Saturday, December 29, 2012

Carromero goes home

Spanish Partido Popular activist Angel Carromero is back in Spain, having served a few months of his four-year sentence for vehicular manslaughter (El Pais).  He drove the car in which dissidents Oswaldo Paya and Harold Cepero were killed last July near Bayamo in an apparent one-car accident. 

His return is pursuant to a 1998 agreement between Cuba and Spain that allows for nationals convicted of crimes in the other’s country to serve their sentences in their home country.  Carromero is en route to a Spanish prison and could in time be granted parole or some kind of conditional release.  Granma’s December 16 article on the transfer of Carromero says that Spain made a commitment that he would serve his sentence “in a penitentiary establishment in Spain.”

Reaction in Spain is polarized.  Carromero’s political colleagues welcome him back from his “nightmare” while others show no sympathy for a Spaniard whose driver’s license was revoked in Spain and whose mission to Cuba resulted in the death of two Cuban citizens.  Search Twitter for “Carromero” and get an earful.

Carlos Paya, Oswaldo’s brother, continues to allege that it was not a one-car accident, that a red Lada driven by Cuban government agents followed Paya’s car, rammed it, and caused the accident.  In an interview, he said that he has seen text messages to that effect from the phone of Aron Modig, the Swedish activist who was in the passenger’s seat.  He also said that the trip of Carromero and Modig was sponsored by a Swedish Christian Democratic organization.

Indeed, it is possible that Carromero will change his tune now that he is on Spanish soil.  In Cuba his account was of a one-car accident: he braked when he came upon an unpaved stretch of highway and lost control.  Modig, in interviews in Sweden, has claimed to have been sleeping and remembers nothing.  Maybe with Carromero home he too will change his tune, and those who are said to have received text messages will disclose them.  The questions that would then arise would include how they nearly reached Bayamo from Havana in eight hours after three stops, and why they would continue driving if they were being rammed by another car.

More complete background and discussion here. 

Other recent stories:

·         Ofelia Acevedo, Paya’s widow, sought to meet Carromero before he departed Cuba and presented her request to Spain’s ambassador in Havana.  The request was denied.  Carromero was transferred by Cuban police to Spanish police before departure.

·         This Spanish media report says, without sourcing, that discussions between representatives of Carromero’s family and representatives of the Cuban government resulted in a deal: a payment of $3 million (to whom, it doesn’t say) and “a promise that once on Spanish soil, Carromero will not speak about what happened in the accident.”

·         The Spanish foreign minister says that Spain “conceded nothing” to Cuba in return for Carromero’s transfer.  He noted separately that Spain supports a “flexible” interpretation of EU policy toward Cuba (the “Common Position”) that could lead to an economic cooperation agreement.

(Poster from this less-than-complimentary article, h/t Babalu.)

Wednesday, December 12, 2012

The new cooperatives law

Here’s what I gather from the new law on private non-agricultural cooperatives in the Gaceta Oficial, which is actually two laws, a decree, and two ministerial resolutions, all of which were necessary because cooperatives were previously permitted only in the farm sector.

Just as pilot projects have been the first step in other reforms, this is a sort of pilot project involving the creation of about 200 cooperatives “with experimental character,” as the law says.  The law does not say how or when the experience of these 200 cooperatives will be evaluated, so we will have to stay tuned for that and for any refinements of the law and policy that result. 

The cooperatives will be self-governing businesses that are not connected to any state institution.  In that sense they differ from state enterprises, all of which have a connection to ministries and their enterprise groups and, in spite of efforts to engender autonomy, have in large measure remained subordinated to government entities.  The cooperatives will be on their own to sink or swim.

By self-governing, I refer to the law’s provisions where each member will have a vote, and cooperatives will create governing structures that correspond to their size.  In the section of the law that suggests governing structures, cooperatives of more than 60 members are contemplated.

The cooperatives will be free to do business with government entities, state enterprises, and private entities.  Except in markets where the state regulates prices, they will set their own.

There will be two kinds of cooperatives, I’ll call them start-ups (those that result from individuals who join together and apply to form a cooperative) and conversions (where the government decides that it wants to divest itself of an enterprise).  The law calls both of these “first-degree” cooperatives that form from the voluntary association of people.

There will also be “second-degree” cooperatives that are formed by two or more cooperatives.  I assume that this has to do mainly with agriculture, where farm cooperatives would join together and form a new cooperative that would handle transportation and sales of produce (see the Lineamientos, #29 and #180).

The application process for creation of any kind of cooperative starts at the local level, and the decision is made at the national level by the Council of Ministers.  If the pilot project is deemed successful, one wonders if this authority will be devolved to provincial or municipal authorities.

Who can form a start-up cooperative?  The law says that anyone age 18 or more who is a resident of Cuba and is capable of performing the proposed work can apply, and cooperatives must have at least three members.  Applicants must describe the economic activity in which they want to engage.  Unlike the law governing small entrepreneurship, the cooperatives law contains no exclusive list of permitted lines of work, and it does not bar university graduates from working in the activity for which they are trained.  If the government has a policy to favor certain types of cooperatives, it will only become apparent as applications are approved and denied in the pilot project phase and later.  The law itself contains no restriction.

In the case of conversions, the current employees of a state enterprise will have preference if they decide they want to form a cooperative and rent the premises from the state.  Leases will be up to ten years, renewable for an equal term.  When a state enterprise is converted to a cooperative, the cooperative will pay no rent for one year if it repairs the premises.

New cooperatives’ working capital will come from employees’ contributions, from bank loans, and from loans from a newly created Finance Ministry fund to support cooperatives.  Employees’ contributions will be reimbursed from the cooperatives’ earnings.  Cooperatives will pay taxes on their profits and will pay social security contributions for their members.

Cooperatives will decide how to distribute profits.  Distributions can be made when employee contributions have been paid back and there are no past due bank debts.  There is a requirement that a portion of profits be dedicated to a reserve fund for contingencies.

Cooperatives may hire temporary workers for terms of up to 90 days, and no more than 10 percent of work-days in any year may be performed by hired labor.  After 90 days, a cooperative must offer membership to a temporary worker or end the arrangement.

What does this all mean?

I think this is a major step, even though the full definition of the policy will only come with time as cooperatives are created and as the government moves beyond the experimental phase.

Certainly from a capitalist perspective, all we see are the restrictions – first and foremost in the requirement that these businesses organize as cooperatives. 

But from the perspective of the Cuba of five years ago, this new law was unimaginable. 

It opens the door to a much larger private sector, one involved in more substantial activities than the small entrepreneurs.  It is a second option for Cubans interested in private business activity, and a new option for friends and relatives abroad who would support them with capital.  There is nothing stopping five software designers from applying to form a business under this law; we’ll see if there is anything stopping the government from approving it.  If the sector prospers it can create efficiencies in agriculture, construction, transportation, and other sectors that will benefit Cuba’s economy and people.

And the government needs the cooperatives to prosper.  Without them, it cannot meet its own goals of cutting state payrolls and generating new private sector jobs. 

The pace will satisfy no one, the process will be influenced by officials with more orthodox views, and it will surely have positive and negative notes.  But there’s no denying that this law breaks new ground, with potentially large consequences.

Tuesday, December 11, 2012

Cooperatives law aims to boost private sector jobs

Cuba’s turn toward a larger private sector has depended so far on small-scale entrepreneurship and the expansion of private farming.  Employment in the small entrepreneurial sector has grown from about 140,000 in 2010 to 395,000 today, benefiting from liberalized regulations that allow the hiring of employees and more favorable tax treatment than before.  Private farming has expanded with the distribution of 170,000 parcels of government land in no-cost leases.

But these steps are not enough to meet the government’s goals for reducing state payrolls and creating large numbers of private sector jobs. 

With new laws published today in the Gaceta Oficial and summarized in Granma, the government is taking the next step: the creation of private cooperatives outside the farm sector.  This action, one more step in the implementation of the 311 economic and social policy reforms approved in the 2011 Communist Party Congress, opens the door to the creation of a small and medium-sized business sector in a socialist style, organized in the legal form of cooperatives where each member has one vote. 

I’ll get to the fine print in the actual laws, but for now, from Granma’s summary, this is a substantial step forward:

·         Soon, about 200 coooperatives will be created around the country in transportation, food service, fishing, personal and domestic services, recovery of raw materials, production of construction materials, and construction services. 

·         The cooperatives “will not be administratively subordinated to any state entity.”

·         Earnings will be taxed at rates lower than those charged to small entrepreneurs.

·         The cooperatives will set their own prices (except in unspecified cases where the state controls prives) and decide on their own how to distribute revenues among their members.

·         It is not clear if there is a list of permitted lines of work in which cooperatives can engage.

·         Good news: Start-up cooperatives are allowed where three or more persons decide to form one.  Applications are submitted to local government offices and – bad news – go all the way up the chain to the Council of Ministers for approval. 

·         Cooperatives can compensate members for goods that they bring to the cooperative.

·         There is an unspecified limit on the hiring of temporary employees in order to maintain the character of cooperatives where all who work in them have a vote in their governance.

·         Some cooperatives will be formed by converting state enterprises into cooperatives.  First preference will be given to those already working in the establishment and who wish to try the cooperative arrangement.

·         A bidding process is established to lease idle state installations to newly formed cooperatives.

More later.

Thursday, December 6, 2012

Disorder at the border

Cubans hold a very special and favored place in U.S. immigration policy.

If our policies toward Cubans – a tangle of ad hoc measures built up since the 1960’s – were magically wiped out and we had to start over, would we put current policies back in place?

I don’t think so, and I don’t think we should.  A fresh look, under today’s circumstances and taking into account the characteristics of today’s immigrants from Cuba, would argue for a major overhaul, as I argue in this new paper.

The paper also reports on recent changes to Cuban immigration and travel laws, which take effect next month.

Comments are welcome.

Monday, December 3, 2012

Responsibility for Alan Gross

The attorney and wife of jailed USAID contractor Alan Gross held a press conference last week in which they pressed the point that the U.S. government should negotiate for Gross’ release.  “I urge [President Obama] to privately have an honest and open discussion with the Cubans and to do whatever is necessary to secure Alan's release,” Mrs. Gross said, as quoted by AFP.

“President Obama needs to send a high-level envoy to Cuba, who has the authority to discuss the range of issues in the bilateral relationship and to take whatever decisions are necessary to bring Alan home,” attorney Jared Genser said.

At an event yesterday, Mrs. Gross put it this way: “What has happened or not happened between our government and the Cuban government is over, it is the past and neither country should dwell on it… [It is] the duty of the U.S. government to bring Alan home.”

Or, as she put it to the Baltimore Sun, describing her last visit to Mr. Gross: “He feels that the government sent him on a project, it didn’t work, and that’s the end of their responsibility.  So he feels like a soldier left in the field to die.” 

NBC reports today that Mr. Gross himself told a visitor, Peter Kornbluh of the National Security Archive, that (in Kornbluh’s words) “the United States and Cuba have to sit down and have a dialogue without preconditions… He told me that the first meeting should result in a non-belligerency pact being signed between the United States and Cuba.”

With Mr. Gross in captivity for three years now, he and his team are arguing that the Administration has a responsibility to get him back because he was working as a U.S. government operative.  This is a new twist in the public discussion of the case.  It is also one that begins to separate Mr. Gross and his team from the Obama Administration, which has seemed so far to view its responsibility as to demand Mr. Gross’ unconditional release, and to defend the USAID program.  

Today’s State Department statement continues along that line.  It doesn’t acknowledge the new appeals being made by Mr. Gross and his team.  Reading it, you wouldn’t even get the idea that Mr. Gross is our guy, i.e. a U.S. government operative attempting to escape detection in Cuba.  Instead, he is once again portrayed as a lifelong international humanitarian who was “simply facilitating communications.”

Having been over this ground a few times before (e.g. here and here), I’ll just say once again that this seems much more like a defense of the USAID program than an attempt to secure Mr. Gross’ release.

On the subject of U.S. government democracy programs, I just came across this provocative article by David Rieff published in The National Interest magazine, which is not a left-wing journal.  It’s well worth reading.  Rieff recounts some of the difficulties that U.S. democracy programs are encountering among governments that believe that Washington is trying to weaken them and to strengthen their opponents.  It doesn’t mention the Gross case, perhaps because it’s such an extreme and unique example.  

Only in the case of Cuba are the U.S. programs built on an explicit regime-change premise contained in the 1996 Helms-Burton law.  We can like or dislike the law, and we can like or dislike the Cuban political system, but we can’t avoid the operational consequence: a program like that is going to be hard to operate within Cuba if the Cuban government cares about its own survival and if it cares to defend Cuban sovereignty.  As Mr. Gross found out too late, it cares about both.   

Odds and ends

  • Granma: Representing Cuba at the Mexican presidential inauguration: el compañero Miguel Diaz-Canel.

  • Trabajadores: A report on a Council of Ministers meeting says that Cuba’s economy is on track to grow 3.1 percent in 2012, lower than expected due to under-performance in the agriculture and construction sectors.  Plans for next year include further development of wholesale supply markets and expansion of self-employment (trabajo por cuenta propia) to add some new lines of work to the list.  Also, a “proposal for conceptualizing the economic model” is being drafted to describe the Cuban economic model once all the reforms approved in 2010 are implemented.

  • Café Fuerte: There are now 1.5 million cellular lines in operation in Cuba.

  • AP: Cuban authorities are ending a 2000 policy that added a 10 percent surcharge to U.S.-Cuba phone calls, which if memory serves amounted to 24.5 cents per minute.  The surcharge was imposed when frozen Cuban government accounts in the United States were being drained to pay damages awarded to various plaintiffs in court judgments against Cuba.

  • At Along the Malecon, Tracey Eaton continues to commit acts of journalism with regard to the USAID Cuba democracy programs; here he reports on $11 million spent on operations in Costa Rica.

  • Dallas Morning News: The father of newly elected Senator Ted Cruz of Texas was jailed and tortured by the government of Cuba – that of Batista, against which he fought in the Cuban revolution; he arrived in the United States in 1957.

  • Juventud Rebelde answers readers’ questions about the new immigration law, and will answer more next Sunday.

  • CNN: The first round of peace talks between the Colombian government and the FARC rebels, 11 days long, concluded in Havana and a second round will start this week.  More from BBC.