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Team 4 Talkin Bout A Revolution 02 02 09
- 1. Talkin’ ‘Bout a Revolution Prepared by: Chris Boyd Shawn Cowgell Jonathan Lord Rebecca Oliver Flag of the 26th of July Movement February 02, 2009
- 2. Talkin’ ‘Bout a Revolution (cont.) Trade Obstacles within Castro’s Regime Lack of legal system to enforce commercial contracts Lack of a banking system to offer credit No private-property rights Burdensome Labor Laws Non-Cuban partners cannot hire, fire, or pay workers directly
- 3. Talkin’ ‘Bout a Revolution (cont.) Why do you think the Cuban government requires non-Cuban businesses to hire and pay workers only through the government?
- 4. Talkin’ ‘Bout a Revolution (cont.) Do you think it is ethical for non- Cuban businesses to enter into partnerships with the Cuban government? Why or why not?
- 5. Talkin’ ‘Bout a Revolution (cont.)
- 6. Talkin’ ‘Bout a Revolution (cont.) “See Cuba before Castro dies,” How do you think that the transition to a market economy in Cuba would be the same as, or different from, the transitions now taking place in Russia and China?
- 7. Talkin’ ‘Bout a Revolution (cont.) Why do you think the United States maintains such a hard line against doing business with Cuba? TRADE
- 8. Talkin’ ‘Bout a Revolution (cont.) Cuba’s Convertible Pesos Front Back
- 9. Talkin’ ‘Bout a Revolution (cont.) Do you think this embargo is in the United States’ best interests? Why or why not? 48% YES48% YES 40% NO40% NO
- 10. Cuba holds 30% of the world’s reserves of nickel Cuba exports 75% of its nickel to Europe, using it in stainless steel and other alloys Canada’s Sherritt International Corp., is currently the biggest nickel mining firm in Cuba Sherritt has Castro’s approval to develop beach resorts and strengthen Talkin’ ‘Bout a Revolution (cont.)
Notas del editor
- Revolution can be defined as an overthrow and the thorough replacement of an established government or political system by the people governed. Cuba’s Revolutionary movement started on July 26, 1953, lead by Fidel Castro and 200 revolutionaries from all over Cuba. Fidel led them in a Guerrilla attack on the Moncada army barracks in Santiage de Cuba. The militia seized weapons and other supplies and their success caused the citizens there to rally to his flag. Unfortunately, the government sent in reinforcement, which managed to kill nearly all of the revolutionaries and sent Fidel to prison for 15 years. This day will always be remembered in Cuban history as the 26th of July Movement, the mark of the beginning of a revolution. After a year, Fidel Castro was released and moved to Mexico and formed a new army of Guerrillas to overthrow the Cuban government and they were known as the “26th”. The Cuban Revolution was a revolution leading to the end of the dictatorial Cuban President General Batista on January 1, 1959 by the 26th of July Movement and other revolutionary organizations. The 26th of July Movement is a symbol of the Cuban revolution and continues to be worn on the shoulder of the Cuban military uniform. However, with the end of one dictatorial leader came the beginning of a 50 year reign of communist government led by Fidel Castro. Due to the Cuban people’s sufferings caused by food shortages, falling health and education standards along with a collapsing economy, they were convinced Castro would lead them to a better way of life. Castor’s belief was, only “revolution” could save Cuba. After Castro’s gain of control over Cuba, he was joined with others to form the United Party of the Cuban Socialist Revolution. In 1965 this became known as the Communist Party of Cuba which was the beginning of many trade obstacles.
- Along with the Cuban Revolution came the ongoing implementation of social and economic programs enforced by the new government of Fidel Castro. Under Castro’s power the Cuba was faced with living under his communist haven. Although Castro has allowed companies such as Sherritt (One of the biggest mining firms active in Cuba today) and ETESCA (Cuba’s national telecommunications firm), to make business investments they must be prepared to accept and deal with partnering with a socialist state. Some of these trade obstacles that the Cuban government created were: Lack of a legal system to enforce commercial contracts Lack of a banking system to offer credit No private-property rights Burdensome Labor Laws Non-Cuban partners cannot hire, fire, or pay workers directly Castro created a “pure centrally planned economy”. This meaning it has an economic system in which a nation’s land, factories & other economic resources are owned by the government which plans nearly all economic activity.
- QUESTIONS: 1a). Why do you think the Cuban government requires non-Cuban businesses to hire and pay workers only through the government? The Cuban government requires non-Cuban businesses to hire and pay workers only through the government because they want total control over the Cuban society from an economic and social standpoint. The whole idea of communism is based around control over the people. In Cuba, propaganda and intimidation are the norm. Sherritt, and other companies likewise in Cuba are also overburdened with labor laws that restrict them from hiring and firing individuals and other seemingly unfair complicated rules. Some of Cuba’s Labor Laws include: They must pay the Cuban government to provide laborers The workers are only paid a fraction of these payments: For example – Sherritt pays the Cuban government $9,500 per yr per worker, yet the government only pays the workers $120 - $144 per year. But, what makes this so enticing to outsiders like Sherritt is the 80 percent in annual returns they can receive by operating in Cuba. Though Sheritt abides by the rules and regulations of Cuba they still manage to show social responsibility by contributing funds to building schools, furnish hospitals with new equipment and lend a helping hand to Cuban communities and public facilities such as street lighting and sewer upgrades.
- QUESTION 1b). Do you think it is ethical for non-Cuban businesses to enter into partnerships with the Cuban government? Why or why not? *That is a challenging question to which we each may hold varying opinions. Ethics versus morality is something that makes this a challenge to everyone because each of us have our own set of core values and beliefs. *The very word of Ethical can be interpreted differently, but by its basic definition however, it breaks down to simply doing what is right, or wrong. The Golden Rule. *Morality is a more encompassing term that has varying degrees of meaning. While it also means following the golden rule, it is more a code of conduct by which a society adheres to. Social norms, philosophy, religion and individual conscience are all examples of what are involved in forming the ideals of a cultures sense of morality. *With that said, I believe it is ethical for a business to enter in with a partnership with the Cuban government so long as they enter in with the understanding that they too must submit to that governments laws. Though in our eyes we may see such a partnership as an exploit of cheap labor or perhaps immoral, that is not necessarily how a worker would feel in Cuba when it means the difference between providing the basic necessities for themselves and their families. Cuba’s social structure for the most part does not allow for social mobility. For example, a factory job may be the only job that a person can have with no opportunities to move up to a higher station or place within their own society. If new businesses coming into Cuba follow the example that Sherritt has set, they should fall well within the standards of what most of us would consider ethical.
- Here’s a chart showing an update of Sherritt’s current drilling operations along the North Shore of Cuba. Our case study mentioned that Sherritt initially moved into Cuba to revive some of their old oil production wells. The numbers that you see here on this chart are their new drilling operations. Because of these new drilling operations Cuba is becoming more self-reliant on their oil and less dependant on Venezuela for oil.
- “See Cuba before Castro dies,” Due to the reports that Fidel Castro’s health is declining this is the chant of some Cubans. QUESTION: 2) How do you think that the transition to a market economy in Cuba would be the same as, or different from, the transitions now taking place in Russia and China? A market economy is one where the majority of a nation’s land, factories, and other economic resources are privately owned, either by individuals or businesses. Cuban’s present economy does not reflect that of a “market economy” because Cubans are not allowed free choice, free enterprise, and price flexibility. I believe that eventually, once the Castro regime reign has ended, the people of Cuba will work to transition the structure of the Cuban government to a market economy. Doing so will help to lift the embargo on Cuba and trade will commence between the United States and Cuba. This will help the Cuban people to raise their standards of living and freedom to do whatever they like. History has shown that generally people want a market economy. China and Russia are prime examples of this because they are both experiencing this process. Although changes must be made in order for Cuba to transition to a market economy, it would be similar in many ways to what Russia and China are experiencing. China began their economic reform in the late 1970’s by allowing family units to grow whatever crops they chose and sell the products at market prices which helped to strengthen work incentives. Russia did not begin their transition until the 1980’s and has suffered through years of declining output and income. Because China had some private farm ownership along with a limited market-price system they have not been totally blind in transitioning to a market economy. Whereas, Russia remained under a system of complete government ownership so it is harder for them to transition due to lack of economic experience. Cuba’s economy is similar to that of Russia’s so the transition would be more difficult as well. Both China and Russia are gradually transitioning to a market economy and have shown economic growth . In a letter dated February 18, 2008, Castro announced to retire from official public life so Castro’s resignation “should mark the end of a dark era in Cuba’s history….Fidel Castro’s stepping down is an essential first step, but it is sadly insufficient in bringing freedom to Cuba.” On February 24, 2008, the National Assembly of People’s Power chose Raul Castro, Fidel’s brother and successor as Cuba’s President. At the present time Castro’s brother, Raul, continues to govern along the same guidelines that Fidel Castro implemented therefore a market economy for Cuba may be years away.
- The United States has enforced laws dealing with the Cuban government when Castro took over in hopes of forcing them to change their communist governored society. Some of these laws include the: Trade embargo The embargo began during the Eisenhower administration in 1960 in order to force a change in the communist-run government. Nine presidents have carried out this ban on U.S. exports to Cuba which included a further extension to this policy by President Kennedy in 1962 to ban all imports from Cuba to the United States. Laws that permit U.S. companies to sue companies from other nations that traffic in the property of U.S. firms nationalized by Castro A Law that empowers the U.S. government to deny entry visas to the executives of such firms as well as their families Also U.S. bans travel to Cuba in order to keep the Cuban government from profiting off of tourism. There may be fines up to $7,500 if a U.S. citizen travels there. QUESTION: 3a). Why do you think the United States maintains such a hard line against doing business with Cuba? The United States maintains such a hard line against doing business with Cuba because the Castro regime does nothing to help the Cuban people or their economy. So in turn why should the United States enable Cuba to prosper off of trading our commodities when the Cuban government will only use the profit to benefit themselves and not the Cuban society. The Cuban government controls all means of mass media and communication along with the Cuban currency. Effective November 8, 2004, in response to tighter U.S. sanctions on Cuba, Castro’s government made the U.S. dollar illegal money in Cuba. In order for tourists or Cubans to use U.S. currency in Cuban businesses they are required to pay a 10% commission for “convertible pesos”. (Show slide) This pesos cannot be converted on the world market therefore making it only acceptable in Cuban businesses. This is another way for Castro to continue his hold over the people of Cuba.
- Officially only exchangeable within the country, its value is currently pegged to $1.08 U.S. The convertible peso is, by the pegged rate, the tenth highest valued currency unit in the world. One of two official currencies in Cuba, the other being the peso. Equivalent to the U.S. dollar. www.webhavana.com
- QUESTION: 3b). Do you think this embargo is in the United States’ best interests? Why or why not? I believe the trade embargo is in the United States’ best interest, especially if it will help to bring about a positive change for the Cuban people because they have been held under a fear of repression and change for too many years. Although, the Clinton Administration in 2000 passed a law allowing cash sales of food and agriculture products to Cuba. The U.S. sold $447 million to Cuba with the leading exports to Cuba including meat, corn, wheat and rice. One Washington economist, Gary Hufbauer stated, “Some people say that the embargo deprived Cuba of economic resources but the main reason Cuba is poor is that its economic system is crummy and has been for a long time.” He also believes that Cuba could benefit if they were allowed to export to the United States but the overall major factor for the depressing living standards in Cuba has been the communist system. This “revolution” government does not allow the Cuban people the freedom of private enterprise and ownership of property hindering economic growth and prosperity. Recent US polling has indicated that 48% of Americans favor continuing the embargo with 40% favoring to end it. Although Americans have unfavorable opinions of Castro, they believe diplomatic relations should be re-established with the Cuban government. Other countries have not followed the United States trade embargo for resisting business deals with Cuba. Some of these include Canada, Mexico, and Europe which have prospered due to lack of involvement of the United States.
- Many believe after Castro’s 50 Year Revolution ends, things will change and one of these being that the United States may end its embargo with Cuba. This will open the door of economic opportunities for Cuba to trade such products as sugar and nickel. (Discuss Nickel slide data)