Cuba and its New Investment Law: From Sustainable Development to Neo-Liberalism

Yasser Farres Delgado*

Industry in Havana. Photo: Juan Suarez

HAVANA TIMES — On April 16th, the Cuban government published its new Foreign Investment Law, three weeks after this legislation was approved by the National Assembly (Parliament). It made this news public during Easter, when nearly all segments of international news programs tend to focus on festive and religious activities. Is the resemblance to the strategies of certain European governments, which decree the more unpopular measures during national festivities, pure coincidence?

I ask this to prompt some reflection on this matter. For now, however, I will focus, not on such communication strategies, but on the essence of the discourse behind the new law, whose first Whereas clause reads:

“Faced with the challenge of attaining sustainable development, our country can use foreign investment to access sources of financing, technologies and new markets, as well as market Cuban products and services in important international networks, bring about other positive developments for its domestic industry and contribute to the growth of the nation.”

Those who have any research experience will easily identify this as the basic scientific hypothesis of the Cuban government’s platform. I will expound on what I believe to be its central, analytical tenet: sustainable development.

“Sustainable development” has been Cuba’s guiding tenet since the publication of the Economic and Social Policy Guidelines of the Party and Revolution in 2011.The concept, assumed as an axiom, does not require any kind of verification – it is an absolute truth. Progressive discourses such as political ecology and the theory of degrowth, committed to a more just global society that is better adapted to the logic of nature, have, however, long questioned this notion, demonstrating that this “development”, even when qualified as “sustainable”, is more of the same. Aren’t Cuban economists aware of this?

Container terminal at the Port of Mariel.

As Serge Latouche explains in his book Surviving Development: From the Decolonization of the Economic Imaginary to the Construction of an Alternative Society (written in 2004, a decade ago), the concept of “sustainable development” belongs to the same family of concepts as “development”, “human development”, “local development” and others that seek to conceal the imposture of economic development policies.

In this connection, Latouche alerts us to the fact that, in the same way “socialism” in Europe was the hope for which a handful of courageous and generous people sacrificed themselves but also sacrificed generation upon generation of people to build a radiant future, the hope of “development” in Third World countries has resulted in huge sacrifices.

The origins and foundations of the concept of “development”, Latouche explains, are suspect, as it was the West that took it to the countries it had previously colonized. It later became the hope that the leaders and elites of the newly independent countries presented to their peoples as a solution to their problems. The economic development project became, in fact, the only legitimate aspiration the power elites ever confessed.

“Those responsible for the young nation States were bound to indissoluble contradictions. They could neither reject nor achieve development. They could therefore neither refuse to introduce nor manage to adapt everything that is part of Western modernization to their own situation: education, medicine, justice, administration, technology. The hindrances, obstacles and road blocks of any nature, so dear to economic experts, undermined the belief in the success of a project that entailed taking part in the international competition characteristic of the era in which today’s hyper-globalization – generalized economic warfare, that is – was being prepared.”

Going over this 10-year-old book, dealing with issues that take us back an additional 50 years, it would seem to be describing what’s taking place in Cuba today. It is a show of how behind and alienated our anti-capitalist politicians and technocrats are. From my point of view, such a stance is a conscious one, as these individuals are very much aware of the economic development policies dictated by the IMF and Central Bank of Europe.

Cement plant. Photo: Juan Suarez

Exploring everything that’s behind the concept of “sustainable development” requires more space than is afforded by a single post. In this connection, to encourage debate, I will limit myself to pointing out, as Latouche does, that behind the promotion of concepts such as “sustainable development” (espoused at the Rio Summit in 1992) or “socially sustainable development” (promoted at the Copenhagen Summit in 1995) or “human development” or “local development” (advanced by UNDP), are transnational economic institutions whose ultimate aim is economic development “pure and simple” always operate.

As an example of this, Latouche refers to the World Bank, the International Monetary Fund and the World Business for Sustainable Development, which came together as the International Chamber of Commerce that gave birth to the Business Action for Sustainable Development (BASD), forming a lobby made up of 163 multinational companies (including AOL-Time, Warner Areva, Michelin, Suez, Texaco and Dupont), a lobby that participated at the World Summit for Sustainable Development held in Johannesburg in 2002.

Who, then, is interested in Cuba’s “sustainable development”? Is it accidental that its new foreign investment law, or more concretely, projects such as the Mariel Port, is conceived as a means of negotiating with big companies? Is a Brazilian transnational company less imperialist than a US corporation?
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(*) Architect (Havana, 2003). Lecturer at the Faculty of Architecture of the Polytechnic University José Antonio Echeverría (Havana, 2003-2007). PhD in Urbanism Planning and Environment (Spain, 2013)

 

 


6 thoughts on “Cuba and its New Investment Law: From Sustainable Development to Neo-Liberalism

  • April 29, 2014 at 1:19 pm
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    Sustainable development” has been Cuba’s guiding tenet since the
    publication of the Economic and Social Policy Guidelines of the Party
    and Revolution in 2011

    Does the author seriously believe this? So, why does Havana not have a public transport link between the airport and the city centre? Why is public transport in such a miserable state generally? Why has Cuba neglected renewable energy sources.? If the government had not been sleeping on the job, the country could be heading for energy self-sufficiency. How many Cubans do you know who recycle to save the planet for their children as opposed to those who throw empty beer cans out of car windows? And why did the sustainable development Cuban government abandon bottles with deposits in tourist areas for throw away cans?
    Sustainable development in Cuba, don’t make me laugh. Actually, I won’t as it is far too sad and serious.

  • April 25, 2014 at 8:29 am
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    The author seems to suggest the new Cuban foreign investment law is a step towards neo-liberalism. It couldn’t be further from the truth. The law establishes a new set of regulations and conditions on foreign investors, quite contrary to the spirit of liberalism. The Cuban government maintains a monopoly of the labour market through which the foreign investors must contract staff. Cuban citizens remain forbidden to invest in or own businesses. There is nothing at all neo-liberal about the Raulist economic reforms. This is the old style corporate state monopoly system typical to the traditional Latin American caudillos.

  • April 24, 2014 at 4:30 pm
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    Cuba has been a “bad risk” for years. Commercial credit insurance firms have refused to ensure trade with Cuba in Europe for years after the Coface (French company) debacle.
    Even the “insurers of last resort”, the national export insurers in Europe shy away from Cuba.
    A couple of years ago China had to assume a stack of debt from Chinese exporters through their national credit insurer because otherwise exporters would have cut off Cuba.

  • April 24, 2014 at 4:21 pm
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    I would say from “unsustainable dogmatic mismanagement” to “robber baron oligarchy”. Cuba is following in Russia’s footsteps.
    Under Castro Cuba never “sustained” itself. It lived of the wealth of: (in succession)

    – the population and foreign investors (currency reform, expropriations)
    – Soviet subsidies (over 1/3 of GDP)
    – Venezuelan subsidies and slave labor

  • April 24, 2014 at 8:42 am
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    “Sustainable” is largely a buzzword tossed around today. Still, your comment about risk and return is absolutely correct. On that subject, this news item is revealing:

    “Moody’s cut Cuba’s credit rating Wednesday by one notch, citing its vulnerability to a shock rise in fuel costs arising from turmoil in supplier Venezuela.Moody’s also cited the risk of a rocky political transition in the Caribbean island in the wake of the Castro regime as it cut the rating to Caa2 from Caa1, well into “speculative” territory for debt.”

    http://www.globalpost.com/dispatch/news/afp/140423/moodys-cuts-cuba-rating-risk-venezuela-turmoil

    A bad risk environment is now getting much worse.

  • April 24, 2014 at 7:24 am
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    A founding principal of ‘Sustainable Development’ is that the country hoping to attract development capital minimize risks to foreign developers. The political risks associated with investment in Cuba are inescapable so long as the Castros remain in power and the embargo remains in place. Because of their extreme age and the lack of a real plan of succession, investment decisions beyond 5 years are at best blind guesses. Add to that, the Castros track record of abusing investors and Cuba easily becomes the investment choice for extreme risk takers. Extreme risk takers seek greater returns on their investments to offset the extreme risk. All other things being equal, investing $1 million in Cuba demands much greater return than the same investment in Switzerland. As a result, foreign investment in Cuba is far more limited in scope because the potential to earn greater returns on those investments are limited to very few business prospects. If the Castros truly had the welfare of the Cuban people at heart, they would leave town immediately. They would schedule open elections, free political prisoners and legalize independent media. These actions would trigger the US Congress to lift the embargo. The investment horizon would change dramatically for Cuba and the hope for greater ‘sustainable development’ would become reality. Of course, pigs would fly at that point too.

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