Why is the diaspora not going to invest in Cuba?

After the interview on NBC, the Deputy Prime Minister and Minister of Foreign Trade and Foreign Investment, Oscar Pérez-Oliva Fraga, continued to follow the established script and provided more detailed information about the measures aimed at encouraging the participation of Cubans residing abroad in the national economy.

While Cuba lacks the foundations of a democratic system and public freedoms, with respect for human rights, no political prisoners in prisons, and democratic institutions for participation that ensure the separation of powers, it is difficult to channel the Island towards investment projects from the diaspora. Basically, because as long as the political reasons that led to the departure of more than two million Cubans remain, it does not seem logical for investments to take place in the national economy. It would be an absolute folly that could not contribute in any way to the recovery of freedoms and democracy on the Island.

But let's get to the content of Pérez-Oliva Fraga's presentation.

He announced that the decisions "are primarily aimed at seeking greater decentralization of the economy, encouraging greater participation of foreign capital in our economic and social development, and also diversifying the participation of the private sector in various areas of the economy."

Has the Vice Prime Minister read the 2019 Constitution? Or perhaps he needs someone to do so? Well, in Title II, where the economic foundations of the regime are established, there are two provisions that do not align with the previous statement. Indeed, Article 18 states: “In the Republic of Cuba, a socialist economic system prevails, based on the ownership of all the people over the fundamental means of production as the main form of property, and the planned direction of the economy, which takes into account, regulates, and controls the market in accordance with the interests of society.” More specifically, Article 19 states: “The State directs, regulates, and controls economic activity, reconciling national, territorial, collective, and individual interests for the benefit of society. Socialist planning constitutes the central component of the system for directing economic and social development. Its essential function is to project and guide strategic development, anticipating the necessary balances between resources and needs.”

What kind of decentralization of the economy is Pérez-Oliva Fraga referring to? The Cuban economy is socialist, the means of production are “the property of the people,” and the planned economy directs and controls the market. Furthermore, the state directs, regulates, and controls economic activity, exercising maximum centralization of economic power where no decentralization is possible. This is how things are defined, and therefore, Pérez-Oliva Fraga's “decentralization” is a ruse, a daydream that demands profound reforms to the communist constitution of 2019. Will he be able to implement them? There are many doubts.

It also announced as a novelty the opening of investment in the banking financial sector and the creation of cooperation and investment funds, subject to a license from the Central Bank of Cuba. Another absurdity. There is a need to warn about the functioning of this entity, completely subordinate to government orders and lacking autonomy as seen in democratic countries. Attention must be paid to what licenses the Central Bank grants to create non-banking financial institutions, investment banks, and other entities included in Decree-Law 362 with capital from the diaspora. They could be counted on one hand. The potential opening for the participation of the Cuban community residing abroad in the national banking financial sector also comes with the possibility of participating as providers of virtual asset services. Is the regime stimulating crypto??

There is no doubt that this decision, if feasible, has little chance of leading to a specific outcome, as it is heavily influenced by the limitations of a financial and banking market in Cuba that is very limited and distorted by ineffective monetary policy, as well as the population's low savings capacity amidst high double-digit inflation rates that make any effort to save unviable. "Cooperation funds" are instruments within the municipal agenda whose viability depends on their social utility.

The Deputy Prime Minister announced the approval for Cubans residing abroad, through companies established in other countries, to partner with Cuban private enterprises under the Foreign Investment Law 118. Until now, this possibility was only available with state entities.

Another law that will need to be amended, as this type of association is not currently recognized. Therefore, if the aim is to open this space for the participation of the community residing abroad in the economic and social development of the country, the issue of reforming this 2014 law must be addressed, as it has significantly limited the achievement of the objectives set at that time.

Furthermore, if the aim is truly to establish alliances between the Cuban private sector and foreign capital linked to the diaspora, the first thing Pérez Oliva-Fraga must achieve is to ensure that Cuban private entrepreneurs possess the same rights to invest in their businesses as those currently afforded to the diaspora. This asymmetry may hinder the sought-after alliances. As always, the regime believes that the publication of regulations in the Official Gazette can help the Cuban economy function.

And the icing on the cake, in case anyone had any doubts. The regime is always on the lookout for fresh money from abroad. It is established that to facilitate the operation of new economic actors, Cubans living abroad who wish to establish companies in Cuba will have to open and operate bank accounts in foreign currency under the same conditions as any person or institution residing in the country. Legal uncertainty is a factor to consider, and even more so, the fate of those funds once they enter the banking circuit controlled by the regime.

Pérez-Oliva Fraga reported on the increasing participation of the Cuban community abroad in solidarity actions with Cuba. And this is where he lost much, if not all, of the appeal of his arguments, by attributing the responsibility for the crisis in the economy to "the intensification of the blockade imposed by the United States," adding that "it is the main obstacle to the development of all the transformations that our country is implementing in the economic sphere."

False, because in reality Cuba trades, receives investments, capital, and tourists from all countries in the world, except for its neighbor to the north for reasons well known. If Cuba currently lacks access to capital, markets, and financing, it is due to its repeated failures as a debtor, which have resulted in judgments in international courts. Mitigating the current humanitarian crisis on the island would have been possible if the regime's international behavior had been responsible in recent years.

The current damage is exclusively due to poor operations in international financial markets and public management. If the vice prime minister wants U.S. companies to regain interest in Cuba, he should not blame the legislation of the neighboring country, but rather his own, as detailed above. The only ones speaking of a bilateral conflict are those on the Cuban side, who continue to express intentions to deceitfully use the argument of the blockade in all their statements.

To overcome this more mental than anything else blockage, Pérez-Oliva Fraga announced the decision to create funds to stimulate cooperation, always respecting the donor's wishes, which will allow for better organization and greater impact in the destinations that need it most. The question is: has all the international cooperation received by Cuba so far, which is not insignificant, not respected the donor's wishes? How many entities that have donated to the Island will consider conducting audits to verify if their priorities have been met?

The vice prime minister has gotten himself into quite a mess with these types of messages, which can only create a sense of international uncertainty regarding the management of donations. In light of this evidence, it does not seem that there is any possibility for the Cuban community living abroad to participate in investment funds for the development of projects on Cuban territory to finance the implementation of initiatives that are of interest for the economic and social development of the country.

The Deputy Prime Minister announced that one of the decisions made is to encourage the participation of Cubans residing abroad in agricultural production, especially at the local level, in line with the country's policy to enhance the role of municipalities.

He cited Vietnamese companies that produce rice on the Island as an example, suggesting that similar experiences could be developed with the Cuban community living abroad, where land lease rights are granted for food production. The Deputy Prime Minister has been quite clear here, stating that land ownership will never belong to investors.

It is clear that this is reflected in the communist constitution of 2019. Article 29 stipulates that “private property on land is regulated by a special regime. Leasing, sharecropping, and mortgage loans to individuals are prohibited. The sale or onerous transfer of this asset can only be carried out after meeting the requirements established by law and without prejudice to the State's preferential right to acquire it at its fair price.” With these limitations within the economic system, it is understood that the agricultural sector in Cuba has very little capacity for production.

And of course, since there are no two without three, to achieve what has been described, the deputy prime minister, who still seems oblivious to everything, announced the intention to enhance the internal mechanisms for addressing these interests, “including a more targeted approach to the business opportunity portfolio and better control and processing of requests to avoid unnecessary delays.” The business portfolio, another control instrument that limits the investor's ability to act only on those projects that are authorized, along with the bureaucratic processing of requests, creates a true administrative ordeal for foreign investors who have chosen to invest in projects in Cuba under the auspices of Law 118.

Bureaucratic changes that seem aimed not only at capturing the traditional small and short-term projects that come to the Island, but also at attracting higher-level investment projects linked to key sectors for development. Additionally, the vice prime minister wants the diaspora to finance these initiatives. Pérez-Oliva Fraga is really unaware of what the Cubans living abroad are like, and once again the regime illustrates clearly why all its measures and initiatives are a failure.

No matter how much the same communists who have been in power since 1959 show a supposed willingness to strengthen ties with "their children living in other latitudes, recognizing their role in building an increasingly prosperous and sustainable homeland, in accordance with the principles of social justice that have guided the revolutionary process from its beginnings," my recommendation to the vice prime minister is that the last part of the previous statement is unnecessary. With that, they have effectively buried any idea someone might have had about investing in Cuba. Rest assured of that.