Monday, May 27, 2013

Cuba: The Battle Against Our Own Limitations and Deficiencies

Havana. May 10, 2013

The battle against our own limitations and deficiencies

Expanded Council of Ministers Meeting

Granma International

MAY 10, during an expanded meeting of the Council of Ministers, President Raúl Castro Ruz reiterated the need to avoid inefficient use of resources since, “conservation is a principal source of income within the economy,” not always given the priority it merits. The solution, he said, cannot be looking elsewhere for what can be produced within the country.

These observations from the President emerged during the meeting which addressed issues of vital importance to the updating of Cuba’s economic model. It was agreed that the great battle today is one against internal limitations and deficiencies within all sectors.

Raúl emphasized the importance of expanding training and development courses for directors and workers – ultimately responsible for the implementation of every measure approved – to thus advance the process. Errors, he said, lead to extensive economic losses, citing problems which have occurred over the last few years in investment projects.

The first point on the agenda was a report by Adel Yzquierdo Rodríguez, Minister of Economy and Planning, outlining basic principles of a policy designed to improve the country’s investment process. The policy’s fundamental goal is to update and align all relevant legal norms, which should lead to greater efficiency, he explained.

Yzquierdo, also a Council of Ministers Vice President, reported that a diagnostic study undertaken revealed a series of difficulties, including among the most important, the failure to take full advantage of capacity; a lack of leadership on the part of investing entities, and inadequate development of and respect for contracts.

The policy approved by the Council of Ministers on this occasion defines the investor as the principal actor throughout the process, which must be comprehensively conceived and include an analysis of all productive entities involved, with the participation of all relevant management bodies.

Considered next was a policy to restructure and more efficiently utilize machinery and heavy equipment. Industry Minister Salvador Pardo Cruz reported that such a plan was of vital importance to assure the rational use of installations and equipment.

He recalled that before 1990, the metallurgical industry was developed with surplus capacity. After this year, deterioration began, he said, with stoppages, under-utilization of capacity, a decline in the technical workforce and lack of maintenance.

A full national census recently conducted revealed the existence of 58,000 pieces of machinery and equipment belonging to 2,000 entities, a large number in poor condition or obsolete. Also noted were the under-utilization of equipment (30%), low levels of engineering support and a lack of information.

During the period 2001-2010, 680 million convertible pesos (CUC) were spent on importing products previously manufactured within the country, Pardo Cruz reported.

On this particular point, Raúl again insisted that all possible repairs, as well as regular maintenance, be completed, saying, “Many old machines which are currently out of order can still be of use.” He referred to the example of the Revolutionary Armed Forces which has been able to modernize armament, given the prohibitive cost of new equipment on the international market.

The Council of Ministers thus approved a plan to define priorities and reorganize work to adequately utilize machinery and equipment, with a view toward stopping the deterioration and indiscriminant dismantling of these resources.

Use of existing equipment will be reorganized and short term metallurgical manufacturing plans made to meet the needs of emerging productive entities. Also to be explored are alternate forms of complementary cooperation and possible collaboration between state and non-state facilities, maintenance/repair shops and local industry, which would contribute to lowering costs.

Next, Leonardo Andollo Valdés, from the Implementation and Development Permanent Commission working on 6th Party Congress policy guidelines, described principal aspects of the functional and structural reorganization approved by the Food Industry Ministry (MINAL). The Council of Ministers approved the proposal.

Andollo Valdés explained that the first stage of this reorganization took place in 2009, when the Food Industry and Fishing ministries were merged. Current changes have as their main goal the delineation and separation of government regulatory responsibilities from those of enterprise management.

Despite the fact that in 2009, a Central Enterprise Management Organization (OSDE) for the sector was established, Andollo Valdés emphasized, it has yet to function as expected. The current reorganization should allow this body to fully assume its responsibilities, as well as ensuring that both government regulatory work and enterprise management are carried out more efficiently and comprehensively.


Another policy approved during the Council of Ministers meeting was directed toward improving the country’s law enforcement system, of vital importance to the maintenance of order in society.

According to Justice Minister María Esther Reus, efforts are currently governed by more than 80 laws, with contradictory duplications regarding the same issue, in some cases.

Some 30 different inspection corps exist, with more than 15,000 inspectors, including too many who are inadequately prepared to function professionally, thus facilitating repeated acts of corruption.

The application of more exemplary measures, such as the suspension of a license or confiscation, is rare. Current laws, she commented stipulate the imposition of fines, which in many cases basically legalize the violation as opposed to correcting it.

Reus González said that the imposition of fines is not always reflective of systematic, consistent work and described the amounts established as disproportionate, with no consideration given repeated, versus first-time, infractions.

The policy approved will include in a single, general statute-level law definitions of infractions and measures to be taken, using a single procedure for its implementation within the context of the updating of Cuba’s economic model.

Among other measures, fine amounts will reflect the gravity of the offense and be based on the minimum salary. Repeated violations will incur greater fines and discounts will be available to those who pay within 72 hours of the citation. Entities charged with collecting fine payments will be given authority to retain property, salaries, bank accounts and other income, in the event a fine is not paid.

The Justice Minister reported on the process underway of registering all state-owned buildings. She explained that this effort has as its goal reinforcing institutionality and respect for the law, while protecting state property.

Additionally, registering these buildings will allow for other steps to be taken to update the economic model. “For example,” she said, “before renting buildings to self-employed workers, these must first be registered. This will allow state-owned locales to be made available to new forms of management.”


Marino Murillo Jorge, head of the Implementation and Development Commission, reported on the agricultural products sales policy currently functioning in Havana, Artemisa and Mayabeque – a positive experience which will be extended to other parts of the country.

He explained that state regulated prices are maintained for products such as rice, beans, potatoes, some root vegetables, onion, garlic and tomato. At the same time, producers may contract directly with state distributors, eliminating intermediaries who previously hampered the process. Additionally, after fulfilling contracts with the state, producers may sell their produce to third parties engaged in the distribution of such food items.

State buyers, such as agricultural markets and social entities, have access to the wholesale market, on equal footing with non-state buyers.

Murillo, also a Council of Ministers Vice President, described the creation of a wholesale agricultural market, El Trigal, located in the Havana municipality of Boyeros.

He also pointed out that agricultural markets will function on the basis of two modalities - either administered by the state or managed as agricultural cooperatives.


Later during the meeting, Gladys Bejerano Portela, Comptroller General of the Republic, presented a summary of the comprehensive audits undertaken during 2012, which provided valuable information shedding light on the principal causes and conditions leading to inefficiency, failure to abide by regulations, illegalities and corruption.

She reported that the Self-Audit Guide has become a useful tool in preventative efforts.

"Nevertheless, even though the latest information shows improvement in internal review evaluations of audited entities with respect to previous checks, serious problems and vulnerabilities still exist," Bejerano, also a Vice President of the Council of State, emphasized.

"It is imperative that analyses go beyond visible consequences and unearth the real causes," she said. This will require, she continued, proper conduct and preparation by directors and administrative officials, since it is their responsibility, in the first place, to lead their entities in respect for the law and contract obligations.


Rodrigo Malmierca Díaz, Minister of Foreign Trade and Investment, reported on exports of services, confirming that this has become the principal source of hard currency income for the country and has strong potential to continue expanding. He emphasized that, during the last year, major areas of growth have been the health and tourism sectors.

Malmierca Díaz also outlined the principal direction of work to continue promoting this activity, which requires careful training of the multiple actors involved in the export of services, in order to develop a "true export culture," to obtain the results needed by the country.

"Given the current economic conjuncture Cuba faces, which affects foreign trade, diversification of markets and exportable services is a critical task," he said.

Referring to the issue, Raúl acknowledged the noble efforts and prestige earned by Cuban doctors working to save lives in remote areas, where no one else goes.

The Minister also presented a report on irregularities detected in the functioning of joint ventures with foreign capital and international contracts which are affecting the country's economy.

After briefly describing what occurred, he emphasized that "the findings of investigations carried out by the Comptroller General's Office merit careful study, with a view to extracting experience and avoiding the repetition of these same errors in the future."

Malmierca Díaz stated that the principal causes of such problems include a lack of rigor, supervision and high expectations throughout the businesses involved, as well inappropriate conduct and attitudes among directors and officials implicated, be they a result of ignorance, incompetence or unethical practices.


Minister of Economy and Planning Adel Yzquierdo Rodríguez reported on irregularities and criminal behavior detected in fuel sales.

The principal losses occur within refineries, transportation hubs and gas stations, given poor control of fuel deliveries and the lack of measurement instruments, or the utilization of these without required certification.

Yzquierdo Rodríguez explained, "The high demand and profits that this illicit trafficking generate lead to continual harassment of workers in this sector on the part of unscrupulous persons who subsequently sell fuel at as much as 60% below the official price."

The Minister announced measures to be adopted to address the situation. Among these, he mentioned the development of a comprehensive program to acquire technology for secure systems of reception, storage and distribution of gasoline; the verification of measurement instruments; and the conclusion of investments in the Ñico López, Camilo Cienfuegos and Hermanos Díaz refineries, directed toward improving the level of control and automation within delivery terminals.

Likewise, GPS systems installed on trains and motorized vehicles will be strengthened and expanded, while a proposal to sell gasoline to self-employed transportation providers is being evaluated, with no implication that this would raise prices charged passengers.

The Council of Ministers was also informed of progress being made in compiling data gathered during the 2012 Population and Housing Census. Marino Murillo addressed the issue and reported that work is being completed satisfactorily, confirming that definitive figures will be delivered, as planned, on June 30.


On May 11, an expanded meeting of the National Defense Council took place, during which Army General Raúl Castro Ruz, President of the body, described the country's level of preparedness in 2012 as satisfactory.

Special attention was focused on the evaluation of experience gained during Hurricane Sandy's trajectory across the eastern portion of the country, particularly the province of Santiago de Cuba, so that lessons can be learned to better deal with similar events in the future.

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