Despite the fact that for years The Brookings Institution, one of Washington’s most prominent liberal think tanks, provided intellectual ammunition to President Obama’s Cuba policy, it has now discovered that “Cuba moves backwards: New regulations likely to impeded private sector growth.”  What is news to the Brookings scholars is well known to the Cubans on the island.

Right under Mr. Obama’s nose, Raul Castro denied the required licenses to any Cuban unwilling to publicly endorse the regime, as Amnesty International denounced in one of its reports.  Today, the problem Diaz-Canel says is that Cubans could get rich.  In other words, Havana wants to have capitalism without capitalists.

 President Trump is correct when he insists that American tourists should not stay in Cuban hotels, most of which are owned and operated by the armed forces and Cuba’s intelligence agency.  Brookings follows in the footsteps of The New York Times that reported the counterintuitive news back in December 2016, that “Cuba’s surge in tourism keeps food the residents’ plates” (December 8, 20016).  Be that as it may, Brookings is very critical of Trump’s foreign policy, but in this case it says that Cuba’s economic setback is due to Diaz-Canel being “more concerned with capping wealth accumulation than in poverty alleviation.”

Also in this issue of CubaBrief, you may read an Associated Press story datelined Havana:  “Report: TSA missed inspections of Cuba-US carriers”

Cuba moves backwards: New regulations likely to impede private sector growth

Richard E. Feinberg and Claudia Padrón CuetoFriday, July 13, 2018

In a leap backwards, the Cuban government has published a massive compendium of tough new regulations governing the island’s struggling private enterprises. The new regulations—the first major policy pronouncement during the administration of President Miguel Díaz-Canel—appear more focused on controlling and restricting the emerging private sector than on stimulating investment and job creation, more concerned with capping wealth accumulation than in poverty alleviation.

Authors
Richard E. Feinberg
Nonresident Senior Fellow - Foreign PolicyLatin America Initiative 
rfeinberg2012

Claudia Padrón Cueto
Reporter - El Toque (Havana, Cuba)

Many small businesses that cater to foreign visitors are already suffering from Trump-era restrictions and travel warnings that have decimated the U.S. tourist trade in Havana. But the new regulations are more a product of domestic Cuban politics than foreign pressures.

On a positive note, the Cuban government promises to renew the granting of licenses for many categories of private businesses by year-end, repealing the extended suspension announced last summer. But the new regulations greatly empower government rule-makers and intrusive inspectors, casting a gray cloud over the island’s business climate. Many existing businesses are likely to retrench if not close altogether.

The private sector grew dramatically in recent years, to include nearly 600,000 owners and employees by official figures, with many more enterprising Cubans working informally; in contrast, the state sector stagnated and further decapitalized. Indeed, many thriving private businesses began to compete successfully against state entities, notably in restaurants, bars and night clubs, guest houses, construction, and transportation. The healthy wages paid by profitable private firms often eclipsed the meager salaries paid to disgruntled government officials and factory workers.

The extensive, highly detailed regulations, which go into effect in December, read like “the revenge of the jealous bureaucrat.” Drawing on a multitude of ministries and operating at all levels—national, provincial, and municipal—interagency committees will now be empowered to authorize, inspect, and regularly report upon private businesses under their jurisdictions. The regulations are replete with astoundingly specific performance requirements and innumerable legal breaches that seem crafted to allow government officials wide discrimination to impose heavy fines (or extort bribes), suspend licenses, and even seize properties.

Report: TSA missed inspections of Cuba-US carriers

By Associated Press | 

Updated: Fri 4:51 PM, Jul 13, 2018

WASHINGTON (AP) — Congressional investigators say TSA failed to perform many inspections of carriers operating flights from Cuba to the U.S. between 2012 and 2016.

The Government Accountability Office said in a report Thursday that the Transportation Security Administration only performed about half the required inspections on five carriers that investigators studied.

The GAO says in many cases TSA couldn't reliably track U.S.-bound charter operations. Homeland Security, TSA's parent, says the agency is working on tools to improve tracking.

House Republicans requested the GAO study.

Commercial flights between the U.S. and Cuba increased after the Obama administration eased restrictions on visiting the island nation in 2016. The Trump administration tightened the rules last year to discourage tourist visits to Cuba, but several U.S. airlines still fly there.