Transcripts For CSPAN2 Tourism In Cuba 20170410

The Trump Administration change the obama administrations cuba normalization policies . A panel at Florida International university looked at the booming Tourism Industry in cuba under the Top Administration and economic prospects for the future. Panelists include academics plus the office of the recent report on cuban tourism. This is about an hour and a half. Good afternoon everyone thank you all for being here. A special thanks to our audience in the cspan world for joining us as this event is being recorded by the cspan, so thank you for the cspan team for being here and for the audience for joining us. My name is frank moore. On the director of the kimberly green latin america and Caribbean Center here at Florida International university. We are for our friends in cspan, we are here located at the biscayne bay campus of Florida International university in miami. We have another campus, where the center is located in west dade. The center that i direct is one of the institutes of programs or centers at the stephen j green school of public and international affairs, again at Florida International university. We are just absolutely delighted to be hosting for cohosting this event. I want to thank our dean, the dean of the Chaplain School of tourism management, mike hampton. [applause] thank you, dean, for supporting this. This is a great event to have here on your campus, right . Also want to thank another cohost, the Cuban Research institute, the directories you with us today and will be joining the panel in a second. A little bit about why were here and how we got here. Last year the Brookings Institution, specifically the foreignpolicy team and group and ted picone in the Latin American Initiative team, reached out to me to see if we were interested in cosponsoring a study, a study on as you all i think no one of the more Dynamic Industries or sectors of the cuban economy. And all this of course was in the context of december 17, 2014, and many different changes that have occurred in the relationship between the United States and cuba since then. And so ted reached out to see the center was interested in helping and funding this study and, of course, we reached out and agreed immediately. We are very delighted to be very much a part of this. The study was first launched in washington d. C. , i think december 2 of last year, and so were doing a kind of miami launch, if you will come of the study with the two authors who are joining us and you will hear from here very soon. So let me tell you how were going to proceed. So here i will introduce the two coauthors in a second. They will present their study. There are copies of the study, by the way, in the back in the lobby of the auditorium. So please make sure to take one. They will do the presentation for about 2025 minutes and then i asked a panel of experts here from Florida International university and st. Thomas university to sort of give the remarks, reactions to the study. We will have a kind of conversation up here on stage before we turn it over to you for your questions and your comments. And then well go from about now anuntil 6 00 when we will end te session. So let me introduce the two coauthors of this important study. First let me introduce Richard Feinberg. Hes the gentlemen right there that you see. Doctor feinberg as a nonresident senior fellow in the Latin American Initiative at brookings and a professor of International Political economy in the school of Global Policy and strategy of the university of california in san diego. Previously, dr. Feinberg served as special assistant to president clinton for National Security affairs and senior director of the National Security Councils Office of Interamerican Affairs back during again in the clinton administration. He is the author of numerous books and works, too many to mention here but there is one thought of what to mention. Its really his most recent book, open for business, building the new cuban economy. Here it is. Its available both of course at amazon as well as the Brookings Institution website bookstore website. And its getting some really wonderful reviews. And i hope you get a chance to read. Also Richard Haskin has come ths sort of a plug for a new magazine, cuba trade. Richard has a piece based on this exact study where he lays out the basic guidelines and elements of the study, and so cuban trade, thats the name of the magazine for trade investment in cuba. The other richard, that is author of this important study works with the International Growth center as the country director for rwanda, who god in south sudan who gonda. Its a joint venture of Oxford University and the London School of economics. Provides the institute provides independent researchbased analysis at the request of governments of selected countries in asia and africa. He is a senior fellow nonresident at the World Trade Institute in bern switzerland and a distinguished research, research at the northsouth institute in canada. He consults with a number of International Organizations including the world bank, the organizationof Economic Cooperation to velvet and the International Trade center that where very, very fortunate to have these two scholars with us today to present their work that span an a number of months and s pretty detailed. Anything it makes an important contribution both in terms of the challenges that cuba faces in expanding tourism in cuba as well as some of the opportunities. So with that i turn it over to our two coauthors who will come up and present their work. [applause] well, thank you very much, frank, for the wonderful introduction. Also thank you to dean hampton for the welcome to the Chaplain School. It really is a pleasure for us to be here. You know youre in the right place when the school of management that you are dealing with is located over a wine bar. You know, this is, richard and i are just humble Development Economist and we came to tourism sorted through the lens of growth and distribution of those kinds of issues. And if wed only known what you guys have only figured out, we wouldve started much earlier in our quest to understand the Tourism Industry. Richard and i are going to bit of a tag team here and so bear with us as we pass the baton and discuss this study. Just a couple of points. Let me give you the headlines first. First of all if i can get this thing to work, one of the reasons we wanted to go to study tourism was the industry was booming. We wanted to ask the question who benefits . That equation is important, has become important politically in the United States because of the recent election and now we see the prospect of possible reverse some of the obama issues. Theres been the assertion that impacthat,in fact, tourism realt benefit the economy. Benefits mainly the military. And so therefore we ought to shut down what is been happening already. The question were also interested in was how can interested be structured so that it drives growth courts we did want it to be just an enclave industry. We should benefit only a few people that benefit only a few people but had growth to rise much more readily than the rather anemic performance it had in the past. The short answer to both those questions is that the industry in fact, is benefiting and wide swath of Cuban Society and indeed it has the potential to drive a Sustainable Development into the future. That said the industry actually u. S. Wil followed behind the otr caribbean countries. It operates well short of its potential in our view. One reason is the combination of state sector ownership and regulations that have created obstacles, particularly for Sports Industry and Linkage Industries to help the industry grow. So we will elaborate a bit of that in the course of this discussion. We think that the way this is proven, in fact, is even modest changes in regulation that occurred over the last four or five years have unleashed a torrent of private sector activities in bread and breakfasts, and restaurants come in transportation, taxicabs and so forth. That private sector cluster now counts for more than 30 of the industries are links. The government does in fact, have ambitious plans for the industry lik would like to accommodate some 10 million visitors by 2030. Thats a big increase. One of the things we wanted to do was look at the realism of the estimate. But they do this . Are estimates suggests that its possible but its unlikely unless cuba changes a number of its policies and will elaborate on what some of those policy changes might be to promote growth. And, of course, finally the industry has important implications come if i can get the last point to boot up, for the United States. We think in its own National Interest of the United States should move forward with the normalization process that mr. Obama has launched already. Let me elaborate on these points together with richard. First of all cuba of course has abundant Tourist Attractions that could be a driver of growth and prosperity. I dont need to tell this audience that. This was the tough assignment that felt to us when we went to there, but this is just a photo of santa maria in the north coast of cuba and, of course, cuba has extensive beaches like this that can be developed further but thats not the only important point. It is a rich culture inland that merits consideration and development. So the opportunities for the industry to grow are really fast and enormous. In fact, already, of course cuba is booming. This simply knows silva shows the number of arrivals for the 19952015. You can see the number of rather steady stream. And, of course, this graph only goes up to 2015. Sally asked me to do a projection 2016 based on more recent numbers, and, of course, that would allow i think for the number of tourists to reach almost 4 million at the end of 2016. If you look at the earnings, the pattern is much more varied. The earnings per tourist varies quite widely from yeartoyear, and response to domestic policies among other things. But in 201415 you see an important upswing in earnings. In 2015 its its likely be even greater simply because the industrieindustry is operating h higher capacity in part due to the normalization efforts of the United States and cuba together. The benefits of the industry as i asserted at the beginning are actually quite widespread. It is one of the major sources of growth in economy, perhaps you could argue it is the principal source of growth in the economy. Its a major source of Foreign Exchange and foreign earnings. Tourist revenues are some twothirds or threequarters of all merchandise earnings. So cuba is a Service Sector exporter as an economy and tourism plays an important role. Some 70 of tourist earnings stay in the country, which is a pretty good number. Through spending on wages, agricultural products, cultural activities, transport and the like. And it is a major force linking cuba to the Global Economy exposing cubans on a daily basis to the international environment. This graph shows the fact that cuban industry has ample opportunity to grow. If you think about, i dont like this term carrying capacity but this simply shows the number of visitors as a share of the population. And indeed relative to the Dominican Republic, here almost at. 5 of the total population, its about twice what cuba is today. So there is considerable upside potentially if you just use this measure and i would argue there are many other measures we could use that would show the same thing. The industry has not contribute to cubas growth as much as it could otherwise occur, as it otherwise could. In fact, that our site is kind of falling behind. This graph simply shows the contribution to the economy on the far left you see in blue the direct contribution to the economy of cuba. Its about 2. 5 of gdp. Of gdp. If you use the world Tourism Councils numbers, that number expansive some 10 total contribution to the economy and this includes induced spending as well as indirect spending. Substantial lesson what we see in either the Dominican Republic or costa rica, comparative countries which are think a pretty good comparatives for cuba. Theres more that cuba could be doing. This shows two things the first is that the bottom line, this is an index in 1995, sort of sort of putting all economies at exactly the same level and saying lets look at revenue per visitor over the long sweep of things. This is an indication of the efficiency and effectiveness of the industry in growth. As you can see, cuba is doing rather poorly relative to the other comparative countries or costa rica, Dominican Republic and this is the average for all of developing countries. Another important point is not only cuba doing relatively poorly compared to the rest of the caribbean, the caribbean itself is doing relatively poorly compared to the rest of the world. The caribbean is losing market share to other destinations. Why . Over the last 20 years major new destinations have opened up in china, in southeast asia, and africa. And as a result the tourist dollars a getting spread over a much wider array of countries, which means that the industry is really has to be competitive in order to survive and to actually prosper. Cuba has more to be in this regard if it wants to upgrade its industries. One of the reasons is that if you talk to some taurus, one of the things that typically complain about our poor maintenance, the service quality, or the fact that the internet is virtually nonexistent or very expensive and awkward. These are things cuba is working on. We have some suggestions about this and we think part of the reason for these particular factors has to do with the nature of the organization of the industry and the incentives that the industry transmits to its workers and to its management. Let me turn it over to richard at this point and he will talk a little bit about the organization of the industry, and its future that way. Richard, thanks very much. So the industry in cuba of tourism is dominant by Stateowned Enterprises. Of course it still a statist economy. Many, there are three main Stateowned Enterprises and the Tourism Sector. Two of them are under mentor, the ministry of tourism. But we also see that under the military we have the third main stateowned enterprise. Some of these three Stateowned Enterprises, only one of the three is the military. Of these three, one accounts for about 40 of the rooms in the Tourism Sector. You may have heard, its often said rhetorically, that tourist money is all going to the cuban military. Is that what this graph says . Or is actually only 40 going to the military owned stateowned enterprise, one of the three . Plus, as i will explain in a minute, you had a boom in the purely private sector person to people opening up their homes, remodeling rooms and creating places where travelers can stay at a bedandbreakfast. That accounts for about another 25 of rooms, about 16,000 rooms. Add that to the total tourism capacity and it is only 2530 of total international rooms, four and five star quality where you might consider staying if you were to visit cuba. The main point here is it is simply not true that all of these traveler revenues are going into the coffers of the far of the cuban armed forces, okay . The other point here is that, as you can see 45 of the main hotels have some foreign partnership. Of course not with u. S. Companies accept a little bit of marriott but mostly with spanish, canadian and other International Hotel operators that are active now in cuba. So most of the hotels that we would stay at it is some international presence. However, we point to forming problems with the way the Tourism Sector has operated. One is a lot, there are endless beaches. Thats with the growth is. You dont see many cranes operating in havana. But if you travel to these beach resort you see a lot of cranes. It seems odd, doesnt it . Why are they not Building Work capacity in havana . There are various reasons which ill report explains how to do with infrastructure. What of 44,000 rooms, only got only about 6000 are in havana. Fy 2 20 statically to tell in advance today you will pay 400 a night. There are only three important new hotel sites currently under construction in havana. There should be a dozen. For various reasons its easier to build boxes on the beach that it is to do an Interesting Hotel in havana and there also questions of profitability. So thats one problem. Overemphasis on beach resorts as opposed to urban sites, have been and elsewhere and spurringg investment around the country, for example, to ecotourism, et cetera the second problem, the Tourism Sector needs to be better integrated into the entire economy. There are no numbers published actually on what percentage of food and beverage is provide domestically versus imported we asked many people. They dont have a countenance that look at in this category. We roughly estimate that twothirds of food and beverage is provided domestically, but certainly it could be a higher percent and that has to do with the sluggishness in the Agriculture Sector. Basically they need a profound reform in agriculture provided much better incentive to farmers so that there would be better integration of the rural sector into the overall Tourism Sector. Second issue, 30 just to do with various organizational issues in labor. Those of you study the cuban economy no that the International Hotels did not directly higher labor. Part of the reason of underinvestment in training and in workforce. And the other problem we want to point out is why not more direct investment, International Participation not just in management contracts but in joint ventures. Only about 6,000 include joint ventures. The government projected 110,000, only about 30,000 of those rooms are are under 30 , will have Foreign Investment, will be joint ventures. In other words, 70 of the new investment going in into the Tourism Sector is projected to be paid for with domestic capital. We will explain why we think that a mistake. I mentioned the private sector. Growing dramatically, bed and breakfast. 50 to 75,000dollar investment. You go on airbnb and high rates of occupancy. We estimate that roughly onethird of money flowing into the economy is going to the private sector in cuba. We cannot emphasize this more and this goes to cutting down u. S. Visitors trying to close off the globalization on the island would only destroy the growth of this private sector which seems to be very counterproductive in terms of u. S. National interest. The private sector still operates under various disincentives. Theyre outlined in the report. Im not going to go in detail of them now but a lot that could be made which would provide yet more dynamism in the private sector in cuba. Two sectors which will be plaques. Here left richard, do you want to continue . These are nice places, what is interesting about the picture, fbi way, the one on your left is this is a private bed and breakfast in trinidad and you can see that the sign there advertising it is i english and i thought it was kind of revealing of the new clientele that theyre catering to internationally. At one point just to scroll back for a moment that should be mentioned here is that airb nb has set up a program with more than 4,000 liftings in cuba and this impetus to grow because a person can go online, look at the myriad of offerings in la havana and see what the price, pay with the credit card in dollars and go show up in cuba with your piece of paper and happily stay in that place as well. Airb b solved problem in the case of cuba and elsewhere. Particularly in la havana this is really important and worth emphasizing. But cuba has big plans for the industry and richard and i thought would be worth worthwhile and basically the government would like to expand the current level of participation in the industry of tourism up to some 10 million from, say, 4 million at the end of december of last year. Thats a big increase. To do that, they plan to build 108,000 new rooms onto a stock to about 54,000 rooms of international quality. 3 to 4 star hotels existing in the stateowned inteer prices enterprises including golf courses, marinas and other tourist potential developments. We met while in havana we met with head of port authority. They are talking about doing any number one of investments, so theres really a lot of broad thinking into the future. We also wanted to look at the feasibility because in the plan that is you get very frequently you dont find information about what are the Economic Investment requirements and the like, because we know that if these numbers were actually realized it would give an impetus to growth and the industry could become a real motor and locomotive for the economy into the futures. We we wanted to project the invest over 15 years at about a steady rate of 7 to get that 800,000 additional rooms that we talked about including depreciation hookup charges and those of you who are in the business school, in the Tourism Industry will immediately recognize the complexity of this, but bare with me for just a moment. We put it all together in a table which you can find in the report. Ly highlight a couple of numbers out of the complex table. The first is 108,000, the number of rooms they seek to add over the next 15 years or so. The second number is the cost per room. We talked to industry sources both in the United States and in europe as well as in cuba to find out what give us an estimate to build up a hotel room. By the way, we went back and talked to industry sources earlier this week to verify the number and we were please today hear that number happened to be spot on in terms of this view. Total calculation when you add depreciation, restoration of some of the rooms are out of order because many hotels have large number of rooms which for whatever reason have not been able to be refurnished, you add the numbers to refurbish and you add in normal depreciation and normal remodeling costs that should occur every five years or so and what you end up with is 33 billion of total investment will be required over the next 15 years to realize this objective. Thats a big number. Anybody know what the gdp of cuba is . Gdp is probably 86 billion according to statistics, if you were to apply depreciation to the currency or some sort of marketbased formulation, it would be substantially less. This is a very big number relative to this rather small economy. In fact, if you looked at it as a sheriff gdp, well, today the numbers in 2016 wouldnt look to be very big, 1. 3 . That would more than triple over the next 15 years if this number holds correct and if cuba doesnt grow any faster than it has in the last four and if we assume it grows at 2. 8 , basically these numbers would have to double. More importantly, they would have to more than almost triple as a total investment. This is clearly unrealistic. Its not realistic to assume that cuba is going to be able to invest some 33 of its total sorry, 33 of its total investment in the Tourism Industry alone. Why is that . Because it has health needs, education needs, highways, it needs power and renovation of the major cities. This leads us to conclude that under the current circumstances, if i can get this to work again, under the current circumstances, the industry is unlikely to be a driver of rising incomes without major internal policy changes. The internal policy changes have to focus on two or three things, one is, it has to focus on increasing domestic savings, that is all savings but particularly at the beginning with domestic savings. How can it do this . One way is to accelerate the development of the b bs, the restaurants and so forth because they are potential for future growth. Similarly it has to begin to also think about ways to tap into foreign savings than it already has. This can include Foreign Investment which are really important but also more importantly might be the savings from, lets say the Cuban Community in in florida that has financed much of the b b development. We have some ideas to structure financial mediation so investment coming in in transition period into housing and expanded development, might be undertaken without alienating property from cuban ownership, something that we think is important during the transition period. To make all of this happen, to increase savings to finance investment, let me turn it thank richard to talk about policy in cuba and in the United States. So we conclude our study with some policy recommendations for the cuban government, of course, they will make their own decisions but in all humility and without arrogance we put forward suggestions for them and also, of course, for the u. S. Government. We hope that you find that these policy recommendations flow whorg organically from our analysis. More Foreign Investment is clearly needed. The cuban government officials have said they want 2. 5 billion in capital inflows per year. They are not even close. Recently president castro as well as senior ricardo cabricas chastised the cuban bureaucracy for not enough Foreign Investment. That has to do with unclear signals from the top, misaligned incentives for bureaucrats and decisionmaking is still way too centralized. All that has to be solved and those are profound problems if theyre going to be able to put enough Foreign Investment which they clearly need to do. The booming bed and breakfast sector, tourism cluster thats emerging, showing the entrepreneurial capacity of cubans when Market Forces are unleashed. Cubans could still only own one house and one beach property. You cant build a chain of bed and breakfast and expand entrepreneurial sector in the private sector. Those overly strict rules should be modified. Cubans should, for example, should be allow today own more than one home, particularly as they are going to be renting some of it out for income that comes from abroad that earns Foreign Exchange. Cuba has to start almost from ground zero to build a modern tax system. Many options there, value added tax, tax and perm incomes, property taxes eventually as cuba moves toward a moremarket base system. As a way to extract resources from the booming terrorism sector so that those in capital inflows can finance the rest of the economy, infrastructure, Higher Quality social services, growth and agriculture, et cetera. Pricing system is dramatically out of line, the distortions are mindbogglingly, they have so much work to do in that sector. Prices have to reflect scarcity and market conditions, they have to reflect supply and demand and these things seem obvious to anyone who has taken econ101. The cubans need to learn all of that. Within the Tourism Sector itself, essentially the current cuban model particularly in the beaches is low Value Tourism bringing in essentially bluecollar tourists from quebec, from russia, other areas of europe, its good value, but its not optimal from the point of view of island tourism. They need to move from a model of tourismbased on value, on low costs to higher value, Higher Quality and that means more income, certainly per room but also they must provide Higher Quality services. That means among other things more investment in training, they have to fix the whole labor market and that means more employees per visitor, per client. Thats where quality tourism is all about. They need to move in that direction. Of course, Better Internet service, any of you who have been there know how frustrating that is and thats important for the entire economy, of course, but its also very important for tourists whether theyre in the business sector or even looking for a Higher Quality tourism in in the luxury tourism market. And then the issue of of sustainability. Cuba is such a beautiful island, they dont want to ruin the beauty that will attract the tourists in the first place. We have a number of recommendations in that regard. For one thing, transparency, weve done our very best in putting together some numbers to analyze the Tourism Sector. I have to tell you, its been a heroic effort in so far as the amount of published data by the cuban government is very thin. The largestate owned enterprises that i talked about earlier, where is their annual report with their financials . There are none. The whole idea that the state has some responsibility to the population and needs to publish data so people can analyze and make and make decisions on public policy, all that needs to be put in place, so that analysts like ourselves and most importantly the cubans can have a better set of data for critical discussion. The main reason we publish this paper is precisely to help the cubans themselves begin to think in terms of numbers and strategy so that they can drive a more rational transparent and productive and efficient Tourism Sector moving forward. We also suggest that perhaps when one talks about sustainability and beauty and esthetics, its about coral reefs and also about city scape. Not just from cuba but from around the world. What highquality, topnotch architect living in the world wouldnt want be to able to advise whats going to be the new havana. Why not draw in the talent and set up an Advisory Committee that would still have rules that would be set by the cuban government, of course, but this would provide toplevel, state of the art for cubans. So then finally now, the United States where we sit today. Of course, we realize that theres about to be an important event tomorrow in washington. Not all of the entering members of the new administration would be fully in agreement with our point of view here. Nevertheless this is our best advice. We think its in the u. S. National interests and we were encouraged when the next secretary of state asked about cuban policy, of course, we dont know where that might land or tendency within the incoming administration, but the probable future secretary of state said he thought first on cuba policy we should undertake a careful review and that seems to be always a good starting point in making public policy. So what we suggest first and foremost here and some of you may have seen the open letter published just two days ago by a number of business groups including the cuba study group, also the council of americas, american society. Im proud to say my name was on that as well and to reverse course and once again reverse to a policy of cutting relations and squeezing the cuban economy. For other reasons humanitarian aspect of that, the private sector, the United States on a worldwide basis has always had as a policy try today support a private sector for its own reasons, its own right but also private sector will tend to promote a more open economy, more friendly economy to u. S. Business interests as well as a more pluralistic and diverse policy internally. For us to cut relations, completely eliminate the flows of travel, et cetera, would kill this growing private sector in cuba. It would be so counterproductive. I cant imagine why we would want to do that. It would be counter to the u. S. National interest. We can help them with activity as we have been doing to some degree. Youre going to allow u. S. Visitors, does it not make sense to allow u. S. Firms to provide infrastructure necessary to support those visitors . Ive argued that some of you may have seen a paper i published with brookings back in 2011 suggesting that cuba, the only country in the world other than north korea thats not a member of the International Financial institutions is cuba. Dont we want cuban economists to have the best advice on how to build an open Market Driven economy with the experience of so many other countries that have also undergone a transition from centralized economy to a moremaskt driven economy. Of course, thats what we would want. The cubans may or may not accept the advice but at least they would hear it and have an opportunity to dialogue with all of the washington, d. C. Base experts. The cuban government has to take the step but we should certainly not stand in the way. And then finally, finally with regard to Sustainable Development, a lot of ngos, government organizations, some involved in the island and we should continue to promote the engagement. Overall as a wrapup, a policy of engagement at the governmental level, tat level of private sector and business, at the level of cubans on the island, nongovernmental sector, nonprofit sector, it is in the u. S. National interest to continue that connectivity and communications. Thank you all very much. [applause] thank you, richard, thank you, if i could ask the other panelists to join me now on stage and as they come up let me briefly introduce them. First, dr. Maria dolores espino. A professor of economics at the university here in miami florida, shes been at st. Thomas since 1999. She was actually on the faculty in the department of economics at Florida International university from 1985 to 1994 a fullbright scholar in colombia and had other appointments here in the United States and outside shes an activist, on Environmental Issues and minority issues and something i admire she does on a consistent basis. John thomas, john is the assistant professor here at the school of hospitality and tourism management. John is a lawyer and practicing attorney for 30 years and he saw the light and became academic and now he is fulltime here at fiu. He was a partner at several law offices during his long career practice in both transactions and litigation. He has earned a board certification by the florida bar and served as chair in the florida bar law committee. And then least but last but certainly not least, my colleague over at the main campus, dr. Jorge duani who i introduced at the beginning. Hes a director of the Cuban Research institute and professor of anthropology at Florida University and came to us a few years from the university of puerto rico at rio piedras and his work on migration is known by many of you. He has taught and held numerous positions in the United States. Thank you for joining us. As i mention at the beginning, what i would like to do is to have each of them and we will start with gloria spino, four to five minutes and brief decision before we turn it over to you, dr. Spino. Let me start by thanking fiu. This is a wonderful report, okay. Theres many things and i would that i like in it. I pretty much agree with all of the conclusions but i am going to start with some of the disagreements or some of the things that i see problematic a little bit, okay. And one of the things i thought that the report should not have used, okay, its the comparison revenue from country to country. Okay, thats number one. Let me tell you why, its really methodology are so different from country to country and not only the methodology but the capability of of collecting data from country to country. The comparisons are really meaningless or meaningless, okay. When youre talking about the cuban economy visavis other caribbean economies, most countries use what we call a direct approach to estimate tourist receipts or expenditures, that is they take surveys and try to determine they survey International Tourists either entering or leaving mostly leaving the country. Cuba does not do that, okay. They try to figure out how much is being spent in different entities, okay, and then calculate what portion of those what portion of that expenditure is attributed to International Tourists. When we were in a purely enclave environment this was relatively easy. Its becoming very, very hard. Its been very hard to determine if we have a consistent series, i dont think it is. As a matter of fact, i identify three different series at a time, okay, and even the ones that we have does not really includes includes things that are not usually included in tourist expenditures or not, if you follow international, you know, guidelines for it. So thats the first thing that i think. Now, the other part is that thats you never know theyre giving you nominal real or what Exchange Rate theyre using, okay. Now ive tried to i have looked at the data and gone down to the province level to see if i can better sense of how they put it together and, you know, i it was monday mindbogglingly. Some reported in pesos and some in dollars. What exchange they use . I dont know. A couple of things there. So any time you use receipts for anything including comparison to gdp, im not sure if its overestimated or underestimated. There are things that go either way. It seems to have been flat for a couple of years. I dont think we can argue that that reflects the poor quality of the cuban Tourism Industry and i agree with you. The quality in the tourist industry is poor, but im not sure thats a measure of it. We we need to come up with, you know, a different measure of it for the reason that i said. It also gets complicated per tourist argument because we have a shift weve had a shift in the last 5, 10 years of who are the tourists coming to cuba. Cuba like the caribbean lost the European Market while the rest of the caribbean were able to substitute the European Market with americans, cuba had to substitute it with canadians and cubans living abroad. Im not going to argue but its the only one who used that methodology come to fore cannot be compared to anybody else. So we have come when you use the percentage in direct expenditures, given the cuban gdp come here the problem in enumerator and the denominator where theres no comparison. I would be great about that. My other concern i would be wary its not a concern. My other concern is the idea of how they use, whats the fact of the revenues coming in, the linkages affect your you estimate only a 30 , 30 import component. That to me seems very low. Back in the 80s and the mid90s \90{l1}s{l0}\90{l1}s{l0} there was some cuban publication and i cited it somewhere. That estimate it to be around 70 . I tried to keep track of what is happened since then and the only thing that is been published is its gotten a little bit better. I agree with that. But its gotten better because the private sector is now thriving but i cannot believe it is that much better, that it went from 70 to 30 . So im a little bit concerned about that. I just want to make emphasis on the concept of the multiplier. That is, when we start doing that only direct but the end is affected. And here i will maybe agree with you, but talk to look at what comes first, the chicken or the egg, okay . Whenever we have the constant multiplier really rests on the idea that the man creates his own supply. That if you demand, theres going to be supply forthcoming. As you pointed out theres incredible restriction and supply in cuba. In all sources. So what we are seeing right now is that instead of creating, because of the restrictions, more supply. What we are seeing is an increase in price. Increased in food prices which has a negative social effect in the population, increase in the housing prices. Because theres no way of producing more or theres constraints. So its an idea for there to be a successful and sustainable tourist growth and development in cuba, both have to work at the same time. The increase in expenditures with new tour risk of more tour is coming and, at the same time you have reform in the system that allows for the supply to actually be created. One more thing im little concerned about. Everybody is talking about the bed and breakfast. I am, too, sort of but i cannot but remember that cuba has an incredible housing shortage. And we are now having some of the households, instead of being open for multigenerations, the kids coming in and living with her parents, are having to get out because you are renting rooms for tour risk. Just basically exacerbate a little bit of some of this, which again could be solved if you are allowed new construction in the housing sector. Thank you very much your john . Richard and richard, i think you did a wonderful study paper. But is that all there is . I dont think so. In fact, i hope not since now that i am an academic we need to find more things to study and so ive got four more, two of which are touched upon and to which you did not. So the first ill talk about is the chinese influence on tourism in cuba. There is a school in china. So were familiar with the influence on hospitality and tourism around the world and we are very connected to chinese influence. There are few cultures i think im more diametrically opposed than the Chinese Culture and the cuban culture, and youve got to wonder why do i think this is anything to do with cuba . It turns out that there is not one in half and and a onetime data privacy when it 50,000 chinese living in cuba. Now its down to a couple thousand and it still exists. There is a great deal of cultural connection between the socialist regime in cuba and the socialist country of mainland china. So is china actually doing anything in cuba now . It turns out they are. President xi jinping visited cuba. Thats an important thing for the president of china to have visited there a couple years ago. The premier and the vice premier of china have visited havana. Three Chinese Navy Ships paid a visit to havana. This is not something they do all over the world. They have used chinese alone money to rebuild the seaport which is being built by the Chinese Communications contracting company. They are Building Infrastructure in cuba, railroads, communications. They are now currently building find the correct number here 13 Chinese Hotel resorts are currently under construction by chinese companies. Not that theyre going to run the hotels, not that theyre going to own the hotels but they are Building Hotels. That excee exceeds 460 millionn chinese money investment. There are also a number multiple number of golf course being built by the chinese in cuba. Theres a direct flight from beijing to havana. Its a once a week flight no. They plan to make it three times the week. They plan to bring a lot of Chinese Tourists directly into cuba. There are going to be chinese visitors, tourists coming to cuba. Any university about a school of tourism that are Chinese Students studying there and they are here in miami and why you fiu school of hospitality and management. Cubas second largest trading partner after venezuela, the second largest trading partner is china. The Chinese Military government, Tourism Hospitality company has produced a promotional video with chinese subtitles showing Chinese People staying at four and five star Hotel Resorts can eating chinese food. They clearly are interested in the chinese market. Why is this important in the discussion here today . Because its uncertain from the u. S. Policy with the future of american tourism and hospitality and Tourism Development and investment will be in cuba. Im just bring up the possibility that if there is a vacuum it may well be that chinese tourism influence that moves into that vacuum in cuba. One of the type of tourism that you did mention is the chris cruise ships. There are, i looked on todays listing of cruises going to cuba, i see six different cruise lines scheduling cruise ships going to cuba. They really would like to stop there. I think 19 ports not big ports, not ports with big peers that can take large cruise ships that there are 19 ports available for stops in cuba. Its rip right for cruise ship operations. Cruise ships bring their own rooms. They bring their own food. Yes, the tourists will go ashore and visit and go to the cultural places and the food, dancing and other activities they havent cuba. We do have the american restriction against americans traveling as taurus. Even with those restrictions theres a great deal of possibility for cruise Tourism Development very quickly in cuba. So im sure the cruise lines are looking at this and it deserves some more study. Medical tourism, cuba has a great deal of medical technology and medical skill. They have been exporting their medical tourism. They in fact, export medical devices to the United States. Littleknown but they do as well as the rest of the world. Im not so sure whats going to happen with the United States health plan. It be that going to cuba will be a viable alternative for people looking for healthcare. [laughing] just bringing that up. The fourth topic that you didnt mention, the Agriculture Sector for growth of cannabis. People are talking about marijuana tourism, but i think theres a market. I think there is the possibility for a quick growth of that type of agriculture in cuba, anecdotally ive heard that there is in fact, some evidence of cannabis in cuba. There are other latin american countries that have decriminalized the use of marijuana. In this country we have 30 states that after what extent or another decriminalized marijuana, police or medical use. Maybe this connects with a medical tourism to cuba, i dont know. But its another aspect of tourism that if it needs more study. Thank you. [applause] was that and applause for the cannabis before the presentation . [laughing] hopefully the presentation. I just want to begin with a minor personal comment on part of the report, which refers to morality and had to say im a little insulted because i study it just like frank did and so to attribute the morality of the cuban revolution i think is a little exaggerated. Although of course everyone knows that [inaudible] porcher mic closer. I want to commend Richard Feinberg and richard new farmer for this very serious, sober, welldocumented report but i think makes a very strong effort to analyze the Current Situation and some future prospects of cubas Main Industries of the 1990s. You may recall thats also the report that this wasnt always this way and a can of guess thats why they start with the morality story before the revolution. When cuba enters this national attribute to spirit of the soviet union and the fall of the berlin wall, cuba turned to tourism which makes today along with remittances from the cubanamerican community and until recently the export of medical services to other countries. I think the authors have done a great job at describing and analyzing a host of different sources of information of the structure and composition of the tourist industry in cuba. I havent seen anywhere else the kind of detailed observations about the composition of the state owned and the private sector in the Tourism Industry as well as some Economic Significance and the projections of these data. They have scanned official sources of information. I agree with the professor is difficult sometimes compare that thats whats available. But it also went further and interviewed the owners of private bed and breakfasts, and the restaurants, visited many of these Hotel Facilities throughout the island and contacted experts on these topics. I think they did a really good job by putting it all together in one place, and i congratulate you for that. They also provide an uptodate and balanced perspective on what may be the future growth of the industry, particularly the combination very strange commendation to some extent of private public facilities on the island. Because of course many of the privately owned restaurants and bed and breakfasts are, in fact, connected to the government industry. And so many people thought these independent business but in fact, theyre very much connected to the rest of the economy. They realize that quite clearly. Their analysis suggests an order for cuba to fulfill its own projections it would have to raise 33 billion to invest in tourist infrastructure and put the quality of its facilities and services, and attract a growing number of tourists in the next decade and half. The question is where is that money can you come from . They have some suggestions in the report but really at this point its a difficult to imagine that cuba with access to the kind of external sources of credit to finance the expansion of its taurus industry. Overall, i think the report is quite optimistic in assessment of the present and the future, contribution of the tourist industry to the islands economic development. Battle in terms of the Stateowned Enterprises but perhaps more important late to the nonstate sector, the socalled the selfemployed sector. The authors have done a great job of steering away from strictly Political Considerations in their very balanced analysis as i said before, different policy options. They do go into some of the possibilities in terms of what the future may bring, in terms of u. S. Cuba relations come terms of possible transitions in the cuban government. I think thats not really in the report but, of course, i year or so from now we do expect major changes in at least the personnel raul castro has announced he will retire from the presidency. They remain cautious with regard to the possibility of him ending the u. S. Embargo of cuba which has potential growth of Tourism Industry. I want to end with three major areas in which i think there might be some discussion. First of all precisely i think the elephant in the room is really the embargo. Although they do refer to the embargo, i think at this point its quite clear the embargo will not be lifted in the next four years, not with the Republican Controlled Congress and not with donald trump in the white house. Although again that would be the second part of the discussion which is given the fact we do expect changes in u. S. Policy towards cuba although we still dont know exactly what that will mean once the Trump Administration takes office, it will could have an impact on travel to cuba and will probably mean a restriction, growing restriction on the number of people based in u. S. , u. S. Citizens who can travel legally to cuba, although again we dont know exactly what kind of policy measures will be taken. I would imagine that a cubanamerican sector of this travel industry we continue to expand. Its difficult to imagine that the Trump Administration will restrict the number of trips that cuban americans might make but its also a possibility, which has already been put in practice by george w. Bush. So i think the main problem that of one to raise is what exactly will the scenario b for any kind of future potential growth of the tourist industry if the u. S. Tourism market is not open . And so under those conditions, if more u. S. Citizens who are not cubanamericans are not able to travel to cuba, then where does the growth come from . And the subtitle of course suggest that it will, the writing way phrase towards prosperity. So in that context then i think we should also talk about what the cuban government might do to make it easier for cubanamericans who wish to travel to cuba and, of course, the numbers are quite difficult to get. The last figures ive since just the anywhere between 300,000400,000 cubanamericans have traveled to cuba in the last year. Many more than u. S. Who are not of cuban origin. I think thats where the main section of any future growth will lie. I try here are my own personal experience. For instant why is this a difficult for people who want to visit cuba who were born on the island to get a passport come to get a visa . Y is a so expected to do that . Master also saw the controversy about whether cubanamericans could go or not on those crew ships. If cuba is serious about expanding its Tourism Industry and given the fact that politically speaking, i doubt more u. S. Citizens who are not of cuban origin will be able to travel to cuba easily, come tomorrow. Then i think the main chunk of the market will be cubanamericans, and cuban born people in other countries. So reducing the costs of these transactions, perhaps even not require any kind of visa or cuban passport for those of us who were born in cuba. Other countries do it and it seems to work quite well in order to attract the kind of diasporas tourism that has been called in the liturgy. I think thats one area that needs to be discussed in the final point, the report also mentions come and begin the estimates of cubanamerican remittances to cuba are difficult to cooperate come anywhere from 3 million, , 3 billion to 5 billion have been put out there. To the question i think for me becomes how can you harness those millions of dollars theyre being spent to cuba so that they could be used productively, and addition to being in immediate household issues which you know are very important, food and housing and medicine. But also as we know informally because its very difficult to get that kind of data, a lot of his money that is sent to give is being invested in the bedandbreakfast and a taxi drivers and so on. So what kind of policy measures would be appropriate to induce more of that money being invested into the tourist industry . So those are my comments. Thank you very much. [applause] so if i could ask the authors to briefly respond to anything that our panelists have severe why dont we start with you, Richard Fienberg . First of all on behalf of us let me thank all three panels very, very much for your very thoughtful comments. You clearly read the report very carefully and took it to heart and very much appreciate the thought uk to your responses. I will wait to respond to many of the comments on statistics but i think as a said what, we did what we could with the available status that richard can and found that. But you didnt dispute our basic conclusions i believe. So thats heartening. [laughing] on johns comments, on the point about supply restraint, of course 100 in a report very much emphasized that and thats the link between any sector including the Tourism Sector and reform needed throughout the economy. Thats a major thrust of the report and we fully agree that it portrays the supply constraints many reforms are necessary throughout the Agricultural Sector and housing sector, et cetera. On johns comments about china, there i have to say if i can advertise again my book, open for business, i do have a section on china with many of the themes that you emphasize. Ive met from time to time with the chinese authorities on the island. They very much so tremendous expansion in chinese and other asian tourism. Already you can see it in havana. I have to say that my own view of overall u. S. Industry relations is this is not the time to try to pull back and antagonize in the hemisphere winter is obviously another emerging great power who would love to fill the vacuum. Surely, short of the incoming understands this and will not make false steps in that regard. So i completely agree. In any case china, so if the United States restricts our tourism that will slow the growth of the Tourism Sector but will it stop it . Theres a whole nother world out there. You have more European Tour is coming actually from many european countries, in part because of the parts of the mediterranean are not as secure and safe as it were, so you have displacement there. The cubans are making a big effort to draw more latin american taurus, and we seen some of that from argentina, mexico, brazil. But ag asia is a big growth mar, and that is already happening and will continue to happen, as you pointed out. So i couldnt agree more about that. On the issue of medical tourism, of course is Something Like 40, 50,000 cuban medical personnel working abroad as a major income under. Many of them should be able to stay in cuba and provide medical assistance on an international basis. That would require Better Internet connections of course and other facilities. But that is the longterm vision of the Cuban Medical Services as you may probably know. I think effectively that will happen. Whether or not that is linked to cannabis tourism would require a dramatic change in cuban policies. As things stand now cuba its very hard lined on use of illegal substances. You dont want to be caught in cuba in any way linked to Drug Trafficking or use. Youll get a very rough prison sentence pics i dont think we are likely to see that in the near term. But certainly i think the idea of increasing medical tourism, as tourism becomes not so heavily, this is a major part of our study, sun and surf is fine but they can dramatically diversify their tourism offerings, crew ships, adventure tourism, but also certainly medical tourism. Then finally, thank you so much for me ever thoughtful comments. Just responding to two of them, richard i address other. On this issue of part of the 33 billion would come from, what our suggestion is direct investment as opposed to commercial credits. And we know of Many International hospitality firms that are dying to set up joint ventures in cuba and for reasons that are hard to fully comprehend, the cuban bureaucracy is dragging its feet. But yes rather than, they can take on some debt but rather than Debt Financing direct investment is what we are suggesting to cover parts of that 33 billion. The final point that i would make, yes, absolutely agree the aspera makes so much sense as an expert of course have written so much about diaspora. There we suggest that some of the restrictions on investment in the bedandbreakfast sector or in the real estate sector could be modified in ways which would encourage both National Investment as well as the aspera investment, so thank you very much for all of those comments. Yes, let me echo richards thank you and appreciation for these comments. I think theyre are really terrific. Just to pick up a couple of them in order, professor, couldnt agree with you more, the data are miserable. We spent many sleepless nights just trying to report accurately the number of arrivals which you wouldve thought wouldve been fairly basic. In fact, richard and i for a long time a discussion about how Many Russians are coming in the cuban economy. He was wildly overestimating by the way. [laughing] in any case, the data are difficult. That said, i think as you yourself said, some of the basic conclusions prematurely even if you adjust 20 up or 20 down. I dont think this industry is doing very well relative to other countries in the caribbean. They havent upgraded as rapidly as they could. Their strategy is i think at least as richard said in discussing the beach boxes, maybe a little underdeveloped because in part it doesnt recognize at all the emerging private sector and get that could be an important part. These things i think we all agree on. A couple points at me i would just pick up. When is the linkage affects. Whether or not the industry is so important intensive as it was 20 years ago. Today i dont know. I am somewhat skeptical of that. I think 70 import coefficient would be extremely high. You got economy as a whole of course we dont know what imports to the total economy are because the gdp numbers are sort of messed up. The import accounts are kind of messed up. If you use mirrored data units in entire different place. I could go on a long time about the inadequacies but i think the conclusions are pretty robust. One point i would make that a think is important is the rule of the b bs in the housing shortage and how to think about that. You can also think about it in terms of the competition between the industry for food and the domestic clientele for food. The name of the game is changing policy to expand supply and promote more rapidly. That housing as well as includes domestic food production. So the trick from a policy maker standpoint is to design a transitional period when you can both expand the supply of the tourist industry and the b b industry on the one hand, and expand the supply on the other. You cant do it with only 10 of gdp investment rates which is what they are now. So to do that i have to change policy. The kind of policies we outlined in the report are the way to go to deal with the issue of the supply. Your point is well taken. The transition has to be managed carefully to avoid addressing backlashes. Let me pick up just a couple of the points. John thomas suggesting, i have a different view, richard. I think we should study the marijuana industry. I think this will come back to frank with the proposal about this. Following up on studying beach tourism, this sounds to me to be the next logical step. [laughing] california is moving big time in this. I say that all and just, please. What would be the effect of increased travel restrictions . That i think is an interesting question. You have to put this together in combination with our speculation and it is only speculation on what the future course on u. S. Policy would be. If the future course of your spouse has to do with some travel restrictions on the one hand, but combined with a very substantial background macroeconomic stillness which of course the present elect as promised, you could see a very strong growth dimples and this is what the markets are telling us will happen, to the Global Economy. When that happens, that means rising incomes in europe and asia, and other parts of the world, all of which will generate more money that will be spent in the tourist industry. Im sure will make this audience quite happy but a fake cubans happy because there will be more europeans and Chinese Tourists coming to the region. One of the things that has amazed me when you look at the numbers over the last two or three years is that since brexit, youve seen no appreciable fall in european arrivals come into cuba, which this may be a result of early contracting, who knows what, but we dont see with the depreciation of european currencies even preceding brexit, a major downturn in europeans coming to the cuban economy which is a good sign. Thats only likely increase with rising incomes associated with a trump lead stimulus. Final point i want to make goes back to the issue of investment in cuba, and tapping into the enormous potential wealth in the Miami Community of the tryon at the United States generally and the bedandbreakfast to solve the housing shortage. One thing cuba lacks is any kind of a mortgage market. If you were to suddenly liberalize completely cuban economy a permit Foreign Investment, i would expect half of havana would immediately be bought bought up. Prices are so low right now and if any. You are finding a lot of illicit Foreign Investment come into havana. If there were a way to set up a mortgage facility that would take through borrowing into the miami market of the European Market, put it into mortgages for the expansion of domestic housing which would allow those households to borrow what would be at international rates, much cheaper than what is available in cuba, they could expand the housing market, maintain ownership and could be very highclass debt obligation in the u. S. Or foreign markets. Im sure theres some financial engineers out there in the audience that could set up this kind of arrangement and i think would be extremely valuable for cuba over the long run. The final point i want to make is about all of the discussions we focus on here on u. S. Policy are really only a small part of whats going to affect the industry. Its going to effect the industry over the long wait is cuban policy itself because cuba really controls its own future in this regard, irrespective what the United States show the United States can oppose some difficulties for the industry development, particularly cruise lines and some of the others but, frankly, if cuba were to liberalize it could swap in effects come out of the Trump Administration. Thank you, gentlemen. [applause] so were not at this stage of question and answers. Weve got 30 more minutes. We have microphones on the side comparable sites of police lease yet to come up and make sure that our friends in cspan can hear. I have just two requests in terms of your question. One, if you could identify yourself whichever way you want. And to come since we want to make sure that everyone has a chance to ask questions and make comments, please make your comment or question as brief as possible. And let me in advance apologize for interrupting you if you go a bit too long. Okay . Thank you very much. My name is nicholas sanchez, Professor Emeritus of economics at the college of the holy cross. And i will have three very brief questions. I was surprise, really very surprised that in your presentation your graphic presentations, you do not show the information for puerto rico. And, of course, it appears to me that to a great extent puerto rico is really the big elephant in the room. And the reason for that is because i would like to ask my second question, which is do you think it is in the National Interest to the United States to support puerto rican tourism rather than tourism to cuba . I mean, you have heard trump talking about america first, right . And i think even trump knows that puerto rico is part of the United States. [laughing] so that the idea that, you know, this would be in the National Interest of the United States when puerto rico is having such difficulties, is really difficult for me to grasp. My third and final question has to do with the comment on taxation in cuba. When i visited cuba a few years ago i tal talked to everybody te and they said, what are your taxes like . And everybody said there are no taxes in cuba. So the government apparently has this huge expenditures and their are no taxes. My own calculations about taxation in cuba, it is that it runs from 7080 of personal income. So are you trying to talk about taxing the cuban people even more . Thank you. Thank you. Richard newfarmer, why dont we start with you . These are great questions. Why not puerto rico . Partly we just ha have to pick a number of other countries. We looked at the Dominican Republic and costa rica because come and put them in many of the craft simply because they were similar in size and similar in structures that thats the first point. The second point was the cubans themselves are quite interested in the host of vacant and it ought to be interest in the Dominican Republic. Taking the point the professor made, the numbers on the comparisons may be a little funny that the fact is that cuba has a lot to learn from those two countries and probably has much to learn from puerto rico itself. Certainly in terms of debt management. So that point is well taken. The point on taxation, you actually write that taxes are very high. A tax system and this is point we made, very inefficient. Its kind of a funny set of taxes that come out on the one hand to the state enterprises contributcontributing surplus te treasury which is reallocated and others of the multiple Exchange Rate which is extremely expensive and difficult to both administer and to collect taxes from. Its terribly inefficient equipment talked about the multiple Exchange Rate dual currency system but it really is a major shackle and weight around the neck of the cuban economy. So tax partition as richard point out is really quite important. Were not suggesting u. S. Government support as in subsidize u. S. Relations with cuba. We are simply send u. S. Government should not impede relations. That is to say freedom of travel as Esther Tillerson i think is often argued economic sanctions which are not multilaterally enforced are not likely to be effective. So thats our arguments. Anybody, the other panels want to react quickly . One other thing. I dont see puerto rico and cuba competing. They have very different type of tourism primarily. The Dominican Republic, jamaica are more like the competitors for the type of tourism that cuba has. As a matter fact one of the things that cuba is missing is the type of tourism that puerto rico has which is the mixture of the beach and the urban one next to another and a noninclusive type of deal. They will only get that if they develop also, some social constraints, environment of constraint and there are plans to do that but i think thats going to be very long term. Until they do that theres no direct competition between tourism in cuba and tourism in puerto rico. Let me just add ont on that thai think one of the things that might be very beneficial to talk about tourism in cuba is not to lump all the chores together but recognize that what were talking a complete different products. The people who come to the allinclusive are different for those are going to havana, cuba to those are going to tourism. Different from those going to medical tourism. So in each one of these yet different competitors. I dont see one competing with the other. Just like i dont see them competing with miami which is a complete different type of tourism. Thank you all for coming today. The report was very informative and him half of the crowd, we appreciate your insight. Im wondering if youve seen any tension between the growth in the private sector and the state sector tourism as it relates to competition for resources like food in cuba, or tourist dollars and attention . And it so if there ever been any new restrictions or proposed restrictions on the private sector growth, other than the limitation on homeownership that you mentioned. Thanks. Thats a great question. Like in new york city a lot of the hotels are upset at airbnb because they see competition, headtohead competition. By and large thats not the case in cuba. The reason is that the Stateowned Enterprises are not Building Hotels fast enough in the urban areas where the u. S. Tourists or travelers are going. So the private sector are filling a need to increase supply and are doing it at a Cost Effective way. We estimate to put in a room in airbnb is 1525,000 per room, whereas the Stateowned Enterprises causing them to hundred thousand. As the minister of tourism in cuba has said publicly, he sees a consummate between the rising private bedandbreakfast sector as well as the others which are providing quality food that the state owned restaurants cannot provide. There were a number of newspaper articles that suggested that the private sector in cuba was being squeezed by the government. We were just there presenting this report a few days ago and i made an effort to try to find out what was the truth to this. There were a couple of nightclubs and restaurants highprofile that have been shuttered by state inspectors. You dont see as many food entree fruit and vegetable pushcarts on the streets as before. But on the whole the private sector, it is booming in cuba. And i saw a net to visit many new restaurants, new nightclubs. Not enjoying myself, just doing research. So i think really on the whole despite some crackdown, of course the inspectors who the private sector most people in cuba intensely dislike, there frankly referred to as parasites, and there is some tension there. On the whole though, the big picture is the private sector at least until january 20 continues to expand in a healthy weight in cuba. Lets go to our next questi question. Im with the cuba journal. My first question is very quick. Does anybody have an update on london creditors . Ive not been able to find anything about that. Second, has to do with the sequencing of reforms. More advanced, capable economies in support of the imf and world bank struggle with one or two of these problems simultaneously. That is, currency unification, agricultural reform, labor reform, attracting Foreign Investment. It just is bewildering. Where do you start . If you are a cuban in the government, coming up with policy, can you take a guess at where you would start . Thank you . I will let richard handle actually be easy question at this one, which is the london external debt. Hes written a paper on it. I will preempt him saying that which is quite a good paper. You might take a look at it. Where do you start . Boy, eventually the tough question that theyve obviously been struggling with. One place i think to start is f course price liberalization in agriculture. They made some very tough moves in the direction. They are very worried about rising food prices and what the impact will be on urban labor in the cities if you dont adjust wages at the same time. If you begin to unify the currency and eliminate a multiple Exchange Rate system, you got to raise wages. This entails inflation. Redistribution of income within the society, winners and losers. It has to be managed very carefully. The second point i would make is that it has to be part of a coherent program thats administered over a period of three or four years in order to be able, adobe a lot of fits and starts in doing so. Even the chinese unification of currencies way back in 1994 which is relatively smooth story that its a complex process. The third point i would make is that growth is really important. If you can get your growth rate up from its anemic rate of now, this u. S. Recession, so its a terrible time to do any reforms, but it didnt deter Growth Growth rate up from historical average recently of lets say 2. 8 up to 5 it makes it really much easier to lubricate the process and do this reallocation process. Thats reason why think the tourism and support because if you can begin liberalize the tourist industry, get a growth, link it to agriculture, and you can begin to do some of the other things that they very much need to do. To my surprise they hav havente to lay off people in the Public Sector quite dramatically and that created something that is document very nicely in richards book. When they have done that come to my surprise its been absorbed relatively quickly. The Second Surprise i think that weve had is the unification of the extent it may be a lot easier because there are already have introduced multiple Exchange Rates. Not just one to one or 2420 or now you find up to seven different Exchange Rates in the system. That helps to make it a little easier so theyre moving slowly woul. We like to see the moving faster, getting the growth rate is important. External help her to the extent they could be helped by ifi, they tried to make some moves to join the caf which is a First Step Towards multilateral spirit that would also provide an enormous cushion. They would be awash in money from donors if they had that program that donors could support. All good comments. Im relationship to the external credits, castro had a cavalier attitude towards borrowing. When governments would come to him and say how about payment on the credits we extended . He would say contracts, contracts . How the International Solidarity . Isnt as efficient payment . Very cavalier. And so cubas Credit Rating was on the floor. When raul castro came in he said look, and he said this very publicly. We are going to be more serious now about our International Creditor will try to make a payment on time and reestablish our International Credit worthiness. And he sat down and the first up is your question suggests negotiated or renegotiated credits. Some dating from the cold war. , more recent and most International Creditors, the official creditors. Those have been renegotiated in the context of private, the paris club. Cuba is now so far making payments on that portion of the restructured debt that it agreed to make payments on, a couple hundred million a year. Its not a lot of money for a normal economy, for an economy which struggles so hard export. Cubas merchandise exports are under 5 billion a year. Guys, a mediumsized American Company produces that much in annual revenues. But they are making those payments so far. Then you have the question you asked about the london club which is credits owed to commercial enterprises. To my knowledge those negotiations have not reached any conclusions as of yet. Cuba can still not really borrow on private credit markets. Any credits they might receive from suppliers are shortterm and are very often linked to direct external earnings. This is an escrow arrangement because the Credit Rating is still not high. And given the current crunch the economy is in for various reasons have to do with venezuela and nickel prices, et cetera, i think youve is when you continue to struggle to improve their international Credit Ratings. Please. Yes. Im a phd student in anthropology here at fiu. I have a comment about Racial Equity and the Tourism Industry in cuba. This is a significant issue. It is well documented. It is a concern of groups on the island and as a diaspora, but in terms of who is getting the jobs, whether it be the tour guide jobs or get positions in hotels and other aspects of the Tourism Industry, there is a lack of representation of afro cubans are black cubans and some of the best jobs. I havent had a chance to read the report very thoroughly but i didnt see any mention about Racial Inclusion and equity in the report, and if you want to comment on that. Thank you. So this is an issue about Income Distribution, the one has to think about very carefully. Because it can be twisted in a way which im sure you dont intended to be used. The people on the island, the hardliners, they say look whats happening. We are introducing some market mechanisms, allowing more touristic best generating inequality, therefore we should go back to the old way of the centralized socialist system. Surely i hope you dont mean to suggest that. So yes, how does one deal with an economy which is becoming more diversified and with more market mechanisms, investments which will generate some inequality . Do you go back to a completely directed mandate economy . Or as was suggested in the report to think about introducing various incentive structures, tax reforms, labor reforms that allow you to combine greater efficiency while you try to meet your equity objectives tax now, with regard to issues of inequality on the island. Most comfortable cup afro americans can first all, your point about these things being well documented is not correct. I know no numbers in the last ten years that really layout Income Distribution in cuba. I have not seen them. There are no surveys that ive seen. If yes and i would be interested in seeing the hell are a lot of anecdotal reports but actual numbers i dont think we have been. The eastern part of the island more afrocuban has fallen behind. When the revolutionary first occurred in sandy argo and up and hills, the government tried to redistribute money away from havana into the provinces. In recent years that process had been reversed. Wealth once again, the dynamism of the private sector, tourism, partly because of your flaws which say people to people, cultural tourism. That means largely stay in havana and not traveling around the island which is more difficult and less easy to document then you have done in cultural urban tourism. On eastern part of the island one of our suggestions that if the government can diversify tourism offerings as suggested, that would move it into the eastern part of the island where you would naturally get a pickup in the hiring of the africanamerican community. Is there still racism in cuba . Absolutely. Is there as much racism as was 1958 . I would say probably not but certainly there are still a lot of it. Some of that has to do with the leftover stereotypes and prejudices, et cetera. That, if you have American Hotels that are allowed to go, right now what leverage do we have over the issues youre discussing . If you had American Hotels investing in cuba, then one could suggest that they themselves as well as perhaps suggestions by the u. S. Government that best practices including Corporate Responsibility would bring into play gender equity and antidiscrimination standards. Just to underline precisely the last part of the comet, which is in addition to racial inequality which i think even though we may have statistic, all of the evidence suggests it has decreased over the past 20 or so. In conjunction with the rights of Tourism Industry. You explained very well much of it has to do with the ratio, i mean the regional imbalance. So if we extended the tourist industry has been concentrated in havana in western provinces, and the professor has just come back from the area so she can talk about it personally. There has been less growth in the eastern provinces we have larger concentrations. Theres a correlation between race and region that is quite perverse in a way the Tourism Industry has favored from western provinces. We are running out of time. I think we have two questions. Why dont we take those two questions now at a time. Please go ahead. I am headed digital marketing. One of the things i didnt hear you guys can attach on was the first sector impacting cubas tourism. A few months past they had a baseball game there. Do you guys see whether its baseball, basketball had in fact, on cubas tourism . Did you have a question . Yes. Please. Okay. I am a hospitality student. I have a few questions but a guess i can shorten it to like really for the sake of time. The first one is when i saw that policy outlined for what you recommend both cuba and the United States go for to help improve the growth we are seeing. My question is, at least from a policy perspective do you see in the future cuba starting to adopt will be considered i guess a one cuba to system ten of what china did in the 80s when we would have opened free trade areas but not the entire island itself in order to facilitate the growth of the private sector . Second question, as a hospitality student and someone who inspires aspires to open my own businesses in the future, how hard would it be on what barriers to introduce the right now for many Business People here in the United States who want open or start their own venture in cuba . Great, thank you. Are right. Why dont we start with you, richard newfarmer. On the sports question, this is really a pretty important thing culturally. Fidel himself was a baseball fan pier one of the things that led to the breakdown in u. S. Relationships in the very early days was when the u. S. Administration unilaterally prevented Major League Baseball from having exhibition matches in cuba. As i recall the story. This is a whole new area. I think to the extent they can be increase commerce and interchange between the two countries, sports is a really good form of engagement that would win the hearts of both sides of the florida straits. The issue on whether or not the special Economic Zones could be as they were in china, a vehicle for initial liberalization, you may begin to see part of that and the port area. Although i think the problems are quite different and ultimately probably will have to take a different course of liberalization. To go back to the question about where do you begin first . I think you to formulate an overall Macro Program that is a serious program that adds up. Secondly, you need to have systematic deregulation, start with a negative list rather than saying cubans can do these 192 countries, activities. Say cuban can do anything they want in terms of economic commerce, except the following several things. That would unleash a torrent of private savings that is now hidden from those that would be coming in to spur investment. So deregulation is the second part of the story i think price wilwith liberalization, gradual perhaps combined with programs that support the poor. There are a lot of poor people in cuba. I think to the extent that you have to use the National Fiscal policy to compensate losers in the process, programs have to be thought through to actually make that happen. With regard to americans investing in cuba, the official cuba position is that u. S. Citizens can participate in the cuban economy like any other citizens from any other part of the world. They have to go through this elaborate approval process but there is no specific discrimination against u. S. Citizens in general. The major restriction is on the u. S. Side, even under obama regulations, most investments for the u. S. Side would be prohibited. To my very last point, here we are generally 19th, i just have to conclude the panel of saying a thrust of our study is that the interaction with United States has advanced u. S. Interest and help promote an explosion of private, independent Economic Activities on the island. There is excitement and entrepreneurialism in cuba them for the u. S. To purposely destroy that would seem to be both tragic and counterproductive for cuba and u. S. National interest. [applause] thank you for our authors and our commentators and thank you all for being here and thanks to the cpn audience for joining us, and again thanks to the breaking institution for allowing us to partner with the kimberly green Caribbean Center. Follow us and look at the programming we are doing at the center and we hope to see you soon at another event. Thank you so much. [applause] heres whats happening on the seas cspan network. The ceremonial swearingin of Supreme Court justice neil gorsuch. On cspan2, on the communicators, mike doyle of pennsylvania on the recent repeal of internet privacy rules and the outlook for Net Neutrality. On American History tv, on cspan three, joseph ellis shows his insights about the founding fathers. All of that at 8 00 p. M. Easte eastern. The l. A. Times has been putting on the festival of books for more than 20 years and it has become an institution thats part of the community, and its a way that we can celebrate with the readers of the paper and with the city as a whole, the very notion of reading. Today with the idea of something called fake news being out there, i think books help us celebrate the way words and faxed are grounded in storytelling and history. Watch our live coverage of the festival of books all weekend april 22 and 23rd on the tv on cspan2. Tonight on the indicators, pennsylvania congressman mike doyle, Ranking Member of a Key House Committee talks about privacy, Net Neutrality and expanding broadband in the u. S. He is interviewed by a Technology Reporter for the hell. When you an democrats are down at the negotiating table, will the public outcry over broadband privacy be a point of leverage for democrats to use . I think this is all part of it. The reclassification affects both, and i think obviously if this is to come to pass, i think the public will have something to say about this. What we want as democrats on the committee is strong consumer protections. More and more the handheld device, and your laptop, your whole life are on these devices now. Your medical information, your financial information, personal and family information, information about your children. People want to sense that the Internet Service providers and the people handling this data are not using this data strictly just to make money for themselves. Watch the communicators tonight at eight eastern on cspan2. Next, a conversation with to