A Cuban Economy Facing Grim Forecasts Awaits Impact of Trump
By Ivet González
HAVANA, Nov 15 2016 (IPS) – Cuba’s economic difficulties will be
aggravated by the uncertainty regarding how U.S. president-elect Donald
Trump will deal with the thaw inherited from President Barack Obama.
Experts consulted by IPS preferred not to speculate. But they did
recommend that the Cuban authorities adopt all measures within their
reach to cushion the blow and reinforce what has been achieved on the
economic front with the outgoing U.S. administration.
“In any case, Cuba will have to continue moving forward with its
economic reforms and try to resolve whatever has clearly not functioned
for decades and is within our reach to fix,” said Cuban economist Pável
Vidal, a professor at the Javeriana University in Cali, Colombia.
Vidal is studying the economic reforms implemented since 2008 by the
government of Raúl Castro, which has been facing major difficulties this
year due to liquidity problems and oil shortages caused by the political
and economic crisis in Venezuela, this country’s main trading partner
and energy supplier.
In the first six months of this year, GDP grew just one percent, half of
what was expected. And forecasts for the rest of 2016 are bleak,
projecting a drop of one percent.
Further muddying the picture are the doubts with respect to the recently
restored relations with the United States, now that Democratic candidate
Hillary Clinton was defeated by her Republican rival in the Nov. 8
“With regard to Cuba, I don’t think (Trump) will roll back the important
steps taken by the Obama administration to normalise relations between
the two countries,” John Gronbeck-Tedesco, assistant professor of
American Studies at Ramapo College in New Jersey, told IPS by email.
“But with a Republican-controlled Congress, it’s harder to know when the
United States will fully commit to lifting the embargo and truly open up
trade between the two countries,” said the academic, the author of the
book “Cuba, the United States, and Cultures of the Transnational Left,
The U.S. embargo against Cuba, in place since 1962, consists of a
complex web of laws that can only be fully repealed by Congress.
Cuba sees the embargo as the biggest obstacle it faces to development
and a normalisation of ties with its giant neighbour to the north.
Since the start of the move towards reestablishing bilateral ties, in
December 2014, Obama has taken measures to undermine the embargo and
attempted to protect his efforts by means of Presidential Policy
Directive 43 on the normalisation of relations between the United States
and Cuba, issued on Oct. 14.
He even took an enormous symbolic step on Oct. 26, when for the first
time in 25 years the United States abstained in the United Nations vote
on the resolution that Cuba has presented annually since 1992,
condemning the U.S. embargo, which it blames for 125.873 billion dollars
Obama said his aim was to make the opening to Cuba “irreversible”. But
just a week before the election, Trump said “We will cancel Obama’s
one-sided Cuban deal, made by executive order, if we do not get the deal
that we want and the deal that people living in Cuba and here deserve,
including protecting religious and political freedom.”
But the business community and Cuban-Americans are largely in favour of
the thaw, as analysts in both countries have been pointing out.
In Gronbeck-Tedesco’s view, “The United States will continue treating
Cuba and Venezuela as separate political issues. And since Venezuela is
still suffering from economic and political uncertainty, Trump’s plans
would not appear to include an improvement in relations with Venezuela
or help in rebuilding that country.”
In a reaction that observers like Vidal describe as “tardy”, Havana
appears to be pushing for more foreign investment, especially in the
energy industry, which is heavily dependent on the shrinking deliveries
of Venezuelan crude.
“The tendency is for foreign investment in energy to pick up speed,”
Juan Manuel Presa, an official at Cuba’s Ministry of Energy and Mines,
told IPS. “There are a large number of projects in different stages of
progress to use renewable sources, mainly wind and solar power.”
The engineer said the industry “is seeking a diversity of partners in a
diversity of formulas: external financing of Cuban projects, companies
that are made up 100 percent of foreign capital, and the new legal
status of mixed – Cuban and foreign – companies.”
Cuba is still far from its goal of drawing 2. 5 billion dollars a year
in foreign investment – the amount needed to put the economy on a steady
footing. The 83 projects approved since a new law on foreign investment
went into effect in 2014 have attracted just 1.3 billion dollars so far.
But to some extent, the thaw is easing the tense economic situation in
Between 2.0 and 2.5 billion dollars in remittances from abroad flow into
Cuba annually, mainly coming from the Cuban-American community,
according to estimates by Cuban economist Juan Triana.
Only exports of medical services bring in more hard currency revenues,
Another major source of hard currency is tourism. Cuba’s colonial cities
and white sand beaches are experiencing an unprecedented tourism boom,
with the number of visitors from the U.S. growing every month, despite
the fact that they can only travel here under one of 12 approved
categories, such as family visits, academic programs, professional
research, journalistic or religious activities.
In the first half of this year, Cuba received 2,147,912 visitors from
abroad, including 136,913 from the U.S. This latter number was 80
percent higher than the total for the first half of 2015, according to
the national statistics office, ONEI.
In that period, tourism brought in more than 1.2 billion dollars, only
counting public installations, not the growing private sector, which
rents out rooms and runs taxis and restaurants.
Cuban economist Ricardo Torres showed IPS a novel analysis on the U.S.
president-elect, who was widely criticised during the campaign for his
racist, xenophobic and misogynistic remarks.
“There are three aspects (of Trump) that could benefit relations with
Cuba,” the academic researcher said.
“As a businessman, he could be inclined towards pragmatic policies that
favour business interests,” he said. “He doesn’t have a personal history
against Cuba, and as a Republican he doesn’t have a complex about
appearing weak. Since he doesn’t have prior experience in public office,
a large part of his decisions will be reached with the advisers who
Source: A Cuban Economy Facing Grim Forecasts Awaits Impact of Trump |
Inter Press Service –