President Barack Obama’s historic normalization talks with Cuba have brought about a lot of excitement in business circles, and hardly a day goes by without new reports of U.S. investors, lawyers and entrepreneurs flocking to the island. But I’m afraid most of them will lose their shirts there.
In a recent interview, U.S. Secretary of Commerce Penny Pritzker told me that even though Cuba is a small economy, the Cuban people are entrepreneurial , and have a great economic potential. “It’s a beginning, you have to start. And by starting, things will evolve,” she said.
My opinion: Maybe so. But for the time being, as Florida International University business professor Jerry Haar has rightly — and only half-jokingly — commented, the most profitable businesses dealing with Cuba will be those that put together conferences and seminars on doing business in Cuba.
Obama did the right thing in starting normalization talks with Cuba’s military dictatorship, although he should be much more forthright in demanding basic freedoms on the island. But the administration should tone down its claims that the U.S.-Cuba honeymoon will lead to political and economic changes on the island, and to great business opportunities for foreign companies. It won’t, at least in the near future.
In October, the Cuban government announced that it would no longer require the much-hated exit visa for anyone wishing to travel abroad. All a Cuban citizen will need is a passport and a visa for the country he plans to visit. This new Cuban policy takes effect January 14th.
The problem is, under current American law, a “visit” to the United States can immediately award a Cuban full refugee status, then permanent residency and citizenship, under the Cuban Adjustment Act of 1966.
For decades, Cubans have been trying to sail to the US and then dock or swim ashore before immigration agents catch up with them. For those who made it past the US Coast Guard gauntlet, once their feet touched the beach they were given legal admission. During the fiscal year that ended in September, the Coast Guard said it caught 1,275 Cubans trying to arrive by boat—the highest total since 2008. Uncounted others made it ashore, where they immediately received their unique American embrace.
Starting January 14th, however, Cuba will allow them to leave by any means of their choice. And all they’ll have to do is walk off the airplane in Miami or anywhere else in the US to be awarded refugee status. The change could lead to many thousands of new Cuban refugees every month, joining the two million Cubans and their descendants already here. But you don’t hear anyone in Washington even mentioning this problem, given the urgent concerns about Iran, North Korea, the fiscal cliff, and so much else.
The global financial crisis, and the $10 billion in damage inflicted by three hurricanes in 2008, have forced authorities to run a deficit of 5 percent of GDP, leaving them unable to pay back credits received from China and elsewhere. Cuba slashed spending on importing food and other basics by 34 percent to $9.6 billion in 2009, from $12.7 billion the previous year. But so far, the moves have not been enough to rein in the deficit.
President Raul Castro has startled the nation lately by saying about one in five Cuban workers may be redundant. Carmelo Mesa-Lago, a Cuba economics expert and professor emeritus at the University of Pittsburgh, said Cuban officials have spent months debating cuts in the labor force and economic reforms. He said they know what’s needed, but face “a problem of political viability.”
Various government perks like cars, gas, uniforms and office supplies have become incentives to bloat the payroll, since they are based on the size of a company’s work force.
But low pay means low productivity. On Obispo street, a state-run cafeteria sells heavily subsidized soft ice cream and pork sandwiches for the equivalent of a few American pennies — meaning wages and tips are so tiny that the staff is complete indifferent toward customers. Three waiters sit at the counter cracking jokes. A fourth is the only one working, making coffee for three tables. Nearby, a cashier stares into space, a cook flirts with a scantily clad teen and a supervisor sits idly by.
Here, nearly everyone works for the state and official unemployment is minuscule, but pay is so low that Cubans like to joke that “the state pretends to pay us and we pretend to work.” – monthly salaries worth only $20 a month on average.
”I think this is Raúl definitely trying to put his own stamp on the government,” said Sandy Acosta Cox, a political analyst at ECHO-Cuba, a Miami nonprofit that offers aid to evangelical churches on the island. ‘I think this demonstrates that there were factions within the government: Fidelistas and Raúlistas. . . . Positioning key `Raúlistas’ in place, especially before the major announcement everyone is anticipating — Fidel’s death — ensures that there won’t be a power struggle between the two factions.”
Raúl Castro took over from his brother in the summer of 2006 but was not officially named president until a year ago. He took office under the pledge of efficiency, and often used his rare moments on the public stage to blast the Cuban government’s notorious wastefulness.
”This is Raúlismo at its best,” Mora said. “I don’t see ideology. I don’t see power politics. I see Raúl being Raúl.”
A Deadly Turf War Over Cuban Illegals – TIME
Mexico certainly appears to have become the most popular route for Cubans seeking to reach the United States. According to the U.S. Department of Homeland Security, 11,487 Cubans entered the U.S. over the Mexican border in the fiscal year 2007. Over the same period, 4,825 Cubans successfully crossed the Florida Straits, while 2,861 were caught by the Coast Guard and turned back.
A Mexican official not authorized to speak on the record explained that gangs running the lucrative Cuban smuggling route into the U.S. charge between $10,000 to $12,000 per head, compared to the $2,000 Mexicans pay “coyotes” to take them over the desert into the U.S. And it is the high profits have driven the killings, officials say, with rival groups allying with Mexican gangsters to fight over the spoils of the trade.