Saturday, June 25, 2011

Translation: Guidelines debate 11, Foreign investment

Here is Part 11 of my translation of the booklet Information on the results of the Debate on the Economic and Social Policy Guidelines for the Party and the Revolution, an explanatory document published together with the final version of the Guidelines adopted by the Cuban Communist Party (PCC) Congress in April. 

Cuba, like the Soviet Union under Lenin and Trotsky's leadership in the early 1920s, seeks foreign investment to complement the large-scale investments carried out by the socialist state. Foreign investment became more important following the collapse of the Soviet bloc at the beginning of the 1990s, which accounted for 85% of Cuba's foreign trade. In 1995, Cuba modified its laws to encourage foreign investment, allowing for the possibility of 100% foreign ownership. In practice the Cuban state has maintained a controlling share in joint ventures with foreign investors with the option of buying out the foreign partner.

While the economic integration of Cuba and Venezuela during the past decade is hugely beneficial to both countries' socialist projects, Cuba cannot do without foreign capitalist investment because it lacks the necessary investment funds, advanced technology, access to the world market and modern management techniques monopolised by the transnational corporations. Much of Cuba's productive infrastructure dates from the Soviet era and is both antiquated and dilapidated. Cuba must engage with capitalist corporations on its own terms, learn from them and assimilate advanced productive and managerial techniques. 

Examples are tourism, where Cuba has learned to run a modern tourism industry thanks to partnerships with hotel management firms such as Spain's Sol Melia; nickel mining and processing, via a joint venture with Canada's Sherritt International; and the three-way partnership between Venezuela, Cuba and a French telecommunications firm to lay the fibre optic cable connecting Cuba and Venezuela. What makes foreign investment in Cuba different to that in capitalist Third World countries is that Cuba's working people have state power. Transnational corporations exploit Cuban workers — this is the source of their profits from joint-venture enterprises — but workers in such enterprises earn higher wages and enjoy better working conditions than other Cuban workers, and foreign investments are evaluated on the basis of their contribution to Cuba's socialist-oriented economic development. 

This is a glaring contrast with foreign investment in, for example, the garment sweatshops in neighbouring Haiti owned by US corporations or the industrial assembly plants along the US-Mexican border known as maquiladoras, in which the workforce is super-exploited in Dickensian conditions. The "Special Development Zones" projected in the guidelines should not be read as a euphemism for sweatshops a la China or Haiti, but as concentrations of export-oriented industries developed with the participation of foreign capital in which workers enjoy the same or better pay and conditions as other Cuban workers. In capitalist societies "the national interest" is a euphemism for the interests of the capitalist class as a whole. In Cuba, where the parasitic bourgeoisie was expropriated in the 1960s, the national interest is identical with the class interests of the working people.     

The format is as follows: number and text of the draft guideline, followed by the text and number of the corresponding guideline approved by the Communist Party Congress, followed by the drafting commission's explanation for the change. You'll find it easiest to read on my blog where the amended guidelines are in bold.

Debts and credit

85.
Boost the process of reordering external debts with short, medium and long-term maturity that affect the functioning of the national economy. Design and apply strategies for flexible reordering for debt payment and conclude these processes in the shortest possible time-frame, to allow for a growing and sustained economic performance that opens up new sources of financing. (Maintained as guideline 92)

86. Ensure that the commitments entered into in the debt reordering process are strictly complied with. (Maintained as guideline 93)

87. Ensure that external financing is included in the National Economic Plan and that it does not lead to the deterioration of the external financial situation of the country. (Maintained as guideline 94)

88. Establish a policy for the coordination of new credits and their rational use, as well as for the management and control of the country's levels of indebtedness. Revise the existing regulations and issue new ones with the aim of guaranteeing compliance with policy. (Maintained as guideline 95)

Foreign investment

89. Continue promoting the participation of foreign capital to complement national investment, in activities in the national interest, in correspondence with medium and long term economic and social development plans.

Continue promoting the participation of foreign capital to complement national investment, in activities in the national interest, in correspondence with short, medium and long-term economic and social development plans. (96)

Incorporates the reference to "short term", 67 opinions in 11 provinces.

90. Ensure that the soliciting of foreign investment fulfills diverse objectives, such as: access to advanced technologies, management techniques, the diversification and growth of export markets, import substitution, the contribution of external financing in the medium and long term to the construction of the productive objective and/or working capital for its functioning.

Ensure that the soliciting of foreign investment fulfils diverse objectives, such as: access to advanced technologies, management techniques, the diversification and growth of export markets, import substitution, the contribution of external financing in the medium and long term to the construction of the productive objective and/or working capital for its functioning, as well as providing new sources of employment. (97)

Adds the final phrase, since foreign investment is also a source of employment.

91. Improve the regulations and procedures of evaluation, approval and implementation of the participation of foreign investment. Rigorous control will be established over the fulfillment of the regulations, procedures and commitments contracted by the foreign partner which constitute the International Economic Association [i.e. the agreement signed with the foreign partner].

Improve the regulations and procedures of evaluation, approval and implementation of the participation of foreign investment, making the process more agile. Rigorous control will be established over the fulfillment of the regulations, procedures and commitments contracted by the foreign partner which constitute any of the foreign investment modalities. (98)

Includes the reference to the agility of the process, given the reiterated deficiencies submitted and recognised in 183 opinions nationwide, and substitutes "International Economic Association" for "any of the foreign investment modalities", since this the most appropriate term from the legal point of view.

92. A time limit must be established for those mixed enterprises or international economic associations agreed to that do not become established in the anticipated time frame, and a decision made on their fate, avoiding the indefinite consumption of resources and their increased inefficiency.

Establish a time limit for the modalities of foreign investment agreed to that do not become established in the anticipated time frame and decide on their fate, avoiding the indefinite consumption of resources and their increased inefficiency. (99) 

Substitutes "international economic association" for "modalities of foreign investment", since this is the most appropriate term from the legal point of view.

93. Promote, through the establishment of a International Economic Association, the capturing of higher incomes for the country in addition to salaries, taxes and dividends, through the delivery of various services and supplies by national enterprises. 

Promote, through the establishment of a foreign investment in the country, in any of its modalities, the capturing of higher incomes for the country in addition to salaries, taxes and dividends, through the delivery of various services and supplies by national enterprises. (100)

Clarifies the wording, substituting the term "any of the modalities of foreign investment" for "International Economic Association", as the latter is more legally appropriate.

94. Favour, in the process of promoting investments, the diversification of the participation of investors from different countries. (Maintained as guideline 101)

95. Elaborate and constantly update a portfolio of investments for possible negotiation with foreign participation. (Maintained as guideline 102)

96. Promote the creation of Special Development Zones that allow for increased exportation, the effective substitution of imports, high tech projects and local development; and that create new sources of employment. (Maintained as guideline 103)

97. Ensure that the economic activity of the international economic associations corresponds with that projected in the National Economic Plan. (Maintained as guideline 104) 

98. Evaluate the existing associations with foreign capital and update them as necessary, in such a way that they are adjusted to the requirements of the country. (Maintained as guideline 105)

99. Analyse, among the possibilities for financing via foreign investment, those non-export industries which are nevertheless indispensable to ensuring other production essential for the economy or for the substitution of imports. (106)

100. Promote, only if economically justified and convenient, the establishment of enterprises and alliances outside the country that allow Cuba to better position its interests in foreign markets. (107)

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