and is expected to be deported back to Cuba within days.
René González, a native of Chicago with dual citizenship, was the first member of the group to be freed in 2011, and returned to Cuba last year. The other members, Antonio Guerrero and Ramón Labaniño, will complete their terms in 2017 and 2024, respectively. The last member, Gerardo Hernández, is serving a double life sentence for conspiracy to commit murder after two planes flown by a Cuban exile group, Brothers to the Rescue, were shot down in 1996.
Over the last decade, the “Cuban Five” have been at the center of diplomatic tensions between the U.S. government and the Castro regime. The Cuban government allegedly offered to release the jailed USAID contractor Alan Gross in exchange for the freedom of the five Cuban prisoners, but Washington rejected the deal, saying that Gross did not engage in any intelligence-gathering on the island. The Cuban government jailed Gross on charges of committing crimes against the state, and he remains in prison.
González’ release comes two weeks after a national poll found that the majority of Americans support normalizing U.S.-Cuba relations.
In a recent interview with The Washington Post, Florida sugar magnate Alfonso Fanjul said he is ready to do business with Cuba “under the right circumstances.” The questions are: “what are the right circumstances?" and “who benefits when American companies ‘do business’ with communist Cuba?”
The Fanjul family left Cuba in 1959 when Fidel Castro confiscated all of its holdings. Eventually settling in Florida, the family rebuilt their lives and fortunes, benefitting from the price supports extended to American-grown sugar by Congress, and Fanjul corporations are now international in scope.
As reported in The Post, Alfonso Fanjul’s comments and meetings with Cuban government officials were promptly condemned by Cuban-American members of Congress who didn’t hesitate to point out that the interview included no discussion of the absence of civil liberties and labor and human rights in Cuba that foreign corporations already exploit.
Foreign companies “doing business” in Cuba are best described as “minority partners” of the Cuban government. Such companies don’t “do business” with Cuban entrepreneurs, they “do business” with the Cuban government, which obligingly “rents” those companies a compliant, uncomplaining labor force.
Cuba’s government sets the rental price that companies pay to the government. In turn, the government pays the employees somewhat less (usually a lot less), and keeps the difference. Complaining employees are fired —not by the company, but by the government—and replaced by someone “willing to work.” This is how Cuban communism works and finances the repression that sustains it.
As the two-day CELAC Summit closed in Havana at the end of January, leaders of the 33 Latin American and Caribbean (LAC) nations that compose this body adopted a triumphant pose for the assembled photographers.
Why the celebratory atmosphere? One might be forgiven for thinking it was connected to the various grand ambitions articulated at the summit–the second since CELAC was created in 2011–in the spheres of education, disaster management, combating corruption and similar hot-button regional issues. But as far as the leaders present were concerned, the greatest triumph was in declaring CELAC a "zone of peace."
"Peace," in this case, is understood as "non-interference." In the words of the summit declaration, each CELAC member state has the "inalienable right to choose its political, economic, social and cultural system as an essential condition to guarantee peaceful co-existence among nations." (My emphasis.)
Put another way, if you are running a one-party state, like the Cubans, or a mafia state that fixes elections, like the Venezuelans, you have nothing to fear. It's perverse, but it's true: even leaders of strong democracies, like Costa Rica, have had the temerity to adopt the language of rights in order to rationalize and justify their silence about the denial of rights to the opposition in non-democratic countries!
I’m not a betting man, but if I were, this is what I’d bet. With a series of statements by leading Cuban-Americans, stories of change inside the island, and growing public pressure and attention to liberalize the U.S. embargo toward Cuba, I’d wager that soon the Cuban government will do something to halt the process.
Further, I’d wager that when it does, hardliners in Congress and the dwindling number of groups that advocate for the embargo will react predictably: denouncing those who argued for more freedom in the restrictions as naïve, and insisting that now is not the time to open up—that in fact, now is the time to close down even those small, but effective, openings that have already been made.
Why do I think this? Because this has been the pattern for decades, whether it was the regime’s crackdown on the broad-based alliance of democratic activists, Concilio Cubano, in February 1996, in the tragic shootdown of two Brothers to the Rescue planes that same year, or the arrest of USAID contractor Alan Gross in 2009.
In each of these cases, talk of easing the embargo had grown just before the act of aggression by the Cuban government. And in each case, hardliners responded to ensure that the Cuban government got what it needs—isolation.
A new poll by the Atlantic Council released yesterday found that a majority of Americans are now in favor of stabilizing U.S.-Cuba relations. Of those sampled nationwide, six out of 10 said they favor policy changes that would allow more business transactions between the two countries, as well as the lifting of restrictions that don’t allow Americans to travel and spend money in Cuba as a result of the embargo.
According to the poll, 56 percent of Americans favor changes in U.S.-Cuba policy. Sixty-three percent of adults in Florida—which holds the largest concentration of Cuban-Americans in the country—and 62 percent of Latinos favor removal of all travel restrictions. Although support is stronger among Democrats, the poll found that 52 percent of Republicans are also in favor of normalizing relations with the country. Sixty-one percent of Americans, and 67 percent of Floridians, also believe that Cuba should not be considered a state sponsor of terrorism.
The poll points to growing disapproval of the U.S.’s economic embargo on Cuba, which has been condemned by the international community 22 years in a row. The trade embargo aimed to collapse the Castro government more than 50 years ago, but has been unsuccessful.
“The Cuba embargo is hampering the United States’ ability to maximize cooperation with allies in the hemisphere at a moment when there is increasing stability, growth, and opportunity,” says the report. Based on the findings, the poll suggests that although the U.S. should demand reciprocal gestures from the Cuban government, such as the release of imprisoned USAID contractor Alan Gross, naming a special envoy for Cuba could be a first sign by the Obama Administration of its willingness to begin deepen ties with the country.
The thirty-three countries that make up the Latin America and Caribbean Economic Community (CELAC), wrapped up their second summit by declaring the region a “zone of peace,” on Wednesday. Heads of state including Juan Manuel Santos of Colombia, Enrique Peña Nieto of Mexico, Nicolas Maduro of Venezuela, and recently elected Michelle Bachelet of Chile signed an accord vowing to resolve conflicts respectfully and peacefully.
According to the summit declaration, the meeting provides an opportunity for coordination within the region and emphasizes the need for pluralistic and respectful cooperation. This year’s summit highlighted issues of crime, economic hardship and inequality in the region, the potential economic benefit of free trade, and support for Argentina’s claims over the Falkland Islands.
The summit culminated with a commitment to non-intervention, cooperation and respect of "the inalienable right of every state to choose its political, economic, social, and cultural system, as an essential condition to guarantee peaceful co-existence among nations," read Cuban President Raul Castro, outgoing CELAC president.
CELAC was created in 2011 as an alternative to the Organization of American States, which has excluded Cuba since 1962. Costa Rica will assume the CELAC’s rotating presidency at the end of the summit.
U.S. acting deputy assistant secretary of State for Western Hemisphere affairs, Edward Alex Lee, and Cuban director-general of the U.S. Division of the Ministry of Foreign Affairs, Josefina Vidal Ferreiro, met in Havana on Thursday to discuss accords on safe, legal and orderly migration between the two countries.
This was the second meeting on migration between the two parties since July 2013, aimed at examining the status of accords signed by both governments in 1994 and 1995. The accords were put into place to combat illegal immigration and smuggling, after the Cuban government allowed thousands to leave the island on makeshift rafts prompting the balsero crisis of 1994. The discussions were suspended by President George W. Bush in 2003 and again in 2011 after Cuba sentenced American USAID contractor Allan Gross to 15 years in prison.
Cuban representatives criticized the U.S.’ “wet foot, dry foot policy,” which gives asylum to Cubans who reach U.S shores, saying that it is the main cause for illegal departure of Cuban citizens to the United States. The U.S. issued 24,727 Cuban immigrant visas in 2013.
The meeting took place in a “respectful environment” according to a statement released by the Cuban government on Thursday. They also expressed willingness to continue dialogue around issues of mutual interest between the two countries, including resuming direct postal service. The Obama administration has stated that the talks do not imply changes in U.S-Cuba policy, but will only ensure safe migration.
The Cuban government announced yesterday that it will be loosening restrictions on the purchase of new and used foreign-made cars. Under the new policy, Cubans will no longer need a permit issued by the Transportation Ministry to purchase cars from state vendors.
Until 2011, Cubans could only buy and sell cars made before 1959. But the new regulations approved by the Council of Ministers on Wednesday will “eliminate existing mechanisms of approval for the purchase of motor vehicles from the state,” according to state newspaper Granma. As a result, the paper reported that “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.”
Despite the change in policy, the Cuban government will maintain its monopoly on the sale of all cars on the island. According to Bert Hoffman of the German Institute of Global and Area Studies, this will cause car prices to remain high due to lack of competition in the market.
The change in policy comes in the context of Cuba’s reforms—knows as the lineamientos (guidelines)—which are led by President Raúl Castro and are meant to modernize the socialist regime’s struggling economy.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.