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Economy

Correcting Rodrigo Malmierca

Despite recent statements by the Minister of Foreign Trade and Foreign Investment, the economic marginalization of Cubans continues to be the bane of investment in the Island.

La Habana
Rodrigo Malmierca
Rodrigo Malmierca GRANMA

Cuba's Minister of Foreign Trade and Investment (MINCEX), Rodrigo Malmierca, recently stated in a tweet that "Foreign Investment Law 118 does not establish any limitations regarding the origins of capital." Five years earlier, he himself had defined that Law as: "a profound revision of the transformation process that took place at the beginning of the Revolution to put the main means of production in the hands of the Revolutionary State." That is, to consolidate the State's monopoly.

To attract foreign investment -excluding nationals- Decree-Law 50 was enacted in 1982, Law 77 in 1995, Decree-Law 165 (to create free trade zones) in 1996, and Decree Law 313 (to create the Mariel Special Development Zone) in 2013, without achieving their objectives, since the conditions they imposed are atypical for companies operating in market economies.

The measures introduced by Fidel Castro in the 90s and Raúl Castro's reform efforts, starting in 2008 –aimed at sustaining power and injecting some efficiency into the totalitarian model, without altering its nature– failed. The sustained decrease in the Gross Domestic Product rendered evident the need for large investments, something that in international economic relations no country can ignore.

In February of 2014, at the 20th Congress of the Workers' Confederation of Cuba, without mentioning the Cuban people, Raúl Castro said: "we must take into account the urgent need to encourage and attract foreign investment, in the interest of boosting the country's economic and social development". According to government calculations, overcoming the crisis requires annual growth in the Gross Domestic Product of 5 to 7%, which means investments of between 2 to 2.5 billion dollars per year.

Against this backdrop, Foreign Investment Law 118 was approved in 2014, more flexible than the previous ones, but barring participation by Cubans independently of the State. However, in December 2016 the Minister of the Economy and Planning acknowledged that "foreign investment continues to be very low". In 2017 it barely surpassed 500 million dollars. The cause: nationalization, the subordination of the economy to an ideology, and the lack of political will.

Now, with the situation aggravated by the entry into force of Title III of the Helms-Burton Act, the Government has issued a timid signal, which, if accompanied by other measures, could be interpreted as a willingness –late, but a willingness at last– to allow Cubans to participate in the investment process, as this exclusion has been and continues to be the bane of the Cuban economy.

Article 2 defines the foreign investor as: "an individual or legal person, with a domicile and capital abroad", and the national investor as "a legal person of Cuban nationality, with his domicile in the country". As legal personality is limited to state enterprises and "cooperatives", subordinated to state purposes, the rest of Cubans are excluded from this process, as Rodrigo Malmierca once said when he believed that foreign investors' dollars would rain on the Island: "Cuba will not seek foreign investment in Miami. The law does not prohibit it, politics do not promote it. " None of the ongoing campaigns to attract investors mentioned potential Cuban ones. 

How can we explain the words of Déborah Rivas, General Director of Foreign Investment at the MINCEX, according to whom there have been "several proposals" for investment by Cuban emigrants, and yet none have come to fruition in five years, while hundreds of foreign businessmen have abandoned Cuba? These statements raise doubts about the political resolve to realize the intentions expressed by various Cuban officials.

If there really is no limit established regarding the origins of capital, why doesn't the Government appeal to Cubans regardless of where they live? If the exclusion of residents abroad is unfair, it is even more unfair to deny that right to those who reside right on the island, among them the thousands of self-employed Cubans who would be willing to participate in investments in something more than the country's snack bars, beleaguered almendrones (taxis), or its street vendors.

The indisputable fact is that Cuba is the only country in the region whose people are excluded from participating in the economic destiny of their nation. An ideological decision that ignores Cubans' interest in the performance of their economy, and generates reticence among foreign investors, as it is something alien to the most basic rights and human dignity. It is a decision that violates José Marti's concept of the Republic, conceived as a state ensuring equal rights for everyone born in Cuba, and a country of many small property owners.

Therefore, if the Government's declarations are to be assigned any credence or value, among many necessary measures, it must definitively liberate the economy from ideological obstacles and grant Cubans the right to be owners and participate as investors, along with foreigners. That is, to definitively do away with this form of exclusion.

Otherwise, it will be just another waste of time, which we are running out of.

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