Workers in Havana / Photo credit: Zoriah / Foter / CC BY-NC
The Cuban Money Crisis: The Biggest Change to the Island's Economy Isn't the Thaw in U.S.-Cuba Relations
By Patrick Symmes (Bloomberg Business, April 1, 2015)
In this article, Symmes discusses the phasing out of the dual currency system in Cuba. The CUC, a convertible currency pegged to the dollar and reserved for use by tourists, will be invalidated through an incremental process over the course of 2015. In addition to the phasing out of the CUC, new monetary reforms by the government of Raul Castro will also include the regular Cuban peso becoming exchangeable and floated against a basket of five currencies including the yuan, the euro, and the U.S. dollar.
By Gail DeGeorge, et al. (Financial Post, December 26, 2014)
In light of recent changes in US-Cuba relations, the article discusses possible barriers and risks of doing business on the island, using Myanmar –another economy in transition– as an example. DeGeorge, et al. advise foreign investors planning to explore the Cuban market to conduct risk analysis and be prepared for uncertainty.
By Marc Frank and David Adams
(Reuters, December 22, 2014)
Although international companies have thus far had an advantage in several sectors of the Cuban market, U.S. corporations are strategizing to move in quickly to the telecom, construction, food, light manufacturing, and pharmaceutical industries, among others. The article suggests that, while there could be plenty of opportunities for U.S. companies when Cuba's government opens up the economy, the pace of change remains uncertain.
By Julie Creswell (New York Times, December 18, 2014)
In the wake of President Obama's announcement, U.S. companies are assessing the business opportunities and barriers facing them as they establish themselves in the Cuban market.Although Cuba tends to welcome companies that provide products or services to support Cuba's domestic sector, companies geared toward selling consumer goods and those in franchise-based models, such as McDonalds and Subway, will likely face more obstacles to their establishment.
By Karen DeYoung and Carol Morello (Washington Post, December 18, 2014)
DeYoung and Morello discuss the multifaceted process ahead in the normalization of the U.S. and Cuba's diplomatic and commercial ties. While citizens will be able to take advantage of the U.S.'s loosening restrictions, it is impossible to anticipate how long the full process will take since each phase must be approved by both governments.
By Thomas J. Donahue (U.S. Chamber of Commerce, December 17, 2014)
In this statement, the U.S. Chamber of Commerce supports President Obama's decision to begin normalizing relations with Cuba.Despite the fact that many reforms will be required, the Chamber views the announcement as an important step in the right direction and will "continue to push for the end of the embargo" in Washington.
CUBA’S NEW FOREIGN INVESTMENT LAW IS A BET ON THE FUTURE
BY WILLIAM LEOGRANDE (HUFFINGTON POST, APRIL 2014)
In his article, LeoGrande analyzes the new foreign investment law that was passed during a special assembly of the Cuban assembly and calls it a “key component of President Raul Castro’s program to ‘update’ the economy.” Motivated by a crisis in the external sector, Cuban leaders are looking for a way to boost direct foreign investment with the new law, which offers substantially better terms to foreign investors than the 1995 law it replaces.
BY JUAN ESTEBAN LAZO HERNÁNDEZ OF THE GACETA OFICIAL CUBA (GRANMA, APRIL 2014)
The Ley de la Inversión Extranjera (Foreign Investment Law) was enacted in March 2014 to encourage sustainable development in Cuba, while still preserving national sovereignty. The law permits, with certain restrictions, foreign investment in most sectors of the economy on competitive terms. It also clarifies foreign investors’ rights and opportunities in Cuba, including assurances that their investments will not be expropriated without due monetary compensation.
By Richard Feinberg (Brookings Institution, December 2012)
This paper explores Cuba’s historic stance on foreign direct investment and considers the possibility of incorporating greater participation from international markets into the Island’s economy. The author estimates that Cuba could bring much-needed revenues to its citizens by partnering with core global financial institutions.
(Cuba Study Group, April 2011)
This document, which originated as a working paper from a summit on economic development in Cuba, explores how small businesses can help the Cuban economy grow to the benefit of both private and public sectors. Based on the actions of similar governments like Bolivia, China, Vietnam, and Singapore, it outlines ideas and plans to encourage the development and success of small business in Cuba for optimal economic expansion. It also encourages the U.S. to reform its economic policy toward Cuba for the benefit both countries.
Edited by Jose Raúl Perales (Woodrow Wilson Center Latin American Program, August 2010)
Based on discussions that took place at a conference on U.S.-Cuban relations, this article summarizes the economic relationship between the United States and Cuba. The author argues that lessening trade and travel restrictions between the two countries would drastically improve both nations’ economies and prompt major growth in the industries of agriculture and tourism.
By Parr Rosson, Flynn Adcock, and Eric Manthei (Texas A&M University, March 2010)
This study estimates the potential economic value of removing the travel ban from Cuba. It estimates that thousands of new U.S. jobs would be created, and that the ability to freely export U.S. agricultural products would prompt major economic growth in that sector.
by Rafael Romeu (IMF Working Paper, July 2008)
This working paper from the International Monetary Fund considers the ramifications of opening Cuba to tourism. It claims that increased levels of U.S. tourism in Cuba would threaten the economic well-being of other Caribbean island nations, which are dependent on the hospitality industry fueled by American travelers.
(United States International Trade Commission, July 2007)
This report analyzes Cuban purchases of U.S. agricultural products, the role of government restrictions in preventing the purchase and sale of Cuban products, and the potential increase in exports that would result from lifting the travel ban and embargo. Considering a variety of scenarios, this report indicates that “all agricultural sectors would likely benefit from the lifting of financing restrictions” on U.S. exports to Cuba.
(FAS Online, 2000)
This piece of legislation requires unilateral agricultural and medical sanctions to be terminated toward countries with which the United States is not at war. It does not, however, allow for expanded trade with nations on the State Sponsors of Terrorism list held by the State Department, and it strengthens travel restrictions to Cuba.