Transcription
The system is maintained, but it is no longer a communist system that the investor will not invest in if there are no political changes, and the human capital that Cuba has is extraordinary. There is enormous uncertainty about what the United States is asking for or demanding. What the Cuban government is willing to do, and what is being proposed in general. A lot of uncertainty because there is a series of absolutely contradictory information. Sometimes words are heard from American leaders that what interests them is an economic opening, and then later the door can be opened to political changes. We know that President Trump fell in love with the Venezuelan model to the point that he said it could be applied to Iran, and it could be applied to Cuba, and it could be applied to any other country. Which is not the case. Each country is very different, very peculiar, very individualistic, and in that sense, what we end up with is great uncertainty about what is intended, what is demanded, and there is very little transparency about it. So, therefore, we don't know what will happen, we don't know when it will happen, we don't know the magnitude of what will happen, and what changes will occur. What we do know is that the situation in Cuba is critical. That Cuba is at the bottom of the barrel, economically speaking, it can go even further down. Yes, and it is on that path. But Cuba is a system, economically speaking, it is a totally and absolutely collapsed system. Therefore, Cuba has very few options for recovery. So, I believe that the most productive discussion focuses on what we have to do to recover Cuba at the moment that window of opportunity opens, because we still don't know what the window will be, we don't know when the window will open, and we don't know how big the window will be for foreign investment or private investment to help generate capital for Cuba. Cuba is a de-capitalized country, meaning capital must be brought in to rebuild the country and get it moving forward. In that sense, a significant stabilization period is needed, which will cost a lot of money and take between 3 and 5 years. Before that, there is no one, except family helping the SMEs. That flows very quickly, but formal capital, capital from a heavyweight investor from the United States or Europe, saying "I'm going to invest in Cuba," that will take time because the conditions are not there for that capital to enter with confidence.
We have to understand that the capital that exists today has an endless number of investment options. It is not limited to one country; it is worldwide. I can invest in any country in the world today while sitting in my chair from Miami. So, that is feasible today. Therefore, investment options are many. So, the capitalist, the investor, the investor decides to invest in an equation that is totally and absolutely financial, not emotional. So, here the only thing that matters is the return and the risk I will have. And between those two, I have to balance risk and return. And then I determine what I will invest in and what return I will expect. The more return I expect, the more risk I am willing to take. That is why we call it the cost of capital. The cost of capital is high when the risk is high. The cost of capital is low when the risk is low. That is why a country like Cuba needs to do everything politically necessary to lower the cost of capital so that money can enter the country as economically as possible. One cannot say that the problem will be solved solely with economic changes because it does not bring a solution to the problem. Regardless of what Washington wants, what the Secretary of State wants, what President Trump wants, none of that matters. The important thing is that the investor will not invest if there are no political changes. Why? Because what brings security to investment? Political changes do. The philosophy of the government, as long as the government has this philosophy that the socialist state is the rector of the economy, that will not inspire confidence in anyone because we know it has not worked anywhere in the world. As long as the government continues to think that the state sector has priority and that the private sector is subsidiary and secondary to the state sector, that will not bring any investor because no one likes to be at the end of the line. There must be a change in philosophy by the regime. There must be a change where it is known that Cuba welcomes capital. And that must be said clearly and widely, it cannot be said in whispers. It must be said clearly and loudly. For confidence to exist, there must be an independent judiciary, because otherwise, I have no confidence. And if I have a dispute with the government and the government freezes my bank account as they did to the Vietnamese just six or seven or eight months ago, what recourse do I have if the Cuban courts are all subordinate to the Communist Party? So, that must change, the laws must change. If there are no rights, if society has no rights, how will I, a foreign investor, have rights? If my right as a foreign Cuban of another nationality to invest in Cuba, as they say they will do, is fabulous, but my Cuban brother does not have the same right, will I invest in Cuba under those circumstances? No. So, there are so many changes that need to be made, both economic and political. It is true that in the first years, in that stabilization period, there must be a preponderance of economic changes followed by major political changes, but not all political changes. What do I mean? Things like the creation of parties, democratic elections, etc. Normally, and from what we have studied, it is much more beneficial if these things occur after the stabilization period has passed, but as a precursor, there must be major political changes where the investor sees that Cuba has because politics brings economic stability. If there is no political stability, there is no economic stability. So, one thing goes with the other. That is why people here get tired of talking about economic changes and fighting for political changes, yes to changes, no to economic changes, yes to political changes. The two must go hand in hand because otherwise, neither of them works without a good economy, democracy does not work. How is it possible that the Cuban people are asked today to think about big political issues, about which party I will choose to govern my country, when they don't even have a plate of food? So, that is where the things and the contraindications and the contradictions that we create for ourselves lie. Both things need to be resolved, and for that, a period of stability is needed for the country's stabilization. The definition of the stabilization period is known to have concluded when the Cuban economy is ready to receive capital. That is, at the moment the Cuban economy is attractive to private investment, that is when the stabilization phase has ended, and the second phase, the reconstruction phase, begins. But in this stabilization phase, many things must be rebuilt to reach that point. For example, let's speak very clearly about the country's electrical system, both the electricity generation and distribution system. Much is said about generation and little about distribution. Both are very important, and both are in a detrimental state at this moment. So, that is a system that no private company is interested in rebuilding the country's generation if it is not guaranteed an adequate return on its investment. Therefore, Cuba cannot guarantee that adequate return because it does not have the financial resources to do so. Who must guarantee it? The United States, the World Bank, the International Monetary Fund, the European Community, whoever, or a combination of all of the above. But without that kind of stabilization, if fuel distribution is not stabilized, if electricity is not stabilized, if public transportation is not stabilized, if public order is not stabilized, if schools are not stabilized, if the health sector is not stabilized, without that, there can be no economy, no country, and we will not be attractive to foreign investment. We will become an Haiti, a destroyed country, a desolate country. Can you imagine how much money will be needed in Cuba to sustain, to first alleviate the humanitarian crisis, because there are people who are and will be suffering even more hunger? The cost of public education, the cost of public health, the cost of public order, the cost of electricity, the cost of aqueducts and surface water and sewage, the cost of public transportation that is needed. When all that is added up, it amounts to enormous sums. Where will that money come from? Washington has said among its plans that it is willing to lift Cuba in that process? No, no one knows where that money will come from. No one has said it. Washington has been very good at teaching us the sticks, as Americans say, but so far, they have not shown any carrots. What are the carrots for Cuba? And here I believe it is essential that not only Washington but also the European Union must mobilize. As long as the carrots are not seen, as long as it is not clear where the money will come from to provide solutions for Cuba, who will dare to implement solutions when there is no money to implement them? That is the fundamental problem of that stabilization phase. We are talking about several billion dollars. Right now, we are talking about approximately 10, from 7 to 10. Where will that money come from? We urgently need clarity on these issues because actions cannot be taken if it is not known with what money they will be taken. And we cannot assume, or idealistically dream, that the money will come from the clouds. Cuba is not Venezuela, where they dig a hole and money comes out from underground. Not here. Here, it must be earned with the sweat of our brow, of all Cubans. So, it is very different. Cuba needs help to leverage its reinsertion into the international economic order. It needs great help to get us to that point. Cuba is in a devastated moment, devastated in large part by American sanctions, but mainly devastated by ineptitude and a system they have created that is totally failed. Tutelage is very important. Let's look at all the Eastern European countries that made a transition to democracy and to the Western world. What was the common factor that helped all those transitions be significantly successful? Naturally, some more than others. It was nothing less than the tutelage of the European Union. So, tutelage helps, but not imposition. Cuba has fought its entire life for its sovereignty and independence. We cannot snatch it away from our people. And the United States must have discretion and must know how to help. There are many ways to help. There are constructive ways to help and destructive ways to help. The way the United States channels this aid to Cuba, and Europe and others, must be a constructive way, but that aid is needed. Without that aid, it will be very, very difficult for Cuba, the human cost will be extraordinary, and we will not get back on our feet for many years. So, there is no other choice. We cannot confuse sovereignty with the need for tutelage, and we cannot confuse sovereignty with the fact that, unlike in the 1890s, when José Martí spoke of all this, he was terrified of economic integration with the United States because he saw it as something colonizing. But today, in a globalized world, which is something Martí could never have envisioned, but which happens today in a globalized world, small countries are at a great disadvantage. So, by definition, we need to reinsert ourselves into someone's world economic order. We need partnerships with Europe, with the United States, and the United States is our most logical, most natural market. Now, where is the key? The key is held by very small countries that have been very successful, Bermuda, the Baltic countries, Israel, Singapore. They have had extraordinary success, and they are very small countries. But why? Because their sovereignty comes from their own ability to create wealth, not from their size. So, that is the strategy for Cuba. We must seek to effectively blend a strategy that is consistent with Martí's thinking of our own sovereignty, our own freedom, and our own autonomy, but understanding our strategic disadvantage as a country, in terms of size, and that what we have to do is create wealth that gives us political strength to achieve a truly independent and prosperous country. We only have to look at how Cuba is today. I was talking the other day with someone who has contact with many farmers, and they are all complaining that they will have to stop planting. Why? Because their produce is stolen at night. So, if Cuba, if social control, which exists in Cuba at this moment, national order control, if that is lost, Cuba will fall into chaos because the economic need is so great, the hunger is so great, the desperation is so great that it will become a situation of every man for himself. Frankly, I do not see the possibility of a transition without a continuity of public order that exists today. There must be continuity. On the other hand, there cannot be too much continuity because the people who will continue doing things are the inept ones who did everything wrong before, so that doesn't work either. Gaesa is an important organization, not as productive as one might think. It is very easy to be productive when you are the only one, when you are not competing with anyone. So, it is not that productive, and besides, it has gangster-like characteristics, of elbowing competitors. If that is the strength of the new Cuba, no investor will be interested in competing with this government monopoly. One would have to be crazy. They will steal my money, kick me out, and throw me out. No one will think of that. So, things must change, and change very quickly, and that is one of them. Gaesa, like state-owned companies, must undergo an orderly process of breaking up those monopolies and selling and privatizing them. In those privatizations, people from the government may participate, but they will enter as private individuals, not as government officials. So, yes, we must have acceptance from many people who are in Cuba today, as is happening in Venezuela and as is happening everywhere, because we must think, there must be reconciliation, peace for the future, otherwise, we will be fighting for the next 40 years. I understand the need for justice, I understand the pain, I understand all those things, but I also understand the pain of not changing. So, to achieve that, many things must be put on the back, third, fourth burner, and we must ensure that we are always moving forward. I have used the analogy of the changes Cuba needs to make as a locomotive, like a train that is moving. Speed is very important. This must go fast, otherwise, it will not work or will take a long time to work and show results. And the locomotive of all these changes is the economy, but behind it come other cars that must be resolved. The privatization of companies, human rights, the release of political prisoners, changes to create a state of law, an independent judiciary, and finally, free elections and political parties, etc. But the train cannot stop. It is the SMEs, the entrepreneurs, because I hated when they called restaurants "paladares." They are restaurants in every sense of the word, with quality in service and everything, and they are entrepreneurs, truly entrepreneurs, not just "mi pymes" (my SMEs), they are quality entrepreneurs due to their knowledge, their capacity, and their creativity. And these people are changing Cuba; they already have, they have radically changed the country in the last 5, 6, 7, 8 years since this process began with force. And they will lead the way in this process, because in these 7 years of stabilization, these 5 to 7 years of stabilization we talked about earlier, the only ones who will be investing will be the "leyos" (locals), the "mi pymes," the Cuban entrepreneurs, and their relatives in the diaspora who will provide the necessary capital. For no one to be surprised, that could easily amount to 5 billion dollars very quickly. So, that will be the first important source of capital entering Cuba during the stabilization process. And this ecosystem, because I like to call it an ecosystem of Cuban small and medium-sized enterprises, is what will pave the way for large investors to enter. That is their role, and they will do an extraordinary job if they are not hindered and are given full freedom to do what they know they must do. They must be the protagonists. We who live here will be cooperators, people who support, people who help, but we will not be the protagonists. The protagonists must be inside, and the human capital that Cuba has is extraordinary, and I have seen it with my own eyes. I know that world of entrepreneurs because we have worked with them for 15 years with a project we did in Cuba together with the Catholic Church to train entrepreneurs. I have seen the talent that exists in Cuba. And that human capital is extremely important in a modern economy, because Cuba will not compete with agriculture, with Brazil, with Argentina, with countries that have large land areas. Cuba will not compete with mineral resources because we do not have them in abundance. There are some, but nothing extraordinary. Cuba does not appear to have large quantities of oil, so we have to look for other things. Therefore, that human capital is the only thing we have, it is Cuba's strongest point for its economic takeoff. And it is very, very commendable that it has it. A survey was even just conducted, I believe by Diario de Cuba, which showed that among the respondents, who were about 17 randomly selected, I was impressed when it spoke of the demographics, the education of the participants. You don't see that in any other Latin American country. How many people have high school? How many people have university degrees? How many people have doctorates? It is extraordinary. We know that education is deteriorating daily, especially elementary education is deteriorating very rapidly. But what exists now and is so important to save in this stabilization process is to restore that educational quality that Cuba has, because that is our most important economic strength, and we do not have many people, but those we have are very well-trained, and that gives us extraordinary help. Another advantage Cuba has, so as not to just dwell on disadvantages and problems, which are many, is that it is the Latin American country with the highest proportion of homeowners. Do you know what it means to be able to launch yourself into a new economy with the security of having a roof over your head? I know some do not have it, I know some are falling behind, but in general, we are talking about large numbers. It is an extraordinary advantage that no one else in Latin America has. So, those two advantages, I believe, position the Cuban people very well for this economic change that is needed, but without downplaying the fact that the change will be hard, it will be painful, and it will take a lot of money and a lot of time. But I am a dreamer about Cuba's future. If we manage to do these things well, of course, as Americans say, but if we succeed, we will have an extraordinary future.