Emigrants investing in Cuba: The economy and the politics

HAVANA – An article where Cuban authorities reaffirm the possibility that Cubans living abroad can invest in the country as foreign investors and published in Cubadebate has generated much debate.

It should not be a surprise. This possibility was established by the 1995 Law 77 for Foreign Investment and ratified by Law 118 approved in 2014, currently in force. The Cubadebate article also says that the Minister of Foreign Trade Rodrigo Malmierca made it clear that there is no restriction on the origin of capital for this type of investment.

The article’s main impact is not so much the content of the Law, but the possibility of it becoming a policy. In 2014, referring to the possible investment of emigrants in Cuba, Malmierca himself said that the law did not prohibit it, but that the politics of the country did not promote it. The result: to date there has not been one emigrant who’s invested on the Island under guidelines set by Law 118. 

We are, therefore, facing a more political than economic problem, which specifically involves the migration policy and the country’s relationship with its emigrants.

Since 1978, Cuba’s migration policy has stopped being oriented towards a break with its emigrants, and instead sought ways of approaching those sectors interested in maintaining relations of various kinds with their country of origin. It has been a slow process, not free of conflicts and setbacks, but that as of 2013 has registered significant advances, which are still clearly insufficient.

The Cuban migration policy is in need of more inclusive actions which encourage not only contact with its emigration, but its integration into the country’s national life. One of these resources is the possibility of investing in Cuba. The problem is that this path, of foreign investment, is not the most convenient.

Several Cuban economists have mentioned the lack of correspondence between the large investments that Law 118 seeks to attract, and the scale of the predominant capital among the emigrants.

The best proof of this is that apart from the current regulation and without any other legal support several billion dollars have been invested by the emigrants via remittances. This money has been invested in small, private businesses that are sprouting throughout the country.

Therefore one assumes that the best vehicle for investments by emigrants are those destined for small- and medium-sized businesses. But the problem here is that these then acquire a legal personality in the Cuban economic model, and although recognized by the recently approved Constitution, the complementary laws that regulate its operation have yet to be issued.

When this finally occurs we shall see if direct investments in the aforementioned businesses by emigrants is legalized and thus make equal their rights with that of Cubans residing in Cuba.

There are many contradictions in the current regulations. The most important being the limitation of rights of Cuban citizens, whether in Cuba or abroad, to invest in any national economic entity, provided they meet the requirements for it. Another problem is to establish differences between Cuban citizens, which prevent the articulation of a migratory policy coherent with the realities and needs of the country.

This is not a minor problem since the constitutionality of this policy may be in doubt. The Constitution establishes what has been called “effective citizenship,” through which the possibility of a Cuban citizen having other citizenships is accepted, although within the national territory only the Cuban one is “effective.”

If inside Cuba all Cubans share equal duties, then we must have the same rights. It is true that foreign investment must pass through a different screen than the national one, but this has to do with the origin of the capital, not with the official residence of the people, as has been explained.

From my point of view, two political premises gravitate with this problem and have complicated decisions in this regard. The first is the old fear that from the small and medium enterprises a native bourgeoisie will develop, distort the objectives of socialism and endanger the sovereignty of the country. The second is the prejudices, present in some sectors, about emigration and its historical role as the social base of the counterrevolution at the service of the United States.

Neither premise is unfounded. Lenin warned about the problems involved in accepting small- and medium-sized private companies, which he called “massive capitalism.” However, he concluded that in that phase of Soviet socialism, let’s say the moment of the New Economic Policy (NEP), there was no other option but to assume the challenge of living with this form of property. Che, on the other hand, considered this vision of Lenin as a strategic error in the construction of socialism. This is how complicated this debate has been within Marxism.

In today’s Cuba, however, it is a debate largely surpassed by reality, given that the existence of small- and medium-sized private businesses is a fact, an inevitable result of the economic reforms undertaken in the country.

Regarding the political prejudices against emigration, they have their origin in the role played by some emigrants in U.S. policy against Cuba. Even today, the Cuban-American right espouse the most hostile positions against the country, and the so-called “historical exile” still serves as a social base for this agenda.

However, Cuba’s emigration has evolved greatly since the times when these positions were almost absolute and what makes the current moment different is the predominance of sectors that advocate for better relations with their country of origin. Stimulating these sectors is a necessity of Cuban foreign policy, not only in the case of the United States, but on an international scale.

Although it cannot be said that all prejudices have disappeared, today Cuban society assumes the migratory fact, and relations with emigrants are viewed differently from those of the past. There exists a broad and appreciable consensus which supports relations with the country’s emigration, and recognizes their importance for the future of the nation.

The goal then is to offer the emigrants and their descendants moral and material advantages that stimulate their bond with Cuba. One of these is to favor their investments in the country. This can effectively contribute to the national economy, but this should not only be a money problem. That’s how we have to look at it.