Universities and foreign companies in Cuba are shrinking

Posted on Wednesday, 05.16.12

Universities and foreign companies in Cuba are shrinking

Cuban leader Raúl Castro's push to carry out needed economic reforms has
led to reduced enrollment at universities and departure of some foreign
companies.
By Juan O. Tamayo
jtamayo@ElNuevoHerald.com

Cuban universities have slashed enrollment by nearly 26 percent,
apparently because of deep cuts in government spending, while several
foreign investors are leaving the island, according to official and news
media reports.

The two reports reflected the downsides of Cuban ruler Raúl Castro's
effort to fix the island's doddering economy by cutting state spending
on education, health and food rations, and his campaign to carry out
tight reviews of foreign investments amid a slew of corruption scandals.

Cuba's National Statistical Office (ONE), reported this week that
overall enrollment in universities — all state-controlled — dropped from
473,309 in the 2010-2011 school year to 351,116 in the 2011-2012 period.
That's a drop of 122,193 students, or 25.8 percent.

The largest group of students, 118,914, was enrolled in medical
sciences, reflecting the government's high interest in educating
doctors, dentists and nurses — Cubans to staff the domestic health
system or work abroad, and foreigners on scholarships to study there.

The biggest drop in enrollment was in social sciences, though it
remained the second largest group with 77,200, according to the ONE report.

Cuba's Ministry of Higher Education sets admission quotas depending on
the skills needed, but government officials have complained recently
that universities are turning out too few scientists who can help
modernize the economy and open new areas of production lines.

"Like other developing states, Cuba is trying now to push away from
ideologically useful education — the social sciences and humanities — to
job and wealth producing fields," said Larry Cata-Backer, a Professor of
International Affairs at Pennsylvania State University who has studied
the Cuban education system.

Cuba's communist government has long boasted of its achievements in
health and education — the record of 711,000 university students in
2008-2009 was a stunning figure in a country of 11.2 million — although
both areas have suffered significantly since the Soviet Union halted its
massive subsidies in the early 1990s.

The Health Ministry announced in January that it had cut its 2011 budget
by 7.7 percent, and officials at the Higher Education ministry have
noted that each university graduate costs the state 25,000 to 40,000
pesos — roughly $890 to $1,450.

Castro has trimmed the food ration card and other government subsidies,
allowed more private micro-businesses like barbershops and announced
plans to slash 500,000 workers from state payrolls in hopes of
"updating" Cuba's Soviet-styled economy.

His reform package, approved by a full congress of the ruling Communist
Party last spring, also called for a more positive attitude toward
foreign investments — only grudgingly accepted by older brother Fidel
Castro before he passed power to Raúl in 2006. Cuban generally insists
on owning at least 51 percent of any joint venture.

The so-called "guidelines" noted that the government was negotiating
with foreign investors for several projects, including at least four
multi-million dollar golf and condo resorts, some with access to beaches
or docks for recreational boats.

Cuba's desperate need for foreign investments has been especially clear
since cancer struck Venezuelan President Hugo Chávez, whose oil-rich
government provides Cuba with subsidies estimated at anywhere from $4
billion to $6 billion a year.

Yet Castro's plans to attract more foreign investments are off to a slow
start because his government has focused more on inspecting and
regulating than in stimulating the investments, according to an
exclusive Reuters news agency report Wednesday.

The Reuters report cited Cuban and foreign business sources as saying
that the island now has about 240 joint ventures and projects between
the government and foreign investors, a drop from the 258 reported in
2009 and the 700 estimated a decade ago.

In fact, more joint ventures have closed than opened in Cuba since the
"guidelines" were approved last spring, the dispatch by the Reuters
bureau in Havana added.

Among those reported to have left are the London-based consumer product
giant Unilever PLC and Grupo BM, a Panama registered company controlled
by Israeli investors that operates citrus groves and juice plants in Cuba.

Foreign investors in Cuba have been increasingly uncomfortable since
early 2009, when the global financial crisis sparked a shortage of hard
currency on the island and led Castro to freeze the bank accounts of
joint ventures operating there. Castro has been slowly paying out the
money, estimated at more than $800 million, since then.

The 2011 "guidelines," while making positive comments about foreign
investors, also noted the need to establish "rigorous" regulations on
the joint ventures, apparently because of the mounting corruption
scandals involving foreign companies in Cuba.

In April, government investigators reportedly arrested British architect
Stephen Purvis, who had been spearheading an ambitious project by Coral
Capital Group Ltd., to build a 1,200-home golf resort just east of Havana.

Amado Fakhre, Coral Capital's managing partner and also a British
citizen, already had been arrested in October. The firm, registered in
the British Virgin Islands, was founded in 1999 to invest in Cuba projects.

Also caught in corruption probes have been top officers of the
Tokmakjian Group and Tri-Star Caribbean, two Canadian trading companies
that have sold foreign items, especially heavy constructions and
transportation vehicles, to government ministries.

Other scandals have hit Cuba's aviation, telecommunications, nickel,
juice, cigar and other industries and led to the arrests or dismissals
of scores of government officials - including Julio Cesar Díaz
Garrandés, boyfriend of Castro's youngest daughter.

Most of the top Cuban government officials who handle deals with foreign
companies, often worth several millions of dollars, earn much less than
$50 a month and can be tempted to pocket bribes in exchange for throwing
business to the foreign companies.

A dispatch from the U.S. diplomatic mission in Havana to Washington in
2006, made public by WikiLeaks last year, noted that corruption in Cuba
was so widespread that the island has become "a nation on the take."

http://www.miamiherald.com/2012/05/16/v-fullstory/2802903/universities-and-foreign-companies.html