THE WASHINGTON POST
How to Win the Cuban American Vote
By Jorge Mas SantosSaturday, October 25, 2008; A15
U.S. policy toward Cuba is at best static and at worst counterproductive, a source of increasing frustration to many Cuban Americans. This sad status quo contributes to the challenge that Cuban Americans will face on Election Day as, once again, particularly in Florida, our vote will probably help determine the next occupant of the White House.
The overwhelming majority of Cuban Americans expect the next president to abandon today's failed "wait and hope" policy and adopt a policy of support and engagement directed toward opening new avenues of freedom for the Cuban people as well as enhancing stability in the United States.
The Cuban American National Foundation, the nation's largest Cuban exile organization, has a predominantly Republican membership. Yet our fundamental interest is not partisan politics but helping to restore freedom to our brothers and sisters on the island.
We entered the new millennium expecting U.S. policy toward Cuba to follow the effective model of the West's support for Poland's Solidarity movement and civil society across Eastern Europe. It was our hope that by seeking to empower Cuba's independent civil society through unlimited support for the brave men and women on the island opposing the Castro regime, the energy and resources of the Cuban American community would be unleashed. To this end, we have been sorely disappointed.
As a direct result of President Bush's strategic blunder in 2004 restricting contact with the island, Cuban dissidents have experienced a significant reduction in material and humanitarian assistance. They are also subject to a ban on receiving cash remittances that help them and their families survive. The isolation of these and other Cubans has increased while Fidel Castro's departure from office caught the Bush administration off guard. Together, these developments have helped Raúl Castro consolidate control over the Cuban people.
These failures in U.S. policy undermine important American interests. Just as a democratic Israel is a key U.S. friend in a critical region, a democratic Cuba would be a crucial ally in furthering democracy in Latin America. Cuba is important, also, because the dissatisfaction of its people under the Castro regime is bound to have a significant effect on Floridians and Cuban Americans nationwide. It has in the past.
The next president must put a stop to America's spectator approach. To this end, we have presented the campaigns of Sens. John McCain and Barack Obama with simple recommendations based on two basic premises: (a) the status quo is unacceptable; and (b) change needs to come from within Cuba. Our specific recommendations are:
· Change the rules that make it impossible to send cash aid and allow direct, substantial and unfettered aid to Cuba's dissidents.
· Lift the 2004 restrictions on travel and remittances by Cuban Americans. Removing the handcuffs that have prevented us from becoming active participants in the development of Cuban civil society will make us agents of change.
· Maintain sanctions that diminish the Castro regime's access to hard currency, which it uses to help fund its apparatus of repression.
· Engage democratic and reformist forces in Cuba, including those in the military and in the civilian government. They need to know that they can count on the friendship and support of the United States.
· Rebuild our intelligence capabilities in Cuba; they have been dismantled over the past decade, creating a vulnerability in this nation's security.
Both presidential candidates have made clear that they want to help the Cuban people achieve freedom. But Barack Obama's forward-looking and proactive approach toward empowering the Cuban people is more in line with these proposals than John McCain's vow to continue the Bush administration's policy.
More of the same will not bring about freedom in Cuba, and more must be done to directly assist Cuba's opposition movement. Cuban Americans are wary of empty promises. But on Nov. 4, before casting ballots, we will ask ourselves two important questions: Who will adopt a proactive policy toward Cuba, and if dissidents in Cuba had a vote in our election, for whom would they vote?
The writer is chairman of the Cuban American National Foundation.
var comments_url = "http://www.washingtonpost.com/wp-dyn/content/article/2008/10/24/AR2008102402716_Comments.html" ;
var article_id = "AR2008102402716" ;
Monday, October 27, 2008
Help Cubans enact change from within
THE MIAMI HERALD
OPINION
Posted on Saturday, 10.25.08
U.S. POLICY
Help Cubans enact change from within
BY JORGE MAS SANTOS
www.canf.org
President Ronald Reagan in the State of the Union speech in 1985 said: ''We must not break faith with those who are risking their lives to secure rights which have been ours from birth. Support for freedom fighters is self-defense.'' This commitment translated into a vigorous program of substantial, direct support to the democratic opposition in the Soviet Union and the Eastern bloc.
U.S. policy on Cuba has been devoid of such a vision, turned, instead, into a mere domestic issue where lip service is paid to the cause of freedom but little is done in the way of substance. Two primary considerations have driven U.S. policy on Cuba: the Cuban-American vote in South Florida and avoiding a mass migration from Cuba. For many years, our community's vote could be guaranteed by a photo opportunity in Miami and the quintessential anti-Castro, rhetoric-filled speech. No longer is this the case.
The Cuban American National Foundation strongly supports a policy that uses the embargo and effective sanctions against the oppressive regime but is accompanied by a proactive approach that empowers the Cuban people to enact change from within. What has been touted as a hard-line policy on Cuba is anything but. Rather than an active partner for the Cuban people in pushing for democratic change, the United States has served as a passive bystander doing nothing to derail the now ostensibly seamless dictatorial transition that has taken place in Havana. This administration has failed to destabilize the regime or its mechanisms of internal control.
The result is a policy full of inherent contradictions:
• It has allowed U.S. companies to sell more than $2 billion in agricultural products to the regime during the last eight years, yet it prohibits a Cuban American in Miami from sending a relative basic hygiene products like soap and toothpaste.
• It allows American businessmen to tour Cuba as many times as they choose, spending money in luxury, government-run hotels and restaurants, while it limits to once every three years a granddaughter from visiting her ailing grandmother in a dilapidated housing tenement in Havana.
• It promises to support Cuban dissidents but prohibits critical cash remittances to those on the front lines of the struggle for democracy.
• It forbids person-to-person humanitarian assistance to Cuban victims of the most destructive hurricane season in Cuban history.
By refusing to move beyond the status quo policy, Washington has strangely, or maybe predictably, embraced a policy of accommodation. Waiting for Raúl Castro to reform is not a strategy; it is wishful thinking, it is surrendering a critical juncture in Cuba's history that could make all the difference.
The next president of the United States, whether it is Sen. John McCain or Sen. Barack Obama, will have to adopt a policy toward Cuba that demonstrates a break from the past and a real and substantive commitment to the triumph of democracy that recognizes the very significant role that Cuban Americans must play in helping Cubans on the island win back their freedom.
We must reassure and strengthen the hands of reformists within the Cuban government, those outside the cohorts of Castro, using effective sanctions and other incentives as a trading card for fundamental political and economic reforms. A proactive Cuba policy should, also, include direct, vigorous support in the form of cash aid and substantial material goods to Cuba's brave opposition leaders and members of independent civil society.
We cannot continue to cripple U.S.-Cuba democracy programs with illogical regulations that result in more than 83 percent of the funding being spent outside of Cuba while Cuba's dissidents and political prisoners are unable to meet their family's most basic needs. We need to facilitate the ability for a family member to send their relatives in Cuba cash assistance that not only alleviates real humanitarian need but also allows them to become independent of the state.
With only days before a crucial election, little can be expected from this administration or our elected officials when they refuse to even temporarily lift the 2004 restrictions after two devastating hurricanes. They have forced the democratic opposition in Cuba to make a desperate appeal to First Lady Laura Bush and Commerce Secretary Carlos Gutierrez in a, thus far, unsuccessful effort to push for a moratorium on the restrictions.
We should demand more of our elected leaders. We cannot forfeit our opportunity to influence events in Havana while we wait for Castro to be born again as a democrat. It will not happen. The next U.S. president should usher in a new U.S. policy on Cuba, one that demonstrates the political will and courage that Reagan heralded with his support for the forces of freedom; one that defies the predominant wisdom in Washington that not much can be done, outside the realm of military power, to help a people be free.Jorge Mas Santos is chairman of the board of the Cuban American National Foundation
OPINION
Posted on Saturday, 10.25.08
U.S. POLICY
Help Cubans enact change from within
BY JORGE MAS SANTOS
www.canf.org
President Ronald Reagan in the State of the Union speech in 1985 said: ''We must not break faith with those who are risking their lives to secure rights which have been ours from birth. Support for freedom fighters is self-defense.'' This commitment translated into a vigorous program of substantial, direct support to the democratic opposition in the Soviet Union and the Eastern bloc.
U.S. policy on Cuba has been devoid of such a vision, turned, instead, into a mere domestic issue where lip service is paid to the cause of freedom but little is done in the way of substance. Two primary considerations have driven U.S. policy on Cuba: the Cuban-American vote in South Florida and avoiding a mass migration from Cuba. For many years, our community's vote could be guaranteed by a photo opportunity in Miami and the quintessential anti-Castro, rhetoric-filled speech. No longer is this the case.
The Cuban American National Foundation strongly supports a policy that uses the embargo and effective sanctions against the oppressive regime but is accompanied by a proactive approach that empowers the Cuban people to enact change from within. What has been touted as a hard-line policy on Cuba is anything but. Rather than an active partner for the Cuban people in pushing for democratic change, the United States has served as a passive bystander doing nothing to derail the now ostensibly seamless dictatorial transition that has taken place in Havana. This administration has failed to destabilize the regime or its mechanisms of internal control.
The result is a policy full of inherent contradictions:
• It has allowed U.S. companies to sell more than $2 billion in agricultural products to the regime during the last eight years, yet it prohibits a Cuban American in Miami from sending a relative basic hygiene products like soap and toothpaste.
• It allows American businessmen to tour Cuba as many times as they choose, spending money in luxury, government-run hotels and restaurants, while it limits to once every three years a granddaughter from visiting her ailing grandmother in a dilapidated housing tenement in Havana.
• It promises to support Cuban dissidents but prohibits critical cash remittances to those on the front lines of the struggle for democracy.
• It forbids person-to-person humanitarian assistance to Cuban victims of the most destructive hurricane season in Cuban history.
By refusing to move beyond the status quo policy, Washington has strangely, or maybe predictably, embraced a policy of accommodation. Waiting for Raúl Castro to reform is not a strategy; it is wishful thinking, it is surrendering a critical juncture in Cuba's history that could make all the difference.
The next president of the United States, whether it is Sen. John McCain or Sen. Barack Obama, will have to adopt a policy toward Cuba that demonstrates a break from the past and a real and substantive commitment to the triumph of democracy that recognizes the very significant role that Cuban Americans must play in helping Cubans on the island win back their freedom.
We must reassure and strengthen the hands of reformists within the Cuban government, those outside the cohorts of Castro, using effective sanctions and other incentives as a trading card for fundamental political and economic reforms. A proactive Cuba policy should, also, include direct, vigorous support in the form of cash aid and substantial material goods to Cuba's brave opposition leaders and members of independent civil society.
We cannot continue to cripple U.S.-Cuba democracy programs with illogical regulations that result in more than 83 percent of the funding being spent outside of Cuba while Cuba's dissidents and political prisoners are unable to meet their family's most basic needs. We need to facilitate the ability for a family member to send their relatives in Cuba cash assistance that not only alleviates real humanitarian need but also allows them to become independent of the state.
With only days before a crucial election, little can be expected from this administration or our elected officials when they refuse to even temporarily lift the 2004 restrictions after two devastating hurricanes. They have forced the democratic opposition in Cuba to make a desperate appeal to First Lady Laura Bush and Commerce Secretary Carlos Gutierrez in a, thus far, unsuccessful effort to push for a moratorium on the restrictions.
We should demand more of our elected leaders. We cannot forfeit our opportunity to influence events in Havana while we wait for Castro to be born again as a democrat. It will not happen. The next U.S. president should usher in a new U.S. policy on Cuba, one that demonstrates the political will and courage that Reagan heralded with his support for the forces of freedom; one that defies the predominant wisdom in Washington that not much can be done, outside the realm of military power, to help a people be free.Jorge Mas Santos is chairman of the board of the Cuban American National Foundation
Monday, October 20, 2008
Another Totalitarian Wellspring?
It seems as though cruel geology, and not economics, is the true dismal science. Whether one believes Cubapetroleo's announcement this weekend that Cuba may have oil reserves of 20 bn barrels (about the same as the US, or almost a quarter of Venezuela's reserves) or the US Geological Survey's more conservative estimate of close to 9 bn barrels (putting it between Norway and Mexico), it seems as though Cuba might one day become an oil exporter instead of an importer. There is plenty of talk of Venezuela becoming another Cuba, but can the converse soon be true (without, of course, any redeeming characteristics such as democratic elections)?
If these announcements do prove to be true (and that is a big "if"), and Cuba eventually takes its place among the pantheon of authoritarian regimes that finance their repression through oil, the prospect of liberty and democracy in Cuba will be the biggest casualty. Sure, with increased government income, the regime might afford buying off more of its citizens with an increased standard of living, but it will also strengthen its repressive hand and corrupt institutional hold. And those who struggle for freedom and reform, whether inside of Cuba or in exile, will surely have to adapt their tactics to face the reality of a more formidable tormentor.
But like anything else coming out of Cuba's state controlled propaganda machine (or as it's some times mistakenly characterized: the "press"), these announcements must be taken with a grain of salt. By its own account, Cubapetroleo arrived at these figures by extrapolating data of "very similar" undersea geology with Mexico's Bay of Campeche, as well as their own data and "inside knowledge" of Cuba's off-shore geology (hardly very convincing stuff). And regardless of its true size and Repsol's well (planned for 2009), they are still many years away from any significant amount of oil coming online and shifting the current equation, and these years might be full of challenges that cannot await for a potential oil bonanza off in the future. Besides, we've heard these type of announcements before (although of a different scale), and they didn't prove to be "game changers" in Cuba either.
And the timing is also suspicious. Is it really sheer coincidence and mere fortune that just when the credit crunch and impeding global economic slowdown, the hurricane devastation, and rising food and commodity prices, tighten the vise around the Cuban regime, it suddenly announces a newly discovered source of collateral and investment opportunity? Also, a couple of months before the 111th Congress is sworn in, this move seemingly creates a new anti-embargo constituency, inside the beltway, of "drill baby drill" congressmen and their oil industry lobbyists who will push for unconditional easing so as to not miss out on a cut (although in reality, as a fungible commodity, we can still benefit from the increased global supply of oil while still not importing it from Cuba).
What's your take on the validity of these claims? If there's more than just a semblance of truth to this, what fate do you think awaits Cuba? Will this perpetuate the regime's lifespan much longer after Castro(s) (how much farther in A.C.?) or is this too small a bulwark against the tide of forces pressuring Cuba, both from outside its borders and increasingly within them?
The price of gas might be dropping as demand plunges, but maybe these are still high times for South Florida Toyota Prius dealers.
Here are some of the articles:
BBC
Guardian (UK)
In other Cuba news:
- Due to the aforementioned "discoveries" and their possible implications to the regime, you might expect Raul Castro to be somersaulting the entire length of El Malecon. Instead, he was busy introducing his latest reform aimed at helping the Cuban people, since none have been uttered for quite some time. So in the wake of the utter destruction of the hurricanes, in which tens of thousands of homes were severely damaged or destroyed, Raul was helping to open up a Russian Orthodox church in the officially atheistic country's capital. He's not one to miss an opportunity to rekindle a strategic romance with an old comrade or maybe, now, to pray for more oil.
- Cuba dropped in rankings of infant mortality from 1960 to 2004, as reported by the New York Times. Hong Kong (now #2), Greece, Spain and Portugal, using "different" (i.e. less repressive) development models, are among those who leap-frogged Cuba (and us).
- With growing food and commodity prices, and the devastation of two hurricanes, Cuba faces a food crisis. Does it respond by taking the advice of a Nobel Prize-winner like Amrtya Sen, and just about every other economist in the free world, by liberalizing production, distribution and the market, or does it borrow a page from the ol' socialist planner playbook? Would you like to hazard a guess? So much for all the highly celebrated "reform" talk this summer...
If these announcements do prove to be true (and that is a big "if"), and Cuba eventually takes its place among the pantheon of authoritarian regimes that finance their repression through oil, the prospect of liberty and democracy in Cuba will be the biggest casualty. Sure, with increased government income, the regime might afford buying off more of its citizens with an increased standard of living, but it will also strengthen its repressive hand and corrupt institutional hold. And those who struggle for freedom and reform, whether inside of Cuba or in exile, will surely have to adapt their tactics to face the reality of a more formidable tormentor.
But like anything else coming out of Cuba's state controlled propaganda machine (or as it's some times mistakenly characterized: the "press"), these announcements must be taken with a grain of salt. By its own account, Cubapetroleo arrived at these figures by extrapolating data of "very similar" undersea geology with Mexico's Bay of Campeche, as well as their own data and "inside knowledge" of Cuba's off-shore geology (hardly very convincing stuff). And regardless of its true size and Repsol's well (planned for 2009), they are still many years away from any significant amount of oil coming online and shifting the current equation, and these years might be full of challenges that cannot await for a potential oil bonanza off in the future. Besides, we've heard these type of announcements before (although of a different scale), and they didn't prove to be "game changers" in Cuba either.
And the timing is also suspicious. Is it really sheer coincidence and mere fortune that just when the credit crunch and impeding global economic slowdown, the hurricane devastation, and rising food and commodity prices, tighten the vise around the Cuban regime, it suddenly announces a newly discovered source of collateral and investment opportunity? Also, a couple of months before the 111th Congress is sworn in, this move seemingly creates a new anti-embargo constituency, inside the beltway, of "drill baby drill" congressmen and their oil industry lobbyists who will push for unconditional easing so as to not miss out on a cut (although in reality, as a fungible commodity, we can still benefit from the increased global supply of oil while still not importing it from Cuba).
What's your take on the validity of these claims? If there's more than just a semblance of truth to this, what fate do you think awaits Cuba? Will this perpetuate the regime's lifespan much longer after Castro(s) (how much farther in A.C.?) or is this too small a bulwark against the tide of forces pressuring Cuba, both from outside its borders and increasingly within them?
The price of gas might be dropping as demand plunges, but maybe these are still high times for South Florida Toyota Prius dealers.
Here are some of the articles:
BBC
Guardian (UK)
In other Cuba news:
- Due to the aforementioned "discoveries" and their possible implications to the regime, you might expect Raul Castro to be somersaulting the entire length of El Malecon. Instead, he was busy introducing his latest reform aimed at helping the Cuban people, since none have been uttered for quite some time. So in the wake of the utter destruction of the hurricanes, in which tens of thousands of homes were severely damaged or destroyed, Raul was helping to open up a Russian Orthodox church in the officially atheistic country's capital. He's not one to miss an opportunity to rekindle a strategic romance with an old comrade or maybe, now, to pray for more oil.
- Cuba dropped in rankings of infant mortality from 1960 to 2004, as reported by the New York Times. Hong Kong (now #2), Greece, Spain and Portugal, using "different" (i.e. less repressive) development models, are among those who leap-frogged Cuba (and us).
- With growing food and commodity prices, and the devastation of two hurricanes, Cuba faces a food crisis. Does it respond by taking the advice of a Nobel Prize-winner like Amrtya Sen, and just about every other economist in the free world, by liberalizing production, distribution and the market, or does it borrow a page from the ol' socialist planner playbook? Would you like to hazard a guess? So much for all the highly celebrated "reform" talk this summer...
Sunday, October 19, 2008
Is the oil party over for Chavez, and therefore Cuba?
As many people know, since Chavez took power the Venezuelan economy has become fully dependent on oil exports - particularly to the US - to support the Venezuelan government and society. Additionally, Chavez has used $100+/barrel oil to support a number of Castro-wannabe regimes across Latin America.
The question is how this model will survive with a sustained drop in oil-prices. Estimates vary, but it is believed that Chavez bases his budget on oil at $60-$75/barrel, a range we are very close to. In all likelihood, we are already below the level needed to support Chavez's budget and off-budget spending (i.e., buying Argentine bonds), given the strong pleas for OPEC production cuts by Chaves and Iran. We know what the Castro model predicts will happen next, lets hope that is wrong for the sake of the Venezuelan people.
The bigger impact may be on Cuba, if Chavez is forced to cut oil-subsidies (estimated to be discounted 60%). How will Cuba's non-existent economy survive a 60% rise in oil-costs...not to mention wow the Cuban people will react to more black-outs?
The future in general is uncertain...but what is certain is that Castro and Chavez are already preparing their anti-US speeches for the crisis to come. God forbid they actually accept responsibility before their own citizens.
Below are two articles. The first talks about oil and Chavez's budget...the second how RBS is cutting its credit line to the government.
---------------------------------------------------------------
Tumbling oil could hurt Chavez's revolution
The Associated Press
Saturday, October 18, 2008
As Hugo Chavez gloats over the crisis in the global capitalist system, the Venezuelan president is acting as if his socialist project is somehow immune. But with oil worth half what it was in July, Chavez's free-spending revolution is bound to be hurt.
For starters, he's apt to cut back on the checkbook diplomacy that helps sustain his regional ambitions. But will Chavez be forced to pare down populist handouts to the poor? Slash a bloated government payroll? Try to win over foreign investors he previously alienated?
Opinion is mixed.
"This country is headed for crisis," predicts former Venezuela central bank president Domingo Maza Zavala.
But some economists say Venezuela has experienced far worse in the past. And for now at least, Chavez is showing few signs of concern.
_He plans to boost state spending by 22 percent next year to US$79 billion after nearly tripling Venezuela's budget since 2004. And that is after overspending this year's budget by about 30 percent.
_Venezuela's state oil company has added almost 11,000 workers this year to what many consider an already bloated payroll, boosting the number of workers to more than 70,400.
_The military said this week that it would buy dozens of Russian tanks and armored vehicles, adding to more than US$4 billion in arms purchases from Moscow.
_And Chavez's government now plans to reduce the workday from eight to six hours, something critics say could put a squeeze on the private sector just as times are getting tough.
"We have the ability to weather this crisis," Chavez told state television Thursday from the presidential palace. He added that he isn't "singing victory" and that the government will review all spending and "watch every cent."
Finance Minister Ali Rodriguez said this month that cost-cutting will be unavoidable — but the only cuts he initially mentioned involved taking government SUVs off the road, slicing cell phone bills and holding less-extravagant parties. Oil prices were down when he spoke — but not to the level they reached Friday: about US$68 a barrel for Venezuelan crude.
On Friday, Rodriguez said the government could raise the price of gasoline, currently 12 cents a gallon.
"It's not in my hands to say it at the moment, but I won't rule it out. It's a decision that's not even being studied yet," he said.
Oil prices are also hurting a key Chavez ally, President Rafael Correa of Ecuador. Like Chavez, he has relied on high crude revenues to ease the burden on his country's poor, and like Chavez he has created expectations of an enduring social safety net.
Both countries' economies depend mightily on petroleum. It accounts for 94 percent of Venezuela's exports and half the national budget. In Ecuador, it's 70 percent of exports and a third of the budget.
Pollster Alfredo Keller says Venezuelans consider a share of petro-profits their birthright: "The dominant idea is that Venezuela is a very rich country and thus poverty is solved when the administrator of riches, the government, distributes them."
So no matter how low oil prices drop, he predicts Chavez won't dare cut social programs, which include subsidized food and free education. Nor, he says, will Chavez cut a government payroll that has swelled to 2 million people — roughly one in 14 Venezuelans.
Chavez's popularity dropped last year when Venezuela — a net importer of food and durable goods — experienced sporadic food shortages. Polls show Chavez has since recovered. But especially with Caracas inflation at 36 percent, some people are worried.
"The only thing we produce is oil. We live from imports," said Franco Bolivar, a 50-year-old importer. "Imagine if there are no dollars. How will we buy? How will we import?"
Many economists believe Venezuela's cushion against fiscal disaster is more than adequate to stand up to anything short of a global depression. Venezuela has international reserves of almost US$40 billion, Chavez says, and total reserves on the order of US$100 billion.
That should allow Chavez to "weather the storm without making any significant adjustments for at least 18 to 24 months," said analyst Patrick Esteruelas of the Eurasia Group.
Ana Maria Di Leo, head economist at the newsletter Veneconomia, says Venezuela has seen worse in the past — including a 1994 banking crisis and oil prices as low as US$6 a barrel.
But some analysts believe Chavez will nevertheless cut back on hundreds of millions worth of petrodollar diplomacy — which has included underwriting eye surgery in Peru and building soccer fields in Bolivia.
Venezuela needs to export oil at US$94 a barrel in order to offset its imports of goods and services, according to calculations by PFC Energy, a Washington-based consulting firm.
The United States has long had a similar "balance of payments" problem but offsets it by selling Treasury bonds that people readily buy, said RoseAnne Franco, an analyst at the firm.
"Venezuela," she said, "does not have the same array of options."
The Petrocaribe program, through which Chavez sells oil at highly favorable rates to Caribbean and Central American states — has already been affected. Venezuela has financed well over US$2 billion in sales since 2005 to its 18 members.
As long as oil was over US$100 per barrel, Petrocaribe members had only to pay 40 percent of the bill immediately, canceling the balance over 25 years at 1 percent interest.
Under the agreement, once crude prices fall below US$80 a barrel, the initial payment jumps to 50 percent. It goes to 60 percent if oil hits US$50 a barrel.
___
Associated Press Writers Rachel Jones, Fabiola Sanchez and Ian James in Caracas and Jeanneth Valdivieso in Quito contributed to this report.
Venezuela State Oil Company Loses Credit Line
HUGO CHAVEZ, VENEZUELA, PDVSA, OIL, ENERGY, OIL AND GAS, ENERGY PRICES, SOCIALIST, RBC, ROYAL BANK OF SCOTLAND
CNBC.com
17 Oct 2008 06:35 PM ET
function UpdateTimeStamp(pdt) {
var n = document.getElementById("udtD");
if(pdt != '' && n && window.DateTime) {
var dt = new DateTime();
pdt = dt.T2D(pdt);
if(dt.GetTZ(pdt)) {n.innerHTML = dt.D2S(pdt,(('false'.toLowerCase()=='false')?false:true));}
}
}
UpdateTimeStamp('633598797487670000');
Venezuela's state run oil company, PDVSA, is urgently searching for replacement financing after losing a line of credit of more than $5 billion from the Royal Bank of Scotland, CNBC has learned.
PDVSA had an agreement in principle with RBS until the UK government stepped in last week and bailed out the troubled bank. RBS then rescinded the financing, citing market conditions.
Now, a source within the US administration says Hugo Chavez's government is giving off indications that it's strapped for cash.
As an oil-producing country, Venezuela should be swimming in cash. A member of it OPEC, it's believed to pump roughly 2.6 million barrels of oil per day, though the exact number is disputed.
Also in question is how much oil Venezuela actually sells. Chavez distributes 800,000 barrels per day internally for his citizens’ use, and then another 300,000 barrels per day to friendly Latin American neighbors, such as Cuba and Bolivia, at highly subsidized prices.
Chavez also has been spending money extensively, both internally and overseas, as he builds what he calls his “Bolivarian Socialist Revolution.” Just how much the president spends is unclear, because Venezuelan government finances are opaque.
In a speech Thursday, Chavez put Venezuela's savings at $100 billion. But in terms of actual reserves that can be measured by the international banking system, that figure is closer to $39 billion dollars. Video: How Low Can Oil Go?
Six months ago, Venezuela's bonds were yielding between 7-9 percent depending on maturity. Currently yields have dropped to a range of 15 percent to 16 percent, indicating investors are increasingly nervous about getting paid back on the bonds.
© 2008 CNBC.com
var url=location.href;var i=url.indexOf('/did/') + 1;if(i==0){i=url.indexOf('/print/1/') + 1;}if(i==0){i=url.indexOf('&print=1');}if(i>0){url = url.substring(0,i);document.write('URL: '+url+'');if(window.print){window.print()}else{alert('To print his page press Ctrl-P on your keyboard \nor choose print from your browser or device after clicking OK');}}
The question is how this model will survive with a sustained drop in oil-prices. Estimates vary, but it is believed that Chavez bases his budget on oil at $60-$75/barrel, a range we are very close to. In all likelihood, we are already below the level needed to support Chavez's budget and off-budget spending (i.e., buying Argentine bonds), given the strong pleas for OPEC production cuts by Chaves and Iran. We know what the Castro model predicts will happen next, lets hope that is wrong for the sake of the Venezuelan people.
The bigger impact may be on Cuba, if Chavez is forced to cut oil-subsidies (estimated to be discounted 60%). How will Cuba's non-existent economy survive a 60% rise in oil-costs...not to mention wow the Cuban people will react to more black-outs?
The future in general is uncertain...but what is certain is that Castro and Chavez are already preparing their anti-US speeches for the crisis to come. God forbid they actually accept responsibility before their own citizens.
Below are two articles. The first talks about oil and Chavez's budget...the second how RBS is cutting its credit line to the government.
---------------------------------------------------------------
Tumbling oil could hurt Chavez's revolution
The Associated Press
Saturday, October 18, 2008
As Hugo Chavez gloats over the crisis in the global capitalist system, the Venezuelan president is acting as if his socialist project is somehow immune. But with oil worth half what it was in July, Chavez's free-spending revolution is bound to be hurt.
For starters, he's apt to cut back on the checkbook diplomacy that helps sustain his regional ambitions. But will Chavez be forced to pare down populist handouts to the poor? Slash a bloated government payroll? Try to win over foreign investors he previously alienated?
Opinion is mixed.
"This country is headed for crisis," predicts former Venezuela central bank president Domingo Maza Zavala.
But some economists say Venezuela has experienced far worse in the past. And for now at least, Chavez is showing few signs of concern.
_He plans to boost state spending by 22 percent next year to US$79 billion after nearly tripling Venezuela's budget since 2004. And that is after overspending this year's budget by about 30 percent.
_Venezuela's state oil company has added almost 11,000 workers this year to what many consider an already bloated payroll, boosting the number of workers to more than 70,400.
_The military said this week that it would buy dozens of Russian tanks and armored vehicles, adding to more than US$4 billion in arms purchases from Moscow.
_And Chavez's government now plans to reduce the workday from eight to six hours, something critics say could put a squeeze on the private sector just as times are getting tough.
"We have the ability to weather this crisis," Chavez told state television Thursday from the presidential palace. He added that he isn't "singing victory" and that the government will review all spending and "watch every cent."
Finance Minister Ali Rodriguez said this month that cost-cutting will be unavoidable — but the only cuts he initially mentioned involved taking government SUVs off the road, slicing cell phone bills and holding less-extravagant parties. Oil prices were down when he spoke — but not to the level they reached Friday: about US$68 a barrel for Venezuelan crude.
On Friday, Rodriguez said the government could raise the price of gasoline, currently 12 cents a gallon.
"It's not in my hands to say it at the moment, but I won't rule it out. It's a decision that's not even being studied yet," he said.
Oil prices are also hurting a key Chavez ally, President Rafael Correa of Ecuador. Like Chavez, he has relied on high crude revenues to ease the burden on his country's poor, and like Chavez he has created expectations of an enduring social safety net.
Both countries' economies depend mightily on petroleum. It accounts for 94 percent of Venezuela's exports and half the national budget. In Ecuador, it's 70 percent of exports and a third of the budget.
Pollster Alfredo Keller says Venezuelans consider a share of petro-profits their birthright: "The dominant idea is that Venezuela is a very rich country and thus poverty is solved when the administrator of riches, the government, distributes them."
So no matter how low oil prices drop, he predicts Chavez won't dare cut social programs, which include subsidized food and free education. Nor, he says, will Chavez cut a government payroll that has swelled to 2 million people — roughly one in 14 Venezuelans.
Chavez's popularity dropped last year when Venezuela — a net importer of food and durable goods — experienced sporadic food shortages. Polls show Chavez has since recovered. But especially with Caracas inflation at 36 percent, some people are worried.
"The only thing we produce is oil. We live from imports," said Franco Bolivar, a 50-year-old importer. "Imagine if there are no dollars. How will we buy? How will we import?"
Many economists believe Venezuela's cushion against fiscal disaster is more than adequate to stand up to anything short of a global depression. Venezuela has international reserves of almost US$40 billion, Chavez says, and total reserves on the order of US$100 billion.
That should allow Chavez to "weather the storm without making any significant adjustments for at least 18 to 24 months," said analyst Patrick Esteruelas of the Eurasia Group.
Ana Maria Di Leo, head economist at the newsletter Veneconomia, says Venezuela has seen worse in the past — including a 1994 banking crisis and oil prices as low as US$6 a barrel.
But some analysts believe Chavez will nevertheless cut back on hundreds of millions worth of petrodollar diplomacy — which has included underwriting eye surgery in Peru and building soccer fields in Bolivia.
Venezuela needs to export oil at US$94 a barrel in order to offset its imports of goods and services, according to calculations by PFC Energy, a Washington-based consulting firm.
The United States has long had a similar "balance of payments" problem but offsets it by selling Treasury bonds that people readily buy, said RoseAnne Franco, an analyst at the firm.
"Venezuela," she said, "does not have the same array of options."
The Petrocaribe program, through which Chavez sells oil at highly favorable rates to Caribbean and Central American states — has already been affected. Venezuela has financed well over US$2 billion in sales since 2005 to its 18 members.
As long as oil was over US$100 per barrel, Petrocaribe members had only to pay 40 percent of the bill immediately, canceling the balance over 25 years at 1 percent interest.
Under the agreement, once crude prices fall below US$80 a barrel, the initial payment jumps to 50 percent. It goes to 60 percent if oil hits US$50 a barrel.
___
Associated Press Writers Rachel Jones, Fabiola Sanchez and Ian James in Caracas and Jeanneth Valdivieso in Quito contributed to this report.
Venezuela State Oil Company Loses Credit Line
HUGO CHAVEZ, VENEZUELA, PDVSA, OIL, ENERGY, OIL AND GAS, ENERGY PRICES, SOCIALIST, RBC, ROYAL BANK OF SCOTLAND
CNBC.com
17 Oct 2008 06:35 PM ET
function UpdateTimeStamp(pdt) {
var n = document.getElementById("udtD");
if(pdt != '' && n && window.DateTime) {
var dt = new DateTime();
pdt = dt.T2D(pdt);
if(dt.GetTZ(pdt)) {n.innerHTML = dt.D2S(pdt,(('false'.toLowerCase()=='false')?false:true));}
}
}
UpdateTimeStamp('633598797487670000');
Venezuela's state run oil company, PDVSA, is urgently searching for replacement financing after losing a line of credit of more than $5 billion from the Royal Bank of Scotland, CNBC has learned.
PDVSA had an agreement in principle with RBS until the UK government stepped in last week and bailed out the troubled bank. RBS then rescinded the financing, citing market conditions.
Now, a source within the US administration says Hugo Chavez's government is giving off indications that it's strapped for cash.
As an oil-producing country, Venezuela should be swimming in cash. A member of it OPEC, it's believed to pump roughly 2.6 million barrels of oil per day, though the exact number is disputed.
Also in question is how much oil Venezuela actually sells. Chavez distributes 800,000 barrels per day internally for his citizens’ use, and then another 300,000 barrels per day to friendly Latin American neighbors, such as Cuba and Bolivia, at highly subsidized prices.
Chavez also has been spending money extensively, both internally and overseas, as he builds what he calls his “Bolivarian Socialist Revolution.” Just how much the president spends is unclear, because Venezuelan government finances are opaque.
In a speech Thursday, Chavez put Venezuela's savings at $100 billion. But in terms of actual reserves that can be measured by the international banking system, that figure is closer to $39 billion dollars. Video: How Low Can Oil Go?
Six months ago, Venezuela's bonds were yielding between 7-9 percent depending on maturity. Currently yields have dropped to a range of 15 percent to 16 percent, indicating investors are increasingly nervous about getting paid back on the bonds.
© 2008 CNBC.com
var url=location.href;var i=url.indexOf('/did/') + 1;if(i==0){i=url.indexOf('/print/1/') + 1;}if(i==0){i=url.indexOf('&print=1');}if(i>0){url = url.substring(0,i);document.write('URL: '+url+'');if(window.print){window.print()}else{alert('To print his page press Ctrl-P on your keyboard \nor choose print from your browser or device after clicking OK');}}
Wednesday, October 8, 2008
Communist experiment or a victory for the opposition?
I found this article very interesting and wanted to share it with you all. As some of you know, a group of female activists in Cuba (FLAMUR) has received attention for a campaign they created called "Con la Misma Moneda" which touches on this very issue - economic discrimination due to the dual-currency system on the island. I can't help but wonder... is this finally a victory for the opposition?
------------------------------------------------------------------------------------------
'Peso paradise' in Cuban town
The Associated Press
Monday, October 6th 2008, 11:01 AM
Ismael Gonzalez/AP
A local vendor attends a family at the "Amanecer" ice cream in Bayamo, in Granma's province, Cuba.
BAYAMO, Cuba — A communist experiment is letting average government workers in this eastern city enjoy a few things only foreigners and monied Cubans can usually afford: a good burger, a kicking jazz bar and stiff cocktails. Across the rest of the island, monthly government salaries of 408 pesos, about $19.50, don't cover grocery bills, let alone a night out. But in Bayamo the central government has made a special effort to support peso businesses, giving the lowly currency actual buying power.
Along the stylish pedestrian mall known as "Paseo" or "The Boulevard," six blocks of restaurants, barber shops, ice cream parlors and department stores give Cubans a taste of tourist life at local prices. Jazz bands jam for free until 2 a.m. at the Piano Bar, where mojitos go for just 5.50 pesos, or 30 cents. A 1950s-style diner serves up tasty meatball sandwiches for about half a peso — the equivalent of three cents — and four scoops of the richest ice cream in Cuba for about the same price.
"Almost everyone who comes in is surprised at first. The music is good. The cocktails are strong," said Ernesto Aldana of the Piano Bar, where the Cuba Libre — copious rum pours with ice and splashes of cola and lime — costs 4.80 pesos, the equivalent of less than 25 cents.
"It's like you're paying in dollars," Aldana said. "But you're not."
Under the country's dual currency system, most things Cubans want and need are not available in the money they earn — the regular Cuban peso which is worth a little more than 4 cents. Virtually all upscale businesses across the island are priced for foreigners in so-called convertible pesos worth $1.08 each, 24 times as much. Cuba has had two currencies since the collapse of the Soviet Union wrecked its economy and spurred its turn to tourism. Tourist businesses took U.S. dollars and charged U.S. prices, while the peso was maintained for everyday transactions. The convertible peso, also called hard currency, was born around the same time but took on its current value in 2004, when the government banned the use of the U.S. dollar.
Cubans have long hoped the government would merge the two pesos and close the gap between the goods and services they and foreigners can afford. But so far, nothing has changed under Raul Castro, who took over as president from his ailing brother, Fidel, earlier this year. Cuba's government historically has chosen provincial areas to test potential economic policy changes. In Bayamo, a city of 140,000 and the capital of Granma province, leaders of the regional Communist Party began expanding peso businesses in 2005.
"Normally, there's a gap between quality of service to foreigners and service to Cubans," said Isidro Alonso of Bayamo's Communist Party's Committee on Ideology. "We are working to erase that."
Huge government subsidies are needed. Paseo businesses here take in only 1,000 to 1,700 pesos a day, or $50 to $80. And the program only took shape after Bayamo communists asked central government planners for special autonomy and won the right to sell regionally produced items such as rum, seafood, beer, yogurt, beef, ice cream and cheese to local residents, rather than shipping them elsewhere on the island.
"We would see products like powdered milk made here and sold somewhere else and we said, 'How is this possible? If we make it in Granma, we should be selling it in Granma,'" Alonso said. However, rising global commodity prices have made Bayamo's government subsidies more costly, while hurricanes Gustav and Ike in recent weeks dealt serious blows to Cuban food production. The government recently ordered all provinces to contribute more food to all parts of the country and reduce Cuba's dependence on foreign imports, said Humberto Rondon, technical director for production at a state cheese and ice cream factory outside Bayamo. In Granma's case, officials will now have to ship about 80 percent of its cheese to points elsewhere in Cuba.
Despite the hurricanes and rising food prices, the Bayamo experiment is so successful that the central government in Havana is continuing to devote $10 million this year to reopen some peso businesses and cover operating expenses of those already established, Alonso said. There are ordinary peso businesses all over Cuba, but the products are shoddy and service is mediocre. Shortages of everything from potatoes to pasta mean most of the dishes listed on peso restaurant menus aren't available, while peso stores have long lines of customers for mismatched inventory on largely empty shelves.
Contrast that with Bayamo, where the raw juice bar offers freshly squeezed mango or papaya juice for the equivalent of less than a nickel. The fully stocked dairy stays open until 11 p.m. on Saturdays. Ground beef is often hard to come by elsewhere, but here two hamburger joints serve up double patties heaped with ham for about $0.40 in pesos. There's an office supply store, a flower shop, two beauty parlors, a pair of seafood restaurants, a Spanish eatery and a place offering passable vegetarian dishes.
"Usually, without hard currency, you never go to restaurants, you never go out on Friday nights. But here you can," said Vilna Lopez, who rents rooms in her home three blocks from Paseo. Out-of-towners even brave long bus rides to spend their pesos in Bayamo.
"I would like to take this place home with me, and I'm from Havana," said Alexey Rodriguez, visiting from the capital 460 miles to the northwest. But the Bayamo experiment is too expensive to work on a larger scale. And it has not done enough to soften the sting of the dual currency system for many. Ana Luisa Gonzalez earns 225 pesos a month as a street sweeper on Paseo. Her son works at a tampon factory. A portion of his pay comes in convertible pesos.
"We live on that," Gonzalez said. "Salaries in (regular) pesos have no value." When asked about all there is to buy along Paseo, the 50-year-old shook her head and said even here, her salary isn't enough. One large block of cheese is 80 pesos. "If I buy two cheeses and two yogurts here, there goes all my salary," she said. "Then what?"
------------------------------------------------------------------------------------------
'Peso paradise' in Cuban town
The Associated Press
Monday, October 6th 2008, 11:01 AM
Ismael Gonzalez/AP
A local vendor attends a family at the "Amanecer" ice cream in Bayamo, in Granma's province, Cuba.
BAYAMO, Cuba — A communist experiment is letting average government workers in this eastern city enjoy a few things only foreigners and monied Cubans can usually afford: a good burger, a kicking jazz bar and stiff cocktails. Across the rest of the island, monthly government salaries of 408 pesos, about $19.50, don't cover grocery bills, let alone a night out. But in Bayamo the central government has made a special effort to support peso businesses, giving the lowly currency actual buying power.
Along the stylish pedestrian mall known as "Paseo" or "The Boulevard," six blocks of restaurants, barber shops, ice cream parlors and department stores give Cubans a taste of tourist life at local prices. Jazz bands jam for free until 2 a.m. at the Piano Bar, where mojitos go for just 5.50 pesos, or 30 cents. A 1950s-style diner serves up tasty meatball sandwiches for about half a peso — the equivalent of three cents — and four scoops of the richest ice cream in Cuba for about the same price.
"Almost everyone who comes in is surprised at first. The music is good. The cocktails are strong," said Ernesto Aldana of the Piano Bar, where the Cuba Libre — copious rum pours with ice and splashes of cola and lime — costs 4.80 pesos, the equivalent of less than 25 cents.
"It's like you're paying in dollars," Aldana said. "But you're not."
Under the country's dual currency system, most things Cubans want and need are not available in the money they earn — the regular Cuban peso which is worth a little more than 4 cents. Virtually all upscale businesses across the island are priced for foreigners in so-called convertible pesos worth $1.08 each, 24 times as much. Cuba has had two currencies since the collapse of the Soviet Union wrecked its economy and spurred its turn to tourism. Tourist businesses took U.S. dollars and charged U.S. prices, while the peso was maintained for everyday transactions. The convertible peso, also called hard currency, was born around the same time but took on its current value in 2004, when the government banned the use of the U.S. dollar.
Cubans have long hoped the government would merge the two pesos and close the gap between the goods and services they and foreigners can afford. But so far, nothing has changed under Raul Castro, who took over as president from his ailing brother, Fidel, earlier this year. Cuba's government historically has chosen provincial areas to test potential economic policy changes. In Bayamo, a city of 140,000 and the capital of Granma province, leaders of the regional Communist Party began expanding peso businesses in 2005.
"Normally, there's a gap between quality of service to foreigners and service to Cubans," said Isidro Alonso of Bayamo's Communist Party's Committee on Ideology. "We are working to erase that."
Huge government subsidies are needed. Paseo businesses here take in only 1,000 to 1,700 pesos a day, or $50 to $80. And the program only took shape after Bayamo communists asked central government planners for special autonomy and won the right to sell regionally produced items such as rum, seafood, beer, yogurt, beef, ice cream and cheese to local residents, rather than shipping them elsewhere on the island.
"We would see products like powdered milk made here and sold somewhere else and we said, 'How is this possible? If we make it in Granma, we should be selling it in Granma,'" Alonso said. However, rising global commodity prices have made Bayamo's government subsidies more costly, while hurricanes Gustav and Ike in recent weeks dealt serious blows to Cuban food production. The government recently ordered all provinces to contribute more food to all parts of the country and reduce Cuba's dependence on foreign imports, said Humberto Rondon, technical director for production at a state cheese and ice cream factory outside Bayamo. In Granma's case, officials will now have to ship about 80 percent of its cheese to points elsewhere in Cuba.
Despite the hurricanes and rising food prices, the Bayamo experiment is so successful that the central government in Havana is continuing to devote $10 million this year to reopen some peso businesses and cover operating expenses of those already established, Alonso said. There are ordinary peso businesses all over Cuba, but the products are shoddy and service is mediocre. Shortages of everything from potatoes to pasta mean most of the dishes listed on peso restaurant menus aren't available, while peso stores have long lines of customers for mismatched inventory on largely empty shelves.
Contrast that with Bayamo, where the raw juice bar offers freshly squeezed mango or papaya juice for the equivalent of less than a nickel. The fully stocked dairy stays open until 11 p.m. on Saturdays. Ground beef is often hard to come by elsewhere, but here two hamburger joints serve up double patties heaped with ham for about $0.40 in pesos. There's an office supply store, a flower shop, two beauty parlors, a pair of seafood restaurants, a Spanish eatery and a place offering passable vegetarian dishes.
"Usually, without hard currency, you never go to restaurants, you never go out on Friday nights. But here you can," said Vilna Lopez, who rents rooms in her home three blocks from Paseo. Out-of-towners even brave long bus rides to spend their pesos in Bayamo.
"I would like to take this place home with me, and I'm from Havana," said Alexey Rodriguez, visiting from the capital 460 miles to the northwest. But the Bayamo experiment is too expensive to work on a larger scale. And it has not done enough to soften the sting of the dual currency system for many. Ana Luisa Gonzalez earns 225 pesos a month as a street sweeper on Paseo. Her son works at a tampon factory. A portion of his pay comes in convertible pesos.
"We live on that," Gonzalez said. "Salaries in (regular) pesos have no value." When asked about all there is to buy along Paseo, the 50-year-old shook her head and said even here, her salary isn't enough. One large block of cheese is 80 pesos. "If I buy two cheeses and two yogurts here, there goes all my salary," she said. "Then what?"
Tuesday, October 7, 2008
Qatar & Select Middle Eastern Muslim Investment - Cuba's Burgeoning Trade Partner Part "Dos"
This is the second piece of a two part series published by the Institute for Cuban and Cuban American Studies' Cuba Transition Project (see below "Iran & Select Middle Eastern Muslim Countries - Cuba's Burgeoning Trade Partner" posted on August 11, 2008). Of note, is arguably the biggest foreign investment commitment to Cuba in the post - Soviet Union era -- United Arab Emirates-based Dubai Ports World (DP World) US $250 million commitment to form a joint venture with the Cuban government to transform the Port of Mariel into a word-class port that by 2012 -- and what amongst other things it may suggest, "a high degree of trust in the stability of the Castro regime as well as confidence in the longer-term economic value of the island."
Hans de Salas-del Valle*
Islamic Investment in Cuba: Part II
The reach of Cuban diplomacy in today’s Middle East transcends Havana’s historic alliances with fellow archenemies of the United States and the West. Since Fidel Castro’s first foray into Middle Eastern affairs in the early 1960s (1), an eclectic array of anti-American regimes from North Africa to the Persian Gulf, among them Saddam Hussein’s Iraq, Qaddafi’s Libya, and the Iran of the Ayatollahs, have all found a friend in Castro’s Cuba.
The island’s longstanding political alignment with Iran, for instance, has expanded into a billion-dollar financial lifeline from Tehran to Havana. (2) Yet, the best measure of Havana’s recent diplomatic triumphs in the region lies in its rising profile as a pragmatic geostrategic partner and safe haven for Islamic interests in the Western hemisphere. The fact that even allies of the U.S., including the moderate Persian Gulf states of Qatar and the United Arab Emirates, are investing in Cuba and collaborating with the government of General Raúl Castro is itself indicative of the Cuban regime’s remarkable ability to continue to circumvent and outmaneuver Washington around the world.
Qatar
In April 2008, Qatar’s real estate development fund Qatari Diar announced that it will invest $70 million in a joint venture with Cuba’s state-run Gran Caribe hotel group to build a 200-room five-star hotel and an accompanying 60 luxury villas on Cayo Largo, an exclusive island resort off the Cuban mainland. (3) The commitment of Qatari capital in Cuba is the culmination of many years of political courting by Fidel Castro, who in September 2000 bestowed Cuba’s highest honor, the Order of José Martí, on Qatar’s ruling emir Sheikh Hamad bin Khalifa al-Thani. At $70 million, the investment by Qatar surpasses in value the declining number of new business deals with Spain and other European nations, which have dominated Cuba’s hospitality sector since the Castro regime opened the island to foreign investment in the early 1990s. Moreover, such a large infusion of capital by Qatari Diar, a government-funded subsidiary of the Qatar Investment Authority, suggests a high degree of trust in the stability of the Castro regime as well as confidence in the longer-term economic value of the island.
Indeed, Qatar has also signed an accord with Havana for the services of Cuban public health professionals to establish and operate a new comprehensive hospital, staffed and supervised by Cuban physicians and specialists, in the Qatari town of Dukhan. (4) While the details of the deal have not been released, the contract with the wealthy Gulf emirate will undoubtedly generate a substantial stream of hard-currency revenue for the Cuban government. Qatar is a potentially very lucrative market for the export of Cuban medical services as Havana increasingly relies on hiring out physicians and other highly-skilled Cuban workers to developing countries in order to compensate for the low productivity of the Cuban economy. (5)
OPEC Fund
The Organization of Petroleum Exporting Countries (OPEC) has emerged as one of the island’s largest aid donors since 2003, when Cuba ended all official cooperation with the European Union (EU) and rejected further bilateral assistance from most EU member states. Through the Vienna-based OPEC Fund for International Development, the oil cartel has funneled more than $50 million in low-interest development loans to the Cuban government for major investments in electrical infrastructure, water sanitation, and agricultural production. (6) And unlike the aid provided by European and other Western governments, which publicly reprimanded the Castro regime following the widespread repression of Cuban dissidents in 2003, the OPEC Fund does not exert any pressure on Cuba to democratize its political system or liberalize its economy.
It is undoubtedly for this reason, as well as for the magnitude of the aid itself, that Cuban vice president Carlos Lage has praised the OPEC Fund as “one of the few institutions left in the world that offer[s] such concessional and untied aid,” (7) i.e., with no reform conditions attached. Considering that grants and other assistance from Spain, the island’s leading European investor which at times has sought to use its economic presence as leverage to influence the direction of a post-Fidel Cuba, totaled 44 million euros (about US$56 million) over a three-year period from 2004 through 2006 (8), aid from the OPEC Fund and other alternative sources has enabled the Cuban government to break its post-Soviet dependency on Western donors and in the process largely nullify Spanish and EU political pressure on the Castro regime, especially at times of crisis.
Dubai Ports: Mariel v. Miami
After Congress forced the United Arab Emirates-based Dubai Ports World (DP World) to sell its operations at six U.S. ports, including New York and Miami, to a U.S. company in response to the perceived security implications of an Islamic firm running major American ports, the Dubai-owned marine terminal operator found an alternative to Miami in the Cuban seaport of Mariel. In what may be the single most ambitious foreign financed project in Cuba since the collapse of the Soviet Union, DP World, which is backed by the sovereign wealth fund of the emirate of Dubai, revealed in October 2007 that it will commit some US$250 million in a joint venture with the Cuban government to transform Mariel, about 30 miles to the west of Havana, into a world-class transshipment center. The flow of Arab capital into an undervalued but strategic asset like Mariel could transform Cuba once again into a major entrepôt at the crossroads of the global economy.
A prescient analysis in The Economist argues that by the time DP World completes its planned modernization and expansion of the Cuban port’s facilities in 2012, “Mariel…would be a well-positioned hub” with the potential to compete for international business. (9) East Asian container lines (DP World, currently the third largest international shipping terminal operator, manages several ports in China) might be willing to reroute their vessels via Cuba for both economic and political reasons. How? Assuming that Washington’s trade sanctions against Cuba have been lifted or relaxed sufficiently so as to allow merchandise imports from the island to enter the U.S. market, by the end of the next administration in the White House both Cuban and multinational “goods could be transferred from the big container ships arriving at the port to smaller vessels which could then reach dozens of harbours in the southern United States.” (10) The possibility that a DP World-run Mariel could eventually challenge Miami’s dominance as the preferred commercial port along the Florida Straits has already been acknowledged by the current director of the Port of Miami with “great concern” at what lies “right around the corner” in 2012. (11)
Cuba, 2012: Islamic Island?
It is not likely that a substantial segment of the island’s population will convert to Islam in the near future or that the fundamentally secular nature of Cuban society will be altered by recent contacts with the Muslim cultures. Nevertheless, the emerging economic ties with Islamic nations do suggest that Cuba is seen as a secure and stable country for Islamic capital and as a reliable political partner to Islamic regimes.
The immediate concerns of most Western observers with respect to Cuba, particularly in light of the catastrophic costs to the island’s economy and infrastructure by hurricanes of recent memory, tend to be short-sighted. While the danger of short-term social upheaval must always be taken into account, it is unlikely that Havana’s allies will allow the strategically located island to sink into chaos simply for a lack of resources, which they are able and willing to provide as a long-term investment in Raúl’s regime. Instead of short-term apocalyptic fears, Islamic investors have demonstrated confidence in Raúl’s vision of a Beijing in the tropics.
By 2012, the island could very well become a leading financial and logistics center for Islamic firms seeking proximity to the United States while remaining beyond the reach of Washington’s policies and regulations. Only Cuba could offer such a safe haven for Islamic capital and interests.
_________________________________________________
Notes
(1) Cf. Piero Gleijeses, “Cuba’s First Venture in Africa: Algeria, 1961-1965,” Journal of Latin American Studies, Vol. 28, No. 1 (Feb. 1996), pp. 159-195.
(2) See “Islamic Investment in Cuba,” Cuba Focus, August 11, 2008, http://ctp.iccas.miami.edu/FOCUS_Web/Issue99.htm.
(3) Amy Glass, “Qatar to build $70 mn Cuba resort,” ArabianBusiness.com, April 29, 2008, http://www.arabianbusiness.com/517917-qatar-investment-authority-signed-70mln-deal-with-cuban-republic (accessed September 2008).
(4) “Qatar, Cuba sign deal on medical services,” Doha, The Peninsula, April 23, 2008.
(5) Cf. Marc Frank, “Cuban service exports continue dramatic rise,” Havana, Reuters, January 10, 2008, http://in.reuters.com/article/asiaCompanyAndMarkets/idINN1016624020080110.
(6) Cf. OPEC Fund for International Development, “Country Profiles, Cuba,” http://www.ofid.org/projects_operations/latamerica/cuba.html, (accessed September 2008).
(7) OPEC Fund for International Development, “Cuban Vice-President visits OFID,” Press release, Vienna, May 17, 2006.
(8) “España reactiva la cooperación con Cuba,” El Mundo (Spain), September 30, 2007. The approximate value of euros to U.S. dollars is based on October 2006 exchange rates.
(9) “Foreign investment in Cuba: Bye-bye embargo?” The Economist, November 22, 2007.
(10) Ibid.
(11) “Port Director Expresses Concern Over Cuba’s Mariel,” Miami, Local 10.com, April 14, 2008, http://www.local10.com/news/15875315/detail.html.
_________________________________________________
* Hans de Salas del Valle is a Research Associate, Cuba Transition Project, Institute for Cuban and Cuban-American Studies, University of Miami.
Hans de Salas-del Valle*
Islamic Investment in Cuba: Part II
The reach of Cuban diplomacy in today’s Middle East transcends Havana’s historic alliances with fellow archenemies of the United States and the West. Since Fidel Castro’s first foray into Middle Eastern affairs in the early 1960s (1), an eclectic array of anti-American regimes from North Africa to the Persian Gulf, among them Saddam Hussein’s Iraq, Qaddafi’s Libya, and the Iran of the Ayatollahs, have all found a friend in Castro’s Cuba.
The island’s longstanding political alignment with Iran, for instance, has expanded into a billion-dollar financial lifeline from Tehran to Havana. (2) Yet, the best measure of Havana’s recent diplomatic triumphs in the region lies in its rising profile as a pragmatic geostrategic partner and safe haven for Islamic interests in the Western hemisphere. The fact that even allies of the U.S., including the moderate Persian Gulf states of Qatar and the United Arab Emirates, are investing in Cuba and collaborating with the government of General Raúl Castro is itself indicative of the Cuban regime’s remarkable ability to continue to circumvent and outmaneuver Washington around the world.
Qatar
In April 2008, Qatar’s real estate development fund Qatari Diar announced that it will invest $70 million in a joint venture with Cuba’s state-run Gran Caribe hotel group to build a 200-room five-star hotel and an accompanying 60 luxury villas on Cayo Largo, an exclusive island resort off the Cuban mainland. (3) The commitment of Qatari capital in Cuba is the culmination of many years of political courting by Fidel Castro, who in September 2000 bestowed Cuba’s highest honor, the Order of José Martí, on Qatar’s ruling emir Sheikh Hamad bin Khalifa al-Thani. At $70 million, the investment by Qatar surpasses in value the declining number of new business deals with Spain and other European nations, which have dominated Cuba’s hospitality sector since the Castro regime opened the island to foreign investment in the early 1990s. Moreover, such a large infusion of capital by Qatari Diar, a government-funded subsidiary of the Qatar Investment Authority, suggests a high degree of trust in the stability of the Castro regime as well as confidence in the longer-term economic value of the island.
Indeed, Qatar has also signed an accord with Havana for the services of Cuban public health professionals to establish and operate a new comprehensive hospital, staffed and supervised by Cuban physicians and specialists, in the Qatari town of Dukhan. (4) While the details of the deal have not been released, the contract with the wealthy Gulf emirate will undoubtedly generate a substantial stream of hard-currency revenue for the Cuban government. Qatar is a potentially very lucrative market for the export of Cuban medical services as Havana increasingly relies on hiring out physicians and other highly-skilled Cuban workers to developing countries in order to compensate for the low productivity of the Cuban economy. (5)
OPEC Fund
The Organization of Petroleum Exporting Countries (OPEC) has emerged as one of the island’s largest aid donors since 2003, when Cuba ended all official cooperation with the European Union (EU) and rejected further bilateral assistance from most EU member states. Through the Vienna-based OPEC Fund for International Development, the oil cartel has funneled more than $50 million in low-interest development loans to the Cuban government for major investments in electrical infrastructure, water sanitation, and agricultural production. (6) And unlike the aid provided by European and other Western governments, which publicly reprimanded the Castro regime following the widespread repression of Cuban dissidents in 2003, the OPEC Fund does not exert any pressure on Cuba to democratize its political system or liberalize its economy.
It is undoubtedly for this reason, as well as for the magnitude of the aid itself, that Cuban vice president Carlos Lage has praised the OPEC Fund as “one of the few institutions left in the world that offer[s] such concessional and untied aid,” (7) i.e., with no reform conditions attached. Considering that grants and other assistance from Spain, the island’s leading European investor which at times has sought to use its economic presence as leverage to influence the direction of a post-Fidel Cuba, totaled 44 million euros (about US$56 million) over a three-year period from 2004 through 2006 (8), aid from the OPEC Fund and other alternative sources has enabled the Cuban government to break its post-Soviet dependency on Western donors and in the process largely nullify Spanish and EU political pressure on the Castro regime, especially at times of crisis.
Dubai Ports: Mariel v. Miami
After Congress forced the United Arab Emirates-based Dubai Ports World (DP World) to sell its operations at six U.S. ports, including New York and Miami, to a U.S. company in response to the perceived security implications of an Islamic firm running major American ports, the Dubai-owned marine terminal operator found an alternative to Miami in the Cuban seaport of Mariel. In what may be the single most ambitious foreign financed project in Cuba since the collapse of the Soviet Union, DP World, which is backed by the sovereign wealth fund of the emirate of Dubai, revealed in October 2007 that it will commit some US$250 million in a joint venture with the Cuban government to transform Mariel, about 30 miles to the west of Havana, into a world-class transshipment center. The flow of Arab capital into an undervalued but strategic asset like Mariel could transform Cuba once again into a major entrepôt at the crossroads of the global economy.
A prescient analysis in The Economist argues that by the time DP World completes its planned modernization and expansion of the Cuban port’s facilities in 2012, “Mariel…would be a well-positioned hub” with the potential to compete for international business. (9) East Asian container lines (DP World, currently the third largest international shipping terminal operator, manages several ports in China) might be willing to reroute their vessels via Cuba for both economic and political reasons. How? Assuming that Washington’s trade sanctions against Cuba have been lifted or relaxed sufficiently so as to allow merchandise imports from the island to enter the U.S. market, by the end of the next administration in the White House both Cuban and multinational “goods could be transferred from the big container ships arriving at the port to smaller vessels which could then reach dozens of harbours in the southern United States.” (10) The possibility that a DP World-run Mariel could eventually challenge Miami’s dominance as the preferred commercial port along the Florida Straits has already been acknowledged by the current director of the Port of Miami with “great concern” at what lies “right around the corner” in 2012. (11)
Cuba, 2012: Islamic Island?
It is not likely that a substantial segment of the island’s population will convert to Islam in the near future or that the fundamentally secular nature of Cuban society will be altered by recent contacts with the Muslim cultures. Nevertheless, the emerging economic ties with Islamic nations do suggest that Cuba is seen as a secure and stable country for Islamic capital and as a reliable political partner to Islamic regimes.
The immediate concerns of most Western observers with respect to Cuba, particularly in light of the catastrophic costs to the island’s economy and infrastructure by hurricanes of recent memory, tend to be short-sighted. While the danger of short-term social upheaval must always be taken into account, it is unlikely that Havana’s allies will allow the strategically located island to sink into chaos simply for a lack of resources, which they are able and willing to provide as a long-term investment in Raúl’s regime. Instead of short-term apocalyptic fears, Islamic investors have demonstrated confidence in Raúl’s vision of a Beijing in the tropics.
By 2012, the island could very well become a leading financial and logistics center for Islamic firms seeking proximity to the United States while remaining beyond the reach of Washington’s policies and regulations. Only Cuba could offer such a safe haven for Islamic capital and interests.
_________________________________________________
Notes
(1) Cf. Piero Gleijeses, “Cuba’s First Venture in Africa: Algeria, 1961-1965,” Journal of Latin American Studies, Vol. 28, No. 1 (Feb. 1996), pp. 159-195.
(2) See “Islamic Investment in Cuba,” Cuba Focus, August 11, 2008, http://ctp.iccas.miami.edu/FOCUS_Web/Issue99.htm.
(3) Amy Glass, “Qatar to build $70 mn Cuba resort,” ArabianBusiness.com, April 29, 2008, http://www.arabianbusiness.com/517917-qatar-investment-authority-signed-70mln-deal-with-cuban-republic (accessed September 2008).
(4) “Qatar, Cuba sign deal on medical services,” Doha, The Peninsula, April 23, 2008.
(5) Cf. Marc Frank, “Cuban service exports continue dramatic rise,” Havana, Reuters, January 10, 2008, http://in.reuters.com/article/asiaCompanyAndMarkets/idINN1016624020080110.
(6) Cf. OPEC Fund for International Development, “Country Profiles, Cuba,” http://www.ofid.org/projects_operations/latamerica/cuba.html, (accessed September 2008).
(7) OPEC Fund for International Development, “Cuban Vice-President visits OFID,” Press release, Vienna, May 17, 2006.
(8) “España reactiva la cooperación con Cuba,” El Mundo (Spain), September 30, 2007. The approximate value of euros to U.S. dollars is based on October 2006 exchange rates.
(9) “Foreign investment in Cuba: Bye-bye embargo?” The Economist, November 22, 2007.
(10) Ibid.
(11) “Port Director Expresses Concern Over Cuba’s Mariel,” Miami, Local 10.com, April 14, 2008, http://www.local10.com/news/15875315/detail.html.
_________________________________________________
* Hans de Salas del Valle is a Research Associate, Cuba Transition Project, Institute for Cuban and Cuban-American Studies, University of Miami.
Subscribe to:
Posts (Atom)
