Cuba and the IMF, towards a new chapter

GMT 05:04 2015 Friday ,30 January

Arab Today, arab today Cuba and the IMF, towards a new chapter

US flag in Havana
Washington - AFP

After its rapprochement with the United States, the steadfastly communist Cuba could further dismantle nearly six decades of isolation by shaking hands with another old enemy, the International Monetary Fund.
The IMF, the world's crisis lender but also an economic policy disciplinarian, does not have an especially good reputation in Havana.
Cuba, like a number of its allies -- Venezuela and Bolivia, for instance -- regards the Fund as too married to a liberal capitalist ideology.
Cuba's now-retired strongman of 50 years, Fidel Castro, has never passed up an opportunity to label it an "evil" dispenser of "lethal advice". He went so far as to call for the Fund's "demolition" pure and simple in the early 2000s.
The Caribbean island was a founding member of the Fund in 1944 when it was established along with the World Bank.
But in 1964, five years after Castro's revolutionary forces seized power, Cuba became the first country to turn its back on the IMF, as well as the World Bank.
That makes Cuba one of the few countries -- North Korea and Liechtenstein are others -- cut off from the two Bretton Woods institutions that form the core of the world's powerful development finance system.
- Times change -
But the times are changing. "El Lider Maximo" has retired, letting his less-obdurate brother Raul take over as president.
With that, and an effort by US President Barack Obama to clear away the cobwebs of the past, lines have opened between Havana and Washington. And a new generation of Cuban leaders seem less hostile toward the two institutions, according to experts.
"Younger Cubans are more open to participating in the global economy, indeed they are eager to do so, and that implies normal relations with the major international agencies including the IMF and World Bank," said Richard Feinberg, who advised former president Bill Clinton on Latin America policy.
Cuba's economy has been choked by the US embargo on the country dating to 1961, and joining the two institutions could encourage foreign investors to take advantage of its opening to American tourism and other formerly blocked sectors.
"It would be a good thing for Cuba," said Terry Maris, former executive director of the Center for Cuban Business Studies at Ohio Northern University.
"There's just not sufficient infrastructure right now, it would cost billions that are not going to come overnight. Cuba has to be stable to attract foreign investment," he said.
- Struggling economy -
Tightly controlled by the government, the Cuban economy is struggling, with growth of just 1.3 percent last year, the weakest since Raul Castro arrived in power in 2006.
But because of its longtime focus on health and education, the country ranks high in social indicators, according to the United Nations Human Development Index.
Returning to the IMF fold is not a simple thing. Cuba would have to submit a formal request, possibly contribute millions of dollars to the Fund's financial resources, and then agree "to fulfill the obligations of IMF membership," noted an IMF spokesman.
That includes having to lift a veil on the state of the country's economy, supplying data on government accounts and submitting to an annual IMF evaluation.
Carl Meacham director of the Americas Program at the Center for Strategic and International Studies in Washington, said the question is whether they will take that step toward openness.
"Are they willing to play by the rules of the game by making their economy much more transparent and cooperating with other countries?" he asked.
The IMF has not yet received any request to join from Havana.
"We are just waiting and seeing," the Fund's Western Hemisphere department chief Alejandro Werner said recently.
Also crucial is what Washington thinks, as the IMF's largest shareholder. So far the US has not weighed in on the subject.
Asked about it Thursday, State Department spokeswoman Jen Psaki demurred.
"We're not even there at this point in time. We're far from there," she said.
"The road will be long," Juan Triana, a professor at the University of Havana, told AFP.
He pointed to the need for the US Congress to remove its Cuba embargo law, and for Cuba to be removed from the government's official list of states which sponsor terrorism.
As long as those two issues remain unresolved, he said, the IMF and World Bank "can do nearly nothing."


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