Cuba takes center stage at Caribbean/Central American conference

Visitors crowd an Old Havana cafe in July 2015. Cuba’s burgeoning tourism industry presents challenges as well as opportunities for the rest of the Caribbean.
Visitors crowd an Old Havana cafe in July 2015. Cuba’s burgeoning tourism industry presents challenges as well as opportunities for the rest of the Caribbean.

Look for the Communist Party of Cuba to outline its future economic development strategy when it holds its 7th Congress next April, Cuban economist Ricardo Torres said Tuesday in Miami.

Torres, a University of Havana economist who is currently a research fellow at American University, says it's unclear what that strategy will be but it appears tourism and logistics centered on Cuba’s new container terminal and economic development zone in Mariel will be key components.

“The country lacks a strategy,” Torres said. But the outlines of such a strategy are currently being debated in anticipation of the Congress. There are disagreements, he said, which will likely result in a compromise.

Torres spoke at Caribbean-Central American Action's 39th Annual Conference, which was devoted almost entirely to examining the impact on Caribbean and Central American economies as Cuba reinserts itself into the global economy. The three-day conference, held at the Hyatt Regency Miami, brought together business and government leaders from the United States, the Caribbean and Central America.

Not only is Cuba forging a new relationship with the United States, but it also is moving rapidly to normalize relations with the European Union, expanding its economic relationship with China and reintegrating its economy with the larger world, said Richard Bernal, a senior consultant at the Inter-American Development Bank.

“There is a tremendous amount of goodwill for Cuba in the region,” said Bernal, a long-time Caribbean diplomat who said he wasn’t speaking on behalf of the IDB. But he said the Cuban economy presents challenges and competition for tourism, trade and investment as well as opportunities for the rest of the Caribbean.

When Cuban leader Raúl Castro officially took over for his ailingbrother Fidel in 2008, he encountered a “challenging economic perspective,” said Torres, a research economist at the University of Havana’s Center for the Study of the Cuban Economy. “Now the country is much better set to deal with economic challenges but there is still much work to be done.”

Chief among them is the country’s dual currency system, which is producing “distortions in the economy,” he said. The island’s rapidly aging population, Torres said, is also creating economic and social problems.

Since the 2011 Party Congress when limited market-oriented reforms were adopted, the pace of change in Cuba has picked up, Torres said. The market will play a larger future role in the Cuban economy even if Cuba isn’t transitioning toward a full-fledged market economy.

“It’s pretty clear to me that the changes will speed up and accelerate in coming years — with or without the United States,” Torres said. But if Cuba wants faster growth, he said, it will need a more open economy.

Richard Feinberg, a professor at the University of California, San Diego and a senior fellow at the Brookings Institution, said it remains to be seen what Cuba’s economic path will be. One scenario, he said, is that it goes back to the 1950s, becoming the main tourism destination of the Caribbean, a major exporter of coffee, citrus and tobacco and an importer of workers — but without the United States dominating its economy.

Another possibility10 years out is the “inertia scenario,” with Cuba opting for continuity. A third scenario Feinberg calls the “ugly scenario” with rising corruption, increasing inequality, more violence and more chaos in the development process.

But a “sunny 2030” scenario also is a possibility, Feinberg said, with Cuba making more market adjustments in a hybrid economy, improving the delivery of social services and pluralistically inserting itself in the world economy.

Torres said that he has seen more economic change in Cuba in the past five years than had transpired in the previous 30 years. “Change is real; now the question is how fast it will happen,” he said.

In the past Cuba has been highly dependent on just a few economic partners, and it is in the process of trying to diversity its trading partners. Currently 60 percent of total trade is with Latin American and Caribbean countries, but 67 percent of that trade is with a single market — Venezuela, he said.

Rubén Ramos Arrieta, the minister counselor at the Cuban Embassy’s Economic and Trade Office in Washington, said 65 percent of Cuba’s exports are services exports. It has medical cooperation agreements with 60 countries and 25,000 Cuban doctors, as well as nurses and paramedics, working abroad, he said.

Ramos said Cuba has been rebuilding its tourism offerings since the 1990s and it calculates it will need 25,000 additional hotel rooms by 2020 to complement the approximately 62,000 rooms it now has and the 8,000 rooms available at private accommodations. “I don’t think that will be enough if the U.S. travel ban is lifted,” he said. Although the U.S. government made it easier last December for more Americans to visit the island, restrictions still remain.

But in general, he said, the developing relationship with the United States is “very positive. We want to have a normal relationship with the United States as we have with the rest of the world.”