Home' Trinidad and Tobago Guardian : August 14th 2014 Contents AUGUST 2014 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
REGIONAL | BG11
Carlito, a wiry man with graying
hair, sits under a palm tree in
Mariel, a town on a bay 25 miles
west of Havana, sipping rum
and watching a container ship
edge out toward the Caribbean.
He recalls seeing a flotilla of smaller boats leaving
from this same spot in 1980, carrying thousands
of opponents of the Castro regime to Florida
in the "Mariel boatlift."
Those were politically charged times. Gov-
ernment trucks would come to his school to
deliver eggs for him and his friends to throw
at the people fleeing. About a decade and a half
later, after the collapse of the Soviet Union in
1989 plunged Cuba s economy into crisis, sources
of protein were so scarce that Carlito recalled
those wasted eggs with bitter regret.
Some "Marielitos," as those who fled are
known, returned recently and Carlito was
stunned at how prosperous they had become.
"We used to call them traidores (traitors)," he
says, chuckling. "Now we call them traedolares
Across the bay from where Carlito sits is a
US$900 million container port, built with Brazil-
ian money and inaugurated in January. There
are plans to develop a special economic zone
alongside it, modeled on the thriving export
hubs, such as Shenzhen, that China developed
from 1980 onward. The port is part of a vision
for Cuba that relies less on Cuban-American
gusanos (worms) sending remittances to prop
up the local economy, and more on an inflow
of foreign investors.
Carlito is keeping his excitement in check,
however. Construction workers building the
container terminal were paid a mere US a month,
he says, so the ramshackle town has yet to
benefit from the development. None of the 23
firms which have sought licenses to operate in
the special economic zone yet has been granted
Even Joaquin Infante, the 88-year-old vice
president of the slow-moving National Asso-
ciation of Cuban Economists and Accountants,
urges speedier authorisation of investment.
"We need to be more flexible and take more
risks," he says.
Despite reforms that have brought some big
changes to Cuba in the form of private restau-
rants, bed-and-breakfasts and new cooperatives,
the economy has ground to a virtual halt. In
the first half of the year, GDP grew by only 0.6,
leading the government to reduce its estimate
for full-year growth to 1.4 per cent. That is
lower than the 2.7-per cent annual average since
Raul Castro became president in 2008.
Investment is the root of the problem. In a
July report two Cuban economists, Omar Ever-
leny and Ricardo Torres, estimated that the
growth in Cuba s capital stock, such as machinery
and buildings, fell to 7.8 per cent of GDP last
year, close to its level of 5.4 per cent in 1993
when the economy was in serious trouble. In
Latin America as a whole the figure is above
20 per cent.
From the 20th floor of the Habana Libre, a
rundown hotel, not one crane can be seen on
"The economy is screwed," a Havana-based
Supporters of the regime argue that the
reforms simply need more time. A profit-oriented
reorganisation of state-owned behemoths, such
as the sugar monopoly, could be promising; it
is simply that the bureaucrats who run them
are slow to change.
Critics, however, see a fundamental flaw in
the reform model. Although it has sought to
give some people more freedom in what they
make and sell, the state keeps a stranglehold
on the inputs they need for those businesses,
such as seeds for growing crops, sauces and
spices for restaurants and spare parts for taxis.
It has cracked down on "mules" bringing in
such goods on passenger planes from abroad.
Diplomats say that such countermeasures
will make it harder for Cuba to attract the US$2.5
billion in annual foreign investment for which
the regime aims. Some also reckon that the
financial squeeze on the island has tightened
this year in the wake of the case against BNP
Paribas, a French bank, for evading American
sanctions on doing business with Cuba, among
That is why Cuba-watchers have paid close
attention to the visits of President Vladimir
Putin of Russia and President Xi Jinping of
China in recent weeks. Though both men offered
few concrete investments in Cuba, they provide
an opportunity for the Castro regime to start
reducing its dependence on its closest ally,
Venezuela, whose pro-Cuba government has
been rocked by instability this year.
"We have to diversify," Infante says, "and not
depend on just one partner."
He hopes that means more Chinese and Russ-
ian investment in Mariel.
One envoy says that the regime also prefers
such investments to Western capital because it
sees neither China nor Russia as a "Trojan horse"
working toward regime change; as it does with
A Cuban economist sees uncanny parallels
with the special terms offered to the Soviet
Union during the cold war.
"The mentality of the decision-makers is to
talk to Russia, talk to China, and make them
offers based on politics," he says. "But this is
the same mentality we had in the past ... and
it didn t do much for productivity."
Cuba s courtship of Russia is particularly
striking: A day after Malaysian Airlines flight
MH17 was shot down, former President Fidel
Castro publicly blamed Ukraine s government.
Such an overtly pro-Russian stance on Ukraine
may hinder the political negotiations that started
this year between Cuba and the European Union,
diplomats say. It also makes it harder for Pres-
ident Barack Obama to improve America s rela-
tions with Cuba, let alone consider an end to
the counterproductive, 54-year-old embargo.
Back in Mariel, Carlito wants good relations
with everyone, especially America.
"Luckily we Cubans have a lot of patience,"
he says, "and patience is good. Without it there s
@2014 The Economist Newspaper Ltd. Dis-
tributed by the New York Times Syndicate
Cuba looks to some old friends
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