Cuba’s Mariel Development Zone Unmasked

Pedro Campos

Container terminal at Mariel Port.
Container terminal at Mariel Port.  Photo: www.zedmariel.com

HAVANA TIMES — Ana Teresa Igarza, director general of the Mariel Special Development Zone (ZEDM) Regulations Office, recently announced that a special hard-currency exchange rate had been established for Zone employees.

Contracted employees will receive 80 percent of the salaries agreed to by Cuban employment agencies and investors, and payments are to be made in regular Cuban pesos (CUP), at a “special” exchange rate of 1 Cuban Convertible Peso (CUC) to 10 CUP. This is as “special” as the Special Period.

That is to say, if the employment agency negotiates a 1,000 CUC salary (or its equivalent in US dollars) for a Cuban worker, the agency will pocket the 1,000 CUC (or its equivalent in US dollars) and pay the Cuban worker (in CUP) 80 percent of the sum agreed to, at the special exchange rate of 10 CUP to 1 CUC.

If mathematics hasn’t also been deformed by “State socialism”, this means the worker will receive 10 Cuban pesos for each CUC, which means that their salary would be 8,000 CUP (10 x 800).

When that worker comes out of the ZEDM, in order to purchase anything at the hard-currency stores operated by Cuba’s military monopoly, they will have to resort to government exchange locales (or CADECAS), where they are required to buy CUC at an exchange rate of 25 to 1. Thus, their 8,000 Cuban pesos become 320 CUC.

This means that, of the 1,000 CUC (or their equivalent in US dollars) paid by the investor, Cuban workers will only receive 32%. To this, we must add that the wage worker must pay an additional 5 percent for State “social security”, which means that they are ultimately only receiving 27 percent of the original 1,000 CUC.

A total of 63 percent will go to the State, which will sit back and not “get its hands dirty” – it will pocket this only for acting as an “intermediary” between the investor, a euphemism for a foreign capitalist exploiter, and Cuban salaried workers.

A crafty maneuver, true, but it can’t hide the double exploitation they would submit Cuban workers to, between the foreign capitalists and the extortionist State which, to add insult to injury, leaves workers helpless, deprived of laws that could protect them from their employers.

Having accustomed Cuba’s working class to hyper-exploitation, the State of course expects workers to content themselves with 32 % of their salaries. The other 68 % goes to the “nation.”

The benefits that the Mariel port mega-project brings the Cuban working class are becoming clear.

The much publicized Mariel project thus takes off its “progressive” mask to show its true face, to reveal itself as the extortionist of Cuban wage workers.

It is a clear illustration of the sought-after alliance between Cuba’s State monopoly capitalism (which has sought to pass itself off as “socialism”) and international capital, coming together to jointly exploit Cuba’s workforce.


35 thoughts on “Cuba’s Mariel Development Zone Unmasked

  • May 10, 2014 at 8:44 pm
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    The US travellers to Cuba didn’t come to Cuba for tourism, but for academic and cultural purposes (tourism to Cuba is a no-no under US law). Also, when Cuba says the blockade impedes access to the IMF and World Bank, they mean to say that Helms-Burton allows the US to vote against Cuba’s entry to both institutions, not to forget that Cuba withdrew from both IMF and World Bank in 1960s on the grounds that those institutions were symbols of so-called “Yankee financial imperialism”. Someday, Cuba may simply apply for re-admission to IMF and World Bank in defiance of Helm-Burton.

    Personally, I consider Helms-Burton’s provisions on trade ineffective because the US cannot tell a country not to trade with Cuba.

  • April 28, 2014 at 9:30 am
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    Moses,
    careful, Burma is not quite yet a democracy.

  • April 22, 2014 at 8:49 am
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    To be sure, Mandela, while giving high praise to Cuba,
    was careful to avoid comparing Cuba’s contribution to African independence to the efforts of any other country. He said, “Cuban internationalists have done so much for African independence, freedom, and justice. We admire the sacrifices of the Cuban people in maintaining their independence and sovereignty in the face of a vicious imperialist campaign designed to destroy the advances of the Cuban revolution.” He was also careful, and you should be as well, to acknowledge Cuban efforts without diminishing the efforts of other countries to the same end. Additionally, your racists undergarments are showing. Why would you presume that the three notable African-Americans you mentioned should speak for the entire diaspora of such a diverse and beautiful people. As a white boy, does Jesse Helms speak for you? Why not? He was as white as you are. Stop while you are ahead.

  • April 21, 2014 at 7:27 pm
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    The black Cuban dissident Sonia Garro is still in prison after two years.

    By 2012 Ms. Garro already had experience with state violence. Her record of counterrevolutionary activities included running a recreation center in her home for troubled youths. For that she was twice beaten by government-sanctioned mobs. She suffered a broken nose in police detention in 2010.

    When security agents took her home to put her under house arrest ahead of the pope’s visit, she was met by a mob sent to harass her. Her husband, Ramon Alejandro Muñoz, had climbed to the roof and was chanting anti-dictatorship slogans. Two neighbors took the couple’s side. Special-forces police were called in. They raided the home, shot Ms. Garro in the leg with rubber bullets and hauled the couple and two neighbors to jail.

    Eighteen months later prosecutors charged Ms. Garro with assault, attempted murder and public disorder. Her husband and one neighbor, Eugenio Hernández, are accused of attempted murder and public disorder. The prosecution is seeking a 10-year prison sentence for Ms. Garro, 14 years for Mr. Muñoz, and 11 years for Mr. Hernández.

  • April 21, 2014 at 7:21 pm
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    Prominent black Americans condemn Cuba on racism

    A group of prominent black Americans has for the first time publicly condemned Cuba’s rights record, demanding Havana stop its “callous disregard” for black Cubans and declaring that “racism in Cuba . . . must be confronted.”

    “We know first-hand the experiences and consequences of denying civil freedoms on the basis of race,” the group said in a statement Monday. “For that reason, we are even more obligated to voice our opinion on what is happening to our Cuban brethren.”

    Among the 60 signers were Princeton professor Cornel West, actress Ruby Dee Davis, film director Melvin Van Peebles, former South Florida congresswoman Carrie Meek and Dr. Jeremiah Wright, former pastor of President Barack Obama’s church in Chicago.

    http://www.latinamericanstudies.org/cuba/racism-statement.htm

  • April 21, 2014 at 7:11 pm
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    There is no blockade. Last year Cuba bought over $340 million worth of products from the US. Cuban expats sent over $1 billion in remittances to Cuba. Hundreds of thousands of US tourists travelled to Cuba. Cuba trades with many other countries around the world.

    There is no blockade.

  • April 21, 2014 at 4:59 pm
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    Try wiki, which lists the Per Capita GDP in several tables as compiled by various organizations.

    So ok, let’s look at your example of BP. When the state nationalized BP, were all salaries slashed to the equivalent of $20 per month? No. Even the UK’s high tax rates do not come anywhere near the effective tax rates imposed by the Cuban regime.

  • April 21, 2014 at 2:29 pm
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    To be sure, Mandela, while giving high praise to Cuba,
    never publicly compared Cuba’s contribution to African independence to the efforts of any other country. He said, “Cuban internationalists have done so much for African independence, freedom, and justice. We admire the sacrifices of the Cuban people in maintaining their independence and sovereignty in the face of a vicious imperialist campaign designed to destroy the advances of the Cuban revolution.” He was careful, and you should be as well, to acknowledge Cuban efforts without diminishing the efforts of other countries to the same end. Additionally, your racists undergarments are showing. Why would you presume that the three notable African-Americans you mentioned should speak for the entire diaspora of such a diverse and beautiful people. As a white boy, does Jesse Helms speak for you? Why not? He was as white as you are. Stop while you are ahead.

  • April 21, 2014 at 12:50 pm
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    The example of the BBC is completely irrelevant as they are a non-profit public service, funded by mandatory licence fee.

    If we take the example of British Petroleum(BP) before it was privatised. There the government took the usual tax from the employees and as sole shareholder took a massive cut of the profits.

    Could you provide the evidence for the GDP etc.

  • April 21, 2014 at 12:43 pm
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    In the example of my company I am taking the costs out of the equation and comparing wages to profit. In the Cuban example though there are going to be administrative/recruitment and possibly training costs I am assuming they are zero.

    If I put it another way say the Cuban business gets privatised overnight. The employees are still going to be paying tax at the normal rate, but the new privatised company is going to take a big cut as well. Granted you wouldn’t expect the 75% of my company example, but in you and Moses’s calculations this isn’t going to exist. That is why you need to separate the state as tax collector and as employer.

    All the figures on tax I have given are the maximum percentage not the average which is more difficult to calculate.

  • April 21, 2014 at 11:11 am
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    Cuba did not liberate Angola. The Portuguese left Angola of their own accord and granted the Angolan people independence. Cuba supported one political faction when it seized power in the Angolan capital, thereby initiating 2 decades of civil war in which millions of Angolans were killed. The South African intervention in Angola came in response to the Cuban intervention.

    Cuba had nothing to do with the liberation of Namibia or the end of Apartheid in South Africa. The Cuban army had withdrawn from Angola before the South Africa government freed Mandela and allowed the black South Africans the right to vote.

    For a detailed and accurate history of the Cuban intervention in Angola, download the ebook here: http://www.cabinda.net/The-Cuban-Intervention-in-Angola.pdf

  • April 21, 2014 at 9:28 am
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    “by what measure do you believe that Cuba has done more for Africa than anyone else? Cite your source.” How about Nelson Mandela ? He has basically said as much. It must difficult, but profitable, to be to be black, and to advocate so stridently against what Cuba stands for, when your companeros are people like RENAMO backer Jesse Helms. The same Americans who believe that blacks are shiftless criminals are without exception, those most likely to believe the “communist tyranny propaganda about Cuba. How and why have you reached such a diametrically opposed opinion of Cuba than that of Glen Ford, Lucius Walker or Maxine Walters ?

  • April 21, 2014 at 7:21 am
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    The more you comment, the more you seem to betray characteristics of Cuban MININT commenters who carry the Castro propaganda to ridiculous and unfounded extremes. First, I never wrote that Cuba is more racist. Second, Cuba does not currently have 10,000 doctors in Africa. Third, by what measure do you believe that Cuba has done more for Africa than anyone else? Cite your source. Taking nothing away from Cuba’s international reputation in Africa, the US, the French, and the English have incredible records of altruism and accomplishment on the continent as well. If you are a phony Cuban commenter, even though your facts are wrong, your English grammar is better than usual.

  • April 21, 2014 at 6:43 am
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    Another often-repeated Castro propaganda line. Burma (Myanmar) endured a long-term US embargo as well. However, while incomplete, that country has resolved to become a democracy thus ending the embargo the US imposed. Cuba does not exceed Denmark and Japan in education. Japan ranks 6th and Denmark 22nd according to a Wikipedia ranking. (US #15). Cuba is not among the top 62 countries. If you believe otherwise, cite your source.
    http://en.wikipedia.org/wiki/List_of_countries_by_student_performance

  • April 21, 2014 at 6:40 am
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    Nope. I didn’t forget it. I also didn’t forget the $4 billion in Venezuelan subsidies as well as the $6 billion in remittances that the Castros receive that together sustain the moribund economy and the failed Castro-style socialism.

  • April 21, 2014 at 4:06 am
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    Maybe you missed this on housing in Cuba:

    “Cuba, a country of about 11 million people, lacks around 500,000 housing units to adequately meet the needs of the island’s citizens, according to the most recent government numbers from 2010. The housing deficit widens each year as more buildings fall further into disrepair, punished year-round by the tropical sun, sea and wind.

    Sergio Diaz-Briquets, a U.S.-based demographer who has written about the island’s housing deficit, estimated the figure is now somewhere between 600,000 and 1 million.”

    Source: Cuba home woes endure despite real-estate reform – Yahoo News – http://news.yahoo.com/cuba-home-woes-endure-despite-real-estate-reform-053450177.html;_ylt=AwrBEiJ.7FRTXhQA6QHQtDMD

  • April 20, 2014 at 10:27 pm
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    You conveniently forget the brutal economic blockade.

  • April 20, 2014 at 10:25 pm
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    You forgot to include the brutal economic blockade which anyother country would have collapsed long ago. Cuba does however exceed Denmark and Japan in academic achievment in educatation, and does well in healthcare.

  • April 20, 2014 at 10:20 pm
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    Explain to me how Cuba is more racist than the United States? Cuba liberated Angola and led to the liberation of Namibia and later South Africa. Cubans died for Africa. Cuba has 10,000 doctors saving lives in Africa whereas the US has military advisors and trainers for killing Africans. So, please explain. Cuba has done more selflessly for Africa than anybody else. You are grossly misinformed.

  • April 20, 2014 at 10:18 pm
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    You seem to believe that the enterprises in the Mariel zone are Cuban. These are foreign corporations. Cuba is an employment agency, nothing more. THEY HAVE NO EXPENSES! Certainly none that merit these margins. If your company was nationalized it would be run by your government, hence the term “nationalized”. The companies in the ‘zone’ are private. Their expenses come out of their end and not what they pay to Cuba ($1,000) for each employee. If you still can’t understand this, let’s just agree to disagree. BTW, if your company was nationalized and you were taxed at 77%, how would you feel? Just as motivated to work hard? I don’t know where you are from, but I am betting there are always potatoes in your grocery stores and more than enough condoms. You would get your money’s worth. Not so in Castroville.

  • April 20, 2014 at 9:52 pm
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    Listen to what you are saying, Dani. If your employer was nationalized, would your salary be reduced by 75%????

    Does the BBC pay their staff 75% less than the announcers and technicians at Sky or ITV? No they do not. Therefore, your argument it ridiculous. Give it up.

    The Per Capital GDP of the UK is $37,500. The average annual wage, as measured by Purchase Power Parity is $36,000. That’s not much less.

    The Per Capita GDP of Cuba is $10,200. The average annual wage is $240.

    I hope you can see the huge difference in the ratios there.

    The difference is the effective taxation rate imposed by the dictatorial Castro regime on the Cuban worker. The Cuban workers are getting screwed. For the pleasure of which, the people get crappy healthcare and a worthless education. Oh, and a police state to keep the people in line.

    How nice of you to defend the right of the gangsters enforcing the racket, while enjoying a far nicer standard of living and a free society. If the Cuban system is better, why don’t you quit your job at that nice employer, move to Cuba and take that generous $18 per month salary? After all, you will get that fabulous free healthcare!!!

    The answer is obvious. You know the Cuba system is hell. You won’t give up your freedom, human rights and affluence for the sake of your lightly worn and deeply deluded ideals. But you will defend the obligation of the Cuban people to live up to your fantasy.

  • April 20, 2014 at 9:29 pm
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    You you don’t know what you’re talking about.

    You’re unfamiliar with basic accounting terms like “revenue”, “expenses”, “gross and net income” and “profits”. Taxes are levied on profits, not on gross revenue. Any business has to deal with expenses. The cut that the Cuban government takes from employees is not a normal business expense, it’s extortion. Plain and simple extortion.

    In the UK the salary or wage workers earn is negotiable because you have independent trade unions and professional associations which are not run by the government. The government taxes your income, which is orders of magnitude greater than the average Cuban salary. The UK also has “free” education and healthcare, such as it is, and it’s still better than that available in Cuba.

    In Cuba, workers are paid an astonishingly low salary of $18 per month and it is not negotiable. The Cuban trade union does not represent the interests of the Cuban worker. It is there to enforce the will of the government, which is the largest employer and which dictates the conditions of employment for all other workers as well.

    You in the UK get to vote for the government you want, by the way. In Cuba, the people do not have a choice what sort of government they want. Funny how you don’t consider the Cuban people worthy of that experience.

    By the way, the income tax rate in the UK was never 97%. That figure refers to the marginal rate on the portion of income above a very high threshold, and which was never actually collected because anybody with that high income knew how to shift it off-shore. Again, you don’t know what you’re talking about.

  • April 20, 2014 at 9:06 pm
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    Plus free unicorns. You forgot to mention the socialist unicorns every child receives free of charge from the State. Don’t forget the unicorns.
    /

  • April 20, 2014 at 3:11 pm
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    I’m not sure you understand. You would expect the state as owner/employer to take a cut to cover expenses as well as profit margin way and above the tax rate. If my company was nationalized then the state would be taking around 77% (profit + tax) and that is taking expenses out of the equation.

    Denmark and Japan are around 51% maximum according to wikipedia. Nothing compared to the 97% we had in the UK at one time.

  • April 20, 2014 at 10:08 am
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    No, I have it straight. Cuba, as employer deducting for expenses AND as state taxing agent, takes its 68% off the top. As a worker, in your paycheck it doesn’t matter if it is a tax or deduction for expenses. At this level of taxes and deductions (68%) is far higher than anywhere else in the world. Denmark and Japan never exceed 50%. If you live in New York City, before write-offs, it is possible to approach 45%. But, even at rates as high as 50%, look what the Danes and the Japanese get for their money. Compare a small progressive state like Denmark (free health, free schools, etc.) to Cuba. Cuba is an epic failure by comparison.

  • April 20, 2014 at 9:18 am
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    I think you are mixing up the state as employer and the state as tax collector. If you take the company I work for (which has won several awards for best employer), roughly out of every pound earned, 75p goes out in costs and outlays, 10p in wages and 15p in profits to the shareholders. This means that 75% of our wages get taken away. Then put on top of that tax and social security. So the Cuban workers are in fact keeping more of their salary than we are.

    As an aside according to wikipedia the tax rate is between 15%-50% which though high, is not the highest in the world. Countries like Denmark and Japan have a higher maximum rate.

    Secondly, though it is legitimate to question whether Cubans are getting value for money, the state has far more than education and health care to finance. There is investment, transport, the payroll (arguably bloated), sports and entertainment, the media, the libretta and the subsidies on building equipment etc. A lot of people would lose their jobs if it wasn’t for the state supporting them. For example in Santiago I went to see a 50 piece dance troupe rehearsing. It would be near impossible for the same to survive in the UK because of the commercial costs involved.

  • April 20, 2014 at 3:31 am
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    Cubans don’t get “free healthcare”. they pay a portion of their wages for social security. The health care by the way is inadequate and far from free. As lots of items – including medicines, prescription glasses and dentures – are lacking people have to buy them in dollars or pay “under the table” to jump the queue.
    College isn’t free. National service is required: a “work for education” system.
    Housing in Cuba is far from “decent”. The country lacks 500,000 units. most Cubans live in cramped conditions with various generations in one home. Shanty towns exist in Cuba.
    The propaganda here comes from you.

  • April 19, 2014 at 4:06 pm
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    You are the one who is misinformed. Firstly, as an African-American who is frequently mistaken as Cuban in Cuba, I experienced racism first-hand in Cuba. Believe me, I know racism when I see it. Whether it is here in San Francisco or in Havana, it has the same stench. Cubans are hardly the best educated. Worse yet, if education is expanded to include awareness of all sides of world events, Cubans are among the least informed. Cuban health indices are self-reported so it is questionable at best to rely upon much-heralded infant mortality rates and other health statistics regarding the Cuban people. What is true is that Cubans suffer high rates of heart disease, diabetes and hypertension. Alcoholism and suicide are unusually high as well. You sound like the typical Castro sycophant who reads the billboards on La Rampa and believes that crap.

  • April 19, 2014 at 1:15 pm
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    What a uninformed comment. The Cuban Revolition eliminated racism, produced the best educated society in the W. Hemisphere, healthiest all done despite a brutal embargo. Cuba has less crime than Miami. You are so misinformed.

  • April 19, 2014 at 1:11 pm
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    “hyper exloitated”? The Cuban government pockets the difference? Is this money going to Swiss bank accounts? These so called hyper exploitated workers unlike the real hyper exploited workers in agricultural communities in California and Florida do get free health care. Their children can go to college for free, and do get decent housing. Unlike the farmworkers who pick grapes and tomatos and apples in the USA. Stupid propaganda/Imperialist piece.

  • April 19, 2014 at 6:27 am
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    Not what one would expect in a workers paradise. Why would the state not take it’s cut out of commerce tax or port royalties versus workers wages?

  • April 19, 2014 at 1:28 am
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    A correct calculation.

    The news items like the one on Cuba Standard with a title like “Mariel workers to keep most of what employers pay” are misleading.

    Indeed (100*.8)/2.5= 32% of their salary, not 80%.

    The 10CUP per CUC may be a hint to the future target rate for the unification of the CUC and CUP.

    Article referred to:

    “Mariel workers to keep most of what employers pay”, Cuba
    Standard, http://www.cubastandard.com/2014/04/15/mariel-workers-to-keep-most-of-what-employers-pay/

  • April 18, 2014 at 7:07 pm
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    HMM! So where are the Castro groupies now?? They must be celebrating Easter now that is legal in Cuba!

  • April 18, 2014 at 7:04 pm
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    Let any one of the Castro sycophants respond to this post. But first, ask yourself, if your government took 68% of your salary how would you feel? Please don’t say “free education, free health care , blah, blah, blah”. As you can see, it is hardly free. At 68%, I would expect buildings that don’t fall down, buses that run on time, and store shelves fully stocked. The Castros are little more than petty thieves.

  • April 18, 2014 at 3:43 pm
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    Exactly right!

    I am so glad to read Pedro’s concise deconstruction of the Mariel Zone swindle. Yet again, the Cuban workers are getting screwed by the regime. This time in an obscene alliance with foreign corporations. Did the Cuban people struggle through 55 years of so-called “revolution” for this?

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