Political Risk Latin America Blog @PolRiskLatam

Cuban Parliament Holds off on Deeper Economic Reforms

Posted in News and Articles, Political Risk by politicalrisklatam on August 3, 2011

by Roque Planas for Americas Society / Council of the Americas, August 2nd, 2011.

Cuban head of state Raúl Castro surprised observers Monday by announcing the possibility reforming the island’s restrictive immigration laws. Cuba remains one of the few countries that requires its citizens to apply for permission to leave. Castro said the rule made sense in the 1960s when the revolutionary government adopted it as a way to protect itself from hostile political exiles, but did not make sense today, given that most Cuban migrants leave for economic reasons. Castro has previously indicated intentions of reforming a state-dominated economy that has grown sluggishly since the onset of the worldwide recession in 2008, posting GDP growth of 1.4 percent in 2009 and 1.5 percent in 2010. While the possibility of immigration reform stole the show at Monday’s day-long congressional session, the National Assembly did not publicly address Cuba’s many pressing economic challenges.

Some observers expected the Cuban Parliament to finalize game-changing rules permitting home sales at its Monday meeting for the first time since the 1960s. The body did not do so. Despite putting the task off, the Cuban government says it will finish crafting rules governing home sales by the end of the year. Even without the law on their side, The Miami Herald points out that Cubans have already begun advertising their homes on Revolico—a website for classified announcements. And foreigners may soon get the right to buy Cuban property. Canadian company Standing Feather International, which has a contract to build a luxury golf resort in Holguín, says the Cuban government will allow both foreigners and nationals to purchase property there in perpetuity. Previously, foreigners could only lease Cuban property for 50 years, a ceiling Raúl Castro raised to 99 years in September of last year.

Cuba is also struggling just to feed itself. In preparation for Monday’s legislative meeting, Minister of Agriculture Gustavo Rodríguez announced Friday that the government would have to import even more food this year than planned, because the state failed to produce as much as it anticipated in 11 categories of foodstuffs during the first six months of 2011. It was the second time this year the government was forced to bump up its outlay for foreign food purchases. Costs continue to mount despite a 2009 agricultural reform that distributed usufruct rights to 150,000 families to farm fallow land. BBC correspondent Fernando Ravsberg says the reform has yet to boost production because it does not address the main problem of lack of access to basic resources such as fertilizers, tools, seeds, tractors, and other inputs. Cuba imports somewhere between 60 percent and 80 percent of its food (official and private estimates vary widely).  (continue reading… )


The start of a long, slow goodbye

Posted in News and Articles, Political Risk by politicalrisklatam on April 20, 2011

by The Economist, April 20th, 2011.

Age has at last caught up with the Castros and their revolution. New ideas are emerging slightly faster than new leaders

When serious illness forced him to hand over power in 2006, Fidel Castro had been running things for almost half a century. This included an incident when, needing a knee operation, he contrived to have an epidural so that he could remain conscious and therefore in charge. Under Fidel, term-limits seemed less likely in the Plaza de la Revolución than in, say, Buckingham Palace.

But on April 16th Raúl Castro, who formally took over as president from his older brother in 2008, broke with tradition. Speaking at the opening of a four-day Congress of the ruling Communist Party, he declared that senior officials, including himself, should be limited to two consecutive five-year terms in office. “It’s really embarrassing that we have not solved this problem in more than half a century,” Raúl, who is aged 79, said. As the generation that led the revolution of 1959 has grown old in office, Cuba has lacked “a reserve of well-trained replacements with sufficient experience and maturity,” he admitted.

But the Congress largely failed to put Mr Castro’s words into practice. He was duly elected as party first secretary, replacing Fidel. José Ramon Machado, an 80-year-old Stalinist, will remain his number two, and Ramiro Valdés, aged 78, number three. The 15-member politbureau contains only three new faces. Fidel himself made a surprise appearance at Raúl’s side at the end of the Congress. The message seemed to be that change can only happen if the old guard approve. (continue reading… )

Fidel Castro gives brother key vote of confidence

Posted in News and Articles, Political Risk by politicalrisklatam on April 19, 2011

by Paul Haven for Associated Press, April 17th, 2011.

Fidel Castro apologized on Sunday for not making it to a military parade celebrating the 50th anniversary of his victory over CIA-backed exiles at the Bay of Pigs, then praised brother Raul’s speech proposing major economic changes and term limits for Cuba’s leaders.

The 84-year-old revolutionary icon said in an opinion piece that the speech opening the Sixth Party Congress after Saturday’s parade made him proud, a key vote of confidence in the direction his brother is taking the country.

“It has been worth the trouble to have lived to see today’s events, and it is worth the trouble to always remember those who died to make them possible,” Fidel wrote, adding that he felt “the same feelings of pride” when he heard Raul’s address and saw the faces of the 1,000 Communist Party delegates who attended the speech. (continue reading… )

Frustrated Colombia edges toward Asia

Posted in News and Articles, Political Risk by politicalrisklatam on November 23, 2010

by Henry Mance for Financial Times – Beyond Brics, November 23rd, 2010.

Colombia’s free-trade deal with the US is starting to resemble Fidel Castro’s demise: always so close, yet so far. The pact – intended to lock in Colombia as a economic partner of the US – has been held up by Democrats in Congress since 2006. Barack Obama has spoken in favour of it, but the turgid economy leaves little leeway for anything that might be labelled a jobs-killer.

So Colombians no longer bother sending expensive lobbying teams to Washington. Instead, they’re interpreting Congress’s snub as a reason to look to Asia. Colombia is the biggest economy bordering the Pacific that is not a member of Asia-Pacific Economic Cooperation (Apec). It now plans to join the organisation – and to seal free-trade deals with South Korea, Japan and Singapore, a government official said on a trip to London.

Hernando José Gómez, head of the national planning department, and the man who negotiated the stalled agreement with the US, told beyondbrics that Colombia was conscious of its lack of experience in Asia. So the country is looking to sign deals with “economies that are complementary to, not competing with,” its own. Trade with China, Malaysia and others will only be liberalised at a later stage. (continue reading… )


The other way out

Posted in News and Articles, Political Risk by politicalrisklatam on November 19, 2010

by The Economist – Americas View, November 19th, 2010

For years, international Cuba watchers have predicted two possible solutions to the island’s economic problems. The “biological solution” is the death of Fidel Castro. The “geological solution” is a major oil discovery in Cuba’s section of the Gulf of Mexico. Most have assumed that biology would win.

So far, neither remedy has materialised. Fidel Castro is alive, but no longer president. And despite his looming presence in the background, Raúl Castro, Fidel’s brother and successor as president, is implementing some productive economic reforms that Fidel long resisted.

Concurrently, several international energy companies are making a push to find Cuba’s long-awaited oil. In 2011 at least three exploratory drillings are expected to go ahead. The first is expected to be a consortium led by Spain’s Repsol, the only firm with experience in Cuban waters. In 2004 the company did find oil below the seabed, but deemed it not to be commercially viable. Now, Repsol has teamed up with Norway’s Statoil and India’s Oil and Natural Gas Corporation for a second attempt. The group’s drilling rig is currently being built in China and is expected to arrive in Cuba early next year. (continue reading… )


Reform in Cuba: Towards a mixed economy

Posted in News and Articles, Political Risk by politicalrisklatam on September 17, 2010

by The Economist, September 16th, 2010.

Economic reform begins in earnest.

Ever since Raúl Castro took the reins of power in Cuba in 2006, he has seemed to hint that he wants to reform the island’s moribund centrally planned economy. But the changes he has introduced have been either limited or almost inconsequential, such as giving more freedom to farmers, allowing self-employment for barbers and letting Cubans have (unaffordable) mobile phones. Until now. On September 13th the government announced, through the mouth of the official trade-union confederation, that more than 1m people—a fifth of the workforce—will be made redundant from state jobs, half of them by April 1st 2011.

Some of the unemployed will be offered new government jobs, including in the police and tourism. But hundreds of thousands will be expected to fend for themselves. To help them, self-employment is to be legalised in dozens of areas, from transport to construction. The reforms will also allow many small state-owned businesses to become co-operatives, run by their employees. They will have to pay taxes, though how much has not yet been spelled out.

This amounts to the biggest shake-up of the economy since Fidel Castro expropriated small businesses in 1968, impressing his Soviet benefactors by bringing almost all workers, from shoeshiners to barmen, under state control. In the mid-1990s, when the Soviet Union and its subsidies to Cuba disappeared, Fidel reluctantly allowed Cubans to use the American dollar as legal currency and to engage in petty trade (such as renting rooms and setting up small restaurants). But many of those businesses folded because of high taxes and the complexity of obtaining licences to operate. When Venezuela’s Hugo Chávez became Cuba’s new benefactor, offering cheap oil, Mr Castro re-centralised the economy. (continue reading… )