For Cuba: Biden-Harris Administration Should Implement Crock Pot Theory And Quid Pro Quo With Quo Not Giving What Quid Wants.
/Implementing Crock Pot Theory
Quid Pro Quo With Quo Not Giving What Quid Wants.
In Latin, quid pro quo means “something for something.” “Quid pro quo is an arranged exchange of services or favors between two parties.” “Something given or received for something else.”
Washington Should Permit MSMEs To Do What Havana Prohibits… And Let Crock-Pot Pressure From Those Decisions By Havana Do The Rest.
The process will take time. There will be some abuse, no way to prevent it. The percentage of abuse will be and remain overwhelmed by legitimate activity. Eventually, the timer reaches its limit. Critical is maintaining constant activity. Be disruptive- and like it.
When The Government Of The Republic Of Cuba Does Something Deemed Harmful To The Re-Emerging Private Sector In The Republic Of Cuba, The Biden-Harris Administration Should Respond By Authorizing An Activity Deemed Beneficial To The Re-Emerging Private Sector In Cuba.
The Biden-Harris Administration Should Respond To The Diaz-Canel-Valdes Mesa Administration With Something Helpful To Re-Emerging Private Sector In The Republic Of Cuba Knowing Diaz-Canel-Valdes Mesa Administration Does Not Want It.
The More Available And Workable Inventory Of United States Government Policies And Regulations Visible To Those Engaged With The Re-Emerging Private Sector In The Republic Of Cuba, The More Pressure Will Continue Upon The Government Of The Republic Of Cuba To Craft Excuses For Limiting The Role Of The Re-Emerging Private Sector In The Republic Of Cuba. There Is Not An Inexhaustible Quantity Of Excuses.
The goal should be to construct layer upon layer of access and workable opportunity for micro, small and medium-size enterprises (MSMEs) in the Republic of Cuba.
Critical for each access and each workable opportunity to have been first thoroughly vetted not within the United States government inter-agency review process, but outside of the United States government inter-agency review process. Meaning, have the likely, the expected, the actors whose participation are essential for any access and workable opportunity to be operational.
Unhelpful and an unwise use of time for the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry and Security (BIS) of the United States Department of Commerce to issue guidance and then officials from The White House and United States Department of State reach out and ask the relevant actors how what was published can be improved and implemented.
More than two years since the Biden-Harris Administration (2021- ) authorized the OFAC to issue the first license for a direct investment in and direct financing to an MSME located in the Republic of Cuba owned by a Republic of Cuba national.
Remarkably, the Diaz-Canel-Valdes Mesa Administration (2019- ) has yet to issue the regulations which would authorize any MSME in the Republic of Cuba to legally receive direct investment and direct financing.
Statements within the last seven days by officials of the government of the Republic of Cuba suggest those regulations may now be nearer to issuance- not because of a desire to assist the re-emerging private sector in the Republic of Cuba, but because of necessity.
Absent a resilient and resistant re-emerging private sector in the Republic of Cuba, the government of the Republic of Cuba has no possibility of repaying either its sovereign debts or its commercial debts, both of which remain overdue in some instances by decades.
Given the United States domestic political calendar complexities and the willingness by the government of the Republic of Cuba to continue to adhere to decision-making and decision-implementing which is detrimental to MSMEs and to the capabilities of citizens of the Republic of Cuba, the Biden-Harris Administration might consider:
When the Diaz-Canel-Valdes Mesa Administration implements a decision deemed harmful to the re-emergence of the private sector in the Republic of Cuba, implement quickly a policy and/or regulation designed to assist the re-emergence of the private sector in the Republic of Cuba. Sort or a quid pro quo where the quo is unwelcomed by the quid.
For example, as the Diaz-Canel-Valdes Mesa Administration expands pricing restrictions, operational restrictions, and banking requirements, expand supportive mechanisms to the re-emerging private sector in the Republic of Cuba- despite expecting or knowing that the Diaz-Canel-Valdes Mesa Administration will not permit those supportive mechanisms to be implemented.
What the government of the Republic of Cuba fears most is the re-authorization of direct correspondent banking and clarity for MSME account liability responsibilities of United States-based financial institutions. Each require a level of sustained transparency which is generally considered an anathema to the government of the Republic of Cuba.
For example, the OFAC would require a Republic of Cuba national seeking to establish an account with a United States-based financial institution to present documents from the government of the Republic of Cuba certifying ownership (and good standing) of a MSME and then be required to self-certify, similar to what travelers complete when purchasing an airline ticket from the United States to the Republic of Cuba. The Republic of Cuba national agrees to and accepts liability for any errors and omissions- and would be required to update any change in status, thus shielding a United States-based financial institution from potential OFAC penalties. If United States-based financial institutions believe, as they do now, that opening a checking account where the balance could be in the thousands of dollars, but could result in penalties in the hundreds of thousands of dollars for a mistake in a filed document, then executives of the financial institution will politely decline to participate. That has already happened.
While the Biden-Harris Administration recently expanded authorizations for Republic of Cuba-based MSMEs to establish accounts with United States-based financial institutions, there was no meaningful engagement in advance with representatives of United States-based financial institutions, United States-based companies, and United States-based business organizations resulted in authorizations lacking specificity- and that lack of specificity upon publication resulted in skepticism from those whose buy-in is required for a change in policy to become more than words written on paper. The new regulations were embraced by the United States private sector more like walking turtle rather than rolling thunder.
The Obama-Biden Administration (2009-2017) authorized United States-based financial institutions to have correspondent accounts with Republic of Cuba-based financial institutions. One did. But the OFAC did not under a general license authorize Republic of Cuba-based financial institutions to have correspondent accounts with United States-based financial institutions. That technical correction needs to be fixed.
The result was and remains that authorized transactions from the United States to the Republic of Cuba and from the Republic of Cuba to the United States must use financial institutions in third countries, which may receive a fee from the sender and receiver. These authorized transactions include passport fees, visa fees, citizenship fees, postal fees, remittances, remittance fees, telecommunication fees, and airline fees among others
For example, since December 2001 more than US$7.4 billion in OFAC-authorized and BIS payments from the Republic of Cuba to the United States for agricultural commodities and food products authorized by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 have been routed through third countries- and financial institutions in third countries have received fees. Those fees could have been used for an increase in purchases from United States-based companies.
Miami Herald
Miami, Florida
17 July 2024
Despite Worsening Economy, Cuba Announces Crackdown On Growing Private Sector
By Nora Gámez Torres
In a warehouse in Havana, packages of Ocean Spray cranberries stand close to boxes of Country Barn waffle mix, Lipton tea and other products from brands that can be found in U.S. supermarkets. Cuban private businesses are importing food from the United States and other countries at a scale not previously seen. Courtesy.
The growth of Cuba’s emerging private sector will likely halt if the government enacts new measures announced by the country’s prime minister during a National Assembly address in which he blamed the businesses for evading taxes and tapping into foreign currency that once went to government coffers.
Prime Minister Manuel Marrero announced Wednesday that private businesses will have to pay for imports “from accounts in Cuban banks,” saying the measure he said will be implemented “gradually” but giving no other details.
The measure would effectively prevent many enterprises from staying in business because the government does not sell foreign currency to them, and no current mechanism allows a private company to use the Cuban banking system to transfer foreign currency abroad to pay overseas suppliers. Currently, these companies are not allowed to import directly.
They must use a state importing agency as an intermediary. To pay providers abroad, some business owners use bank accounts in third countries. Others have been buying dollars on the black market and using intermediaries such as small money-transfer agencies that pay providers abroad on their behalf.
To address the issue and support the private sector, the Biden administration changed the regulations on the U.S. embargo in May to allow Cuban private business owners to open accounts in U.S. banks, although banks have yet to follow through.
The new requirement by Cuba forcing businesses to use Cuban banks for payment seems to be a response to the Biden administration measures, even though initially Cuban diplomats said the island’s government would not oppose it. “Do you want to import? Well, you’re going to have to use Cuban bank accounts,” the prime minister said with a faint smile. Marrero also said private enterprises will be required to certify the origin of the money they use to pay for imports, customs fees and port duties in dollars.
They will also be required to get authorization from municipal governments to sell goods or services outside their province of residence. The latter measure, he said, would ensure the businesses do not expand over the current 100-employee limit. The government will also increase monitoring of the bank accounts linked to these enterprises and their owners for tax purposes. Just three years after they were first allowed in 2021, small and medium enterprises have become significant importers of food and other essential goods, filling the gap left by the cash-strapped government and providing a lifeline to many Cuban families. They also provide various services, from construction and transportation to senior care and software programming.
According to figures shared by Marrero in a PowerPoint presentation, the private sector, including self-employed workers and cooperatives, accounts for 20 percent of the country’s GDP. Private enterprises imported $1.3 billion in goods in 2023 and $936 million so far this year as of June. Their rapid growth has occurred despite the economy’s lagging recovery from the COVID-19 pandemic and an almost 2% overall economic contraction last year, according to recent official figures.
But Marrero portrayed such economic activity in a negative light, accusing the private businesses of evading taxes, driving the price of the dollar up and taking in the foreign currency that used to go to the government. The private sector’s “financial and commercial activity…creates an uncontrollable demand for foreign currency,” he said. “You may say it is good that they import and bring things. Yes, if they paid taxes, if they sold and marketed it at fair prices to the people.
But this is not really the case, so this is why it must be controlled, regulated — [though] not prohibited.” Since last year, when the government announced the elimination of tax incentives for the private sector and ordered businesses to stop accepting cash as payment, it became clear that some groups in the Cuban leadership were feeling uneasy with the private sector’s unexpected growth, despite the many government-imposed restrictions they were already facing.
Hardliners have grown worried that the experiment with capitalism could threaten the government’s tight grip on power, and the Cuban military, which used to control most foreign currency coming into the island, is viewing these companies as competition, sources in Cuba said. Earlier this year, the government started auditing private businesses, even arresting some business owners, amid accusations of corruption, tax evasion and price speculation.
Earlier this month, it imposed caps on some food and goods sold in private stores and limited the amount state companies can pay to private businesses providing supplies or services. But Marrero’s address made clear the extent to which the government is going after these businesses in what he says is not a “crusade” against the private sector but an effort to clamp down on tax evasion.
He said government inspectors fined more than 1,000 enterprises and 63,000 self-employed workers for tax evasion and shut down 20 businesses. Following the imposition of price caps, he said, the government mobilized around 7,000 inspectors to ensure compliance by private business owners. In just two days, he added, they imposed over 4,300 fines worth over 13 million Cuban pesos.
Ultimately, he said, the government wanted to make sure that it was property implementing guidelines approved by the Communist Party, so the private sector plays its “assigned role” as a complement to state enterprises, which sometimes, he said, has not been the case. “This is why we have to strengthen the socialist state economy,” Marrero said.
Miami Herald
Miami, Florida
18 July 2024
Cuba Moves To “Partially” Dollarize Economy As Government Struggles To Make Payments
By Nora Gámez Torres
Cuban Prime Minister Manuel Marrero said the government will embrace a “partial” dollarization of the economy as it struggles to buy food, oil, and pay creditors in a scenario he described as a “war economy.”
During a session of the National Assembly on Wednesday, Marrero said the government will start accepting payments in dollars and other foreign currencies at hotels, stores and other venues linked to the island’s tourism industry as a temporary measure. “It is not the government´s vision to pursue a full dollarization of the economy,” he said. Currently, tourists must purchase prepaid cards in a local virtual currency, the MLC, to buy goods, gas and services, as the government has pushed to transition from cash to online payments.
Cubans often complain about such requirements in a country with a poor technological infrastructure and frequent blackouts, and the country’s prime minister acknowledged that was the case. “It cannot be that [tourists] want to buy an expensive excursion, and at that moment there is no connectivity, and they cannot pay with the card,” he said. “And yet they have cash, but we say no, and we lose the money.”
For a brief period, the government opened dollar stores in Cuba in 2020, but the dollars had to be deposited to a card linked to a bank account. Marrero said the authorization to pay foreign currency in cash “in some sectors” was one of several measures the government was taking to stabilize the country’s finances. He announced a new policy requiring state enterprises to use only the local Cuban peso for transactions with some exceptions, including wholesale importers, exporting companies and enterprises in the Mariel Special Development Zone, a special economic zone to attract foreign direct investment.
But the prime minister squarely blamed an informal currency exchange market and the private sector for redirecting and taking in most of the foreign currency entering the country. About $2 billion “previously controlled by the state has gone to that market, partly illegal,” he said. He shared figures showing that the private sector, including small and medium enterprises, self-employed workers and cooperatives imported about $1.3 billion dollars in goods last year. But he said that economic activity has created an “uncontrollable demand” for dollars, driving its price up and depriving the government of foreign currency.
The minister then announced new restrictions on private enterprises, including tighter controls on their bank accounts, price caps on food and goods they sell, higher taxes, and a ban on using foreign banks to pay providers abroad. If enacted, the measures would significantly thwart any further expansion of private enterprises, even threatening their survival. Some Cuban observers say the crackdown on the private sector makes little sense at a time of significant scarcity, given the gap these businesses are filling as significant importers of food and goods. “It reeks of desperation,” said Ric Herrero, the executive director of the Cuba Study Group, a Cuban American organization that supports private entrepreneurs in Cuba.
“The Cuban government can defy math laws, but a private business can’t. Private businesses will leave the market and there will be nothing left. The government will see the results of these Draconian measures right away.” A source who has a business in Cuba and asked not to be named said the move seems to be an attempt to fill the government coffers with dollars coming from elsewhere because the government “is bankrupt.” “They have a lot of internal struggles and are trying to calibrate how to stimulate the economy without giving away power,” the source said. Limiting car imports the source said the government is under pressure from state workers, the Communist Party bureaucracy and retired military officers who are now watching how others prosper while earning meager salaries and pensions.
That tension was evident during Marrero’s address to the National Assembly when he announced restrictions on the cars imported by private enterprises. Business owners have been buying millions of dollars in vehicles from the United States — and Florida in particular — according to U.S. trade statistics, some of them luxury brands like Mercedes Benz and Tesla. “The number and types of vehicles that non-state management firms can import will be limited,” he said. “There are some cars that are entering that are not compatible with our society, they are not necessary. And we also have to limit the number, which should be based on the interests of the country.”
Marrero said the government lacked foreign currency to fund its budget fully and was open to foreign investment. “But we will never give up sovereignty. We are not giving the country away.” He had a message to foreign creditors: “We ask for understanding regarding the delay in payment, but we reiterate that we will fulfill our commitments to the last cent. When? When our possibilities and conditions improve.”
Miami Herald
Miami, Florida
19 July 2024
A stunning 10% of Cuba’s population- more than a million people- left the island between 2022 and 2023, the head of the country’s national statistics office said during a National Assembly session Friday, the largest migration wave in Cuban history. The data confirmed reporting by the Miami Herald and Cuban independent media that sounded the alarm over the mass migration of Cubans amid a severe economic downturn and a government crackdown on dissent in recent years.
According to the official figures made public for the first time, Cuba’s population went from 11,181,595 on Dec. 31, 2021, to 10,055,968 on December 2023.
The emigration of 1,011,269 Cubans was the main factor contributing to a massive fall in Cuba’s population by the end of 2023, when the population stood at a number similar to what it was in 1985, said Juan Carlos Alfonso Fraga, the head of the National Statistics and Information Office. Other factors were a high number of deaths, 405,512, and a low birth rate, with only 284,892 children born in that period, according to figures Fraga provided the assembly.
Excerpts From Other Media Reporting:
“The Cuban Government has revoked the import licenses of nearly a third of the private businesses that were authorized to conduct such activities. Prime Minister Manuel Marrero Cruz informed the deputies of the National Assembly of People’s Power that “it was decided to revoke this authorization for 24 out of the 73 approved companies due to low activity levels and poor performance.”
Marrero emphasized that the State should maintain a monopoly over foreign trade in the country. However, to facilitate the activities of non-state management forms, the government had authorized 73 companies to import for micro, small, or medium-sized enterprises (mipymes). “But in our analysis, we found numerous mistakes and mismanagement,” he said. “The document resulting from the work done by the [Ministry of Foreign Trade] MINCEX led us to the conclusion that we had to revoke this authorization for 24 companies due to low activity levels and poor performance,” Marrero stressed.
“In an intensive operation conducted between July 12 and 13, the Cuban government shutdown 53 private businesses following 891 inspections nationwide. Prime Minister Manuel Marrero Cruz reported that more than 4,000 violations were found during these inspections, resulting in fines exceeding 13 million pesos for Micro, Small, and Medium Enterprises (MSMEs), as cited by Cubadebate.”
“Among the main infractions detected were the concealment of products following the government's price cap and the sale of goods at unregulated prices. Marrero Cruz highlighted that 354 forced sales were made at the established prices, and products were confiscated in 21 additional cases. “We are going where the products are,” the prime minister stated, emphasizing that the objective of these actions “is not to close businesses, but to ensure compliance with regulations.” However, he stressed the need for firm measures to control prices and guarantee the accessibility of goods for the population.”
“This inspection and regulation process began on July 8 and has continued, with exchanges and meetings with 4,363 non-state management forms. Marrero Cruz explained that the price caps were set to curb uncontrolled price growth, although he acknowledged that they still do not reflect the proper relationship between prices and wages. He also noted that state stores in Freely Convertible Currency (MLC) sell at prices equal to or higher than those of MSMEs.”
“The prime minister stated that there are currently 7,300 inspectors on the streets, and this number could increase to 20,000. “The ultimate solution to high prices is to produce more and increase the supply of goods and services to the population,” Marrero Cruz added. Despite these actions, he clarified that the government does not aim to close businesses indiscriminately but to persuade merchants to comply with established regulations. “We will continue with this confrontation, carrying out joint and systematic actions.” he concluded.”
“These measures come in the context of an economic crisis in Cuba, where inflation and the shortage of basic products have severely affected the population. The day before, President Miguel Díaz-Canel stated that this is not a “witch hunt” against private enterprises but a call to “reorder” these initiatives.”
“Marrero Cruz maintains that while the prices of state stores in MLC are higher than some capped products, “it is unfair to make that comparative analysis” because the “foreign exchange collecting stores face a scenario as complex as we have expressed here. They do not buy those resources, like chicken and oil, in the same markets where non-state management forms do,” he emphasized during his address to the National Assembly on Wednesday.”
“He said state stores “do not operate with the illegal foreign exchange market, they work at 1x120, so the analysis is different. They have to buy in more distant markets at higher prices because we have had difficulties in paying suppliers, paying very high freight rates, so it is not fair to make that analysis,” he justified. The Cuban regime capped the prices of several products sold by MSMEs last week and has since fined establishments that fail to comply with the measure.”
“It’s time to take action!” With this phrase, Cuban leader Miguel Díaz-Canel confirmed the regime’s shift in its cautious economic opening policy, reaffirming his intent to subject the activities of the “new economic actors” to state directives and centralized economic planning. “It’s time to move beyond diagnoses and take action,” Díaz-Canel stated during his closing speech at the third regular session of the X Legislature of the National Assembly of People's Power (ANPP).”
“Regarding our responsibilities in the uncertain and complex realm of the economy, it is necessary to acknowledge that in the effort to comply with the economic and social policy guidelines of the VIII Congress of the Party, by unblocking processes and promoting the formation of SMEs, we were not firm enough in demanding robust and comprehensive regulatory bases to guide the functioning of this management form that was already operating in the economy but without formal recognition,” he noted.”
