Cuban investments from abroad in Cuba? No, thank you

Continuing with the script announced last week by Miguel Díaz-Canel, when he stated that there were conversations between Cuba and the United States, the first to step forward was Vice Prime Minister Oscar Pérez-Oliva, who proudly announced that Cuba will allow its nationals residing abroad to invest in their own businesses on the Island. A decision that says very little about the one presenting it in these terms.

And he said this in statements to NBC, in an exclusive interview that has quickly circulated worldwide. While lacking more specifics on what is intended, Pérez-Oliva stated that “Cuba is open to having smooth trade relations with companies from the United States” and also that “these relations can be established with Cubans residing in the United States and their descendants,” but he did not provide details on how this desired situation is to be achieved.

What happens is that things are never black or white; instead, there exists a wide range of intermediate grays, and here we are in an exceptional case.

But how can one lie so blatantly?

First, because Cuba has been open to foreign investors for many years. Cuba has been receiving investments from countries around the world for over a decade since the approval of Law 118 in 2014, and there are innovative formats to attract foreign capital, such as the Mariel Special Economic Zone. The mining interests from Canada and the Netherlands, as well as the tourism investments from Spain, confirm that foreign investment has flowed to the Island. There is nothing new about this.

What happens is that the balance has been disastrous, because no one is willing to risk their money in a country where the economy, according to the Constitution, is Marxist-Leninist and private enrichment is prohibited in Article 30 of that document. The regime does not provide data, but the record of foreign investment on the Island is very poor compared to the Dominican Republic or Costa Rica.

The reason is that in the Cuban economy, there is no stable and predictable framework for the exercise of property rights, and the market as a tool for resource allocation is replaced by central planning. With this economic model, one cannot expect foreign investors to turn to Cuba when they can do business in many other countries. Therefore, expectations regarding Pérez-Oliva need to be lowered before one can take a position on his offer.

Secondly, Pérez-Oliva is starting off on the wrong foot if he wants to attract investors from the United States by criticizing the blockade as a threat to Cuba's efforts to overcome the current energy crisis. Pérez-Oliva knows very well the root of the current humanitarian crisis in the Cuban economy and what needs to be done to move past this situation, and he certainly won't achieve that by attacking the only one who can truly help, which is none other than the neighbor to the north.

However, Pérez-Oliva maintains the script of the embargo and asserts that "the blockade, the policy of hostility of the United States against Cuba, is undoubtedly an element that affects the development of the changes that are needed, and the ties that are intended to be built with the United States." So, does Cuba not also have to fulfill its responsibilities to deserve that relationship? Is there not a pressing need for political and institutional change towards a system of liberties, a free press, with no political prisoners and a separation of powers?

The Castro leader sticks to the script and points out that "the blockade deprives the Cuban economy of access to financing, technology, markets, and in recent years, the limitation on access to oil for the Cuban economy." There is no blockade whatsoever. If he continues down that path, he won't get very far. In reality, Cuba engages in trade, receives investments, tourists, etc., from all over the world; the problem is that it doesn't pay, which limits its appeal to businesses.

The issue is that the Castro regime now claims to be genuinely open to having smooth business relations with companies from the United States. Experience will tell, or not. But let there be no doubt that something quite different is attracting capital from Cubans living abroad, whether from the United States, Spain, France, or anywhere else.

The communist regime lacks an adequate framework for relations with the more than 2 million Cubans who are part of a diaspora that is generally unfavorable toward reconciling with those who caused their departure from the country at various times over the past 67 years. More than mere announcements are needed to achieve this new framework for relations. And this is nowhere to be seen.

Pérez-Oliva is part of the group of high-ranking officials appointed by Díaz-Canel to communicate a series of "transformations" in the economy that aim to create a dynamic environment for economic activity. This is intended to be achieved through reforms in various areas, but at no point is the main issue addressed, which is the political and institutional system—a communist dictatorship—that must be directed towards democracy, freedoms, respect for a free press, the release of political prisoners, and the separation of powers. A democratic country could be attractive for foreign investment.

On the other hand, the 2019 Constitution does not guarantee a system capable of promoting economic activity like in other countries around the world. Without this constitutional reform, it will not be possible to activate foreign investment in sectors such as tourism, infrastructure, energy, or mining that are included in the regime's portfolio.