Our Thoughts and Prayers

Saturday, January 8, 2011
Are with the extraordinary U.S. Rep. Gabrielle Giffords (D-Arizona), her family and all of the victims of today's brutal and senseless crime.

More Generals for the Castro Junta

Yesterday, the Castro regime -- once again -- reshuffled its Cabinet ministers.

Did it empower young, dynamic, civilian leaders?

No, it just empowered military generals.

First, it named General Medardo Diaz Toledo as new Minister of Information and Communications, whose job is to tap Cuban phones and censor the Internet.

General Diaz Toledo will succeed General Ramiro Valdes, who has been promoted to a new role of "Super-Minister," in addition to his role as Vice-President of Castro's Council of State.

Then, it outright fired Fidel Figueroa de la Paz, the Minister of Construction, and replaced him Medardo Diaz Toledo, whom no one's ever heard of.

However, it's obvious Diaz Toledo is simply a front, as the official announcement specifically states that General Valdes will oversee the Ministry of Construction in his new "Super-Minister" role (while also helping physically repress the Cuban people through the Ministry of the Interior, where he previously served as Minister from 1961-1968 and again from 1978-1986).

More reform you can't believe in.

Principled Union Leadership

Paul Howes, Secretary General of the Australian Workers Union, refused to meet with Cuba's new Ambassador to Australia.

"I am responding to your letter dated December 20, 2010, and your invitation to meet with me as the new representative of the Cuban government in Australia," began the union leader's missive.

"Unfortunately, this [meeting] will only be possible when your government stops repressing independent labor unions and releases its leaders from prison," stressed Howes.

The full letter (in Spanish) can be read here.

Two Birds With One Stone

From El Universal:

US Representative lobbies for Venezuela's inclusion in the list of state sponsors of terrorism

In the opinion of the chairman of the House Subcommittee on the Western Hemisphere, President Hugo Chávez's government is "providing so much support for Cuba" that "if we manage to stop this support from Venezuela, it would have a big effect," regarding the situation prevailing in Cuba. One of Mack's goals is that the House of Representatives will address the issue as soon as possible

Republican Congressman Connie Mack (R-FL) said on Thursday that one of his goals for the legislative session that began this week is to get Venezuela included on the list of state sponsors of terrorism.

The chairman of the House Subcommittee on the Western Hemisphere told The Associated Press that the fact of getting Venezuela included on the list would also be an important element in the US policy toward Cuba.

"Venezuela is providing so much support to Cuba that if we manage to stop this support from Venezuela, it would have a big effect and would change the situation prevailing in Cuba," he said.

Mack considers that the United States should report to the Organization of American States (OAS) Venezuela's violation of the Inter-American Democratic Charter because it is the "only existing process." However, he admitted that the multilateral organization is "a joke" because it lacks "a legitimate role."

Hiding Fidel's Fortune

Friday, January 7, 2011
A Wikileak-released cable from the U.S. Embassy in Chile, which profiles losing presidential candidate Marco Enriquez-Ominami, includes the following sidebar:

Max Marambio: The Wealthy and Controversial "Friend of Fidel" Behind Marco's Campaign

(C) In a life studded with celebrities and fascinating characters, Enriquez-Ominami's chief campaign financier and political advisor, leftist revolutionary-turned-millionaire Max Marambio, is the most interesting of all. As a young man, Marambio joined the MIR and led Salvador Allende's presidential bodyguard team. He lived in the Cuban embassy in Santiago for 10 months following the coup, before fleeing first to Switzerland and then to Cuba, where he studied political science at the University of Havana and trained with the Cuban special forces. He participated in secret Cuban military and commercial missions to Angola, Lebanon, Korea, Central America, and Europe, allegedly including a role in hiding Fidel Castro's personal fortune. In the late 1970s, he began a joint venture food company with the Cuban government which eventually became International Network Group, a holding company which generates US $80 million in profits in Cuba each year from food products and tourism.

Marambio has since fallen-out with the Castro brothers, who have essentially begun an international manhunt for him, pursuant to a -- get this -- fraud and corruption probe.

In other words, he was probably skimming from the Castro's cut.

Meanwhile, Marambio's business partner was found dead in a Havana apartment last April.

"Here is the devil - and - all to pay."

-- Miguel de Cervantes, The Ingenious Hidalgo Don Quixote de la Mancha (1605).

Foreign Banks Head for Cuban Exit

From Cuba Standard:

Banks reducing exposure to Cuba

Providing evidence of the credit crunch that is forcing Cuba into a tough adjustment program, foreign banks cut back their exposure on the island by 16.39 percent in the first half of last year, according to the latest statistics published by the Bank for International Settlements (BIS).

Cuba is not a member of the Interamerican Development Bank, International Monetary Fund or World Bank and has little access to multilateral loans. Responding to a cash crunch that began in 2008, the government has begun layoffs of 500,000 state workers expected to be completed by the end of March and is cutting back subsidies for state companies and consumers.

According to the BIS quarterly report, foreign banks had outstanding claims of $1.581 billion in Cuba as of the end of June 2010. Fifty-five percent of that amount is due in one year or less; 26.7 percent is due in two years or more.

Cuba's by far biggest lenders are European banks (the BIS reports break down the data by nationality, not individual banks), accounting for 76.28 percent of total outstanding claims. French banks are leading the pack, with $475 million worth of loans and titles (or 30 percent of the total), followed by Spanish banks ($373 million), and German banks ($146 million).

The Truly Revolutionary Country

Thursday, January 6, 2011
From Yale Professor Roberto Gonzalez Echevarria's opinion editorial in The New York Times, "Exiled by Ike, Saved by America":

Fifty years after the break in relations, while Cuba is still ruled by a male, white, militaristic, totalitarian gerontocracy, Barack Obama is the president of the United States and Hillary Clinton the secretary of state. Which of my two countries is the revolutionary one?

In that half-century, Fidel and Raúl Castro have managed to run into the ground what was a prosperous country, to drive a million and a half of its citizens into exile and to fill the jails with political and common prisoners. Recent changes in the Cuban economy, conciliatory gestures toward the church and the release and deportation of some political prisoners show that the Castros are aware of the instability of their system — which Fidel Castro not long ago blurted out does not even work in Cuba.

The one change that they have not dared to make, however, is to remove fear from Cuban life, because it is the glue that holds together their government. Fear of being accused by a neighbor who belongs to one of the vigilante Committees for the Defense of the Revolution; fear that the secret police will find something to incriminate you; fear that you will be jailed without charges for months or even years; fear that the government-sponsored mobs called Rapid Response Brigades will stage a violent rejection rally in front of your house (as has happened to the mother of Orlando Zapata Tamayo, the dissident who died during his prison hunger strike last February); fear that you will be denied your request to travel abroad; fear that you will lose your job; fear, in short, that the long arm of power will reach down to you and smite you.

Castro's U.S. Business "Guru" Defects

Pedro Alvarez, who until recently was head of the Castro regime's foreign trade monopoly, Alimport, has defected to the United States.

Alimport is the Castro regime's official counter-party for every single agricultural sales transaction from the U.S. to Cuba.

As president of Alimport, Alvarez was considered Castro's business "guru" behind agricultural purchases from the U.S., and has wined and dined dozens of U.S. Governors, Members of Congress and hundreds of American business executives.

As U.S. Rep. Leonard Boswell (D-Iowa) gleefully stated during a March 2010 hearing of the House Agriculture Committee:

"I, too, have been down there, Mr. Presidents (of the American Farm Bureau and National Farmers Union), both of you. I appreciate that but assume that you know who Mr. Alvarez is. I spent a lot of time with him. I spent quite a bit of time with Mr. Castro. Sometimes we would be entertained. I can tell you about that a little bit."

In November, Alvarez was detained and questioned in a "corruption" probe by the Castro regime.

In other words, he either stopped producing for the Castro brothers, or dipped his hand into their (absolute and whimsical) cut.

Now, it appears Alvarez is in the U.S., where he can surely be a source of valuable information regarding the Castro regime's shady business practices -- not to mention about the "entertainment" Congressman Boswell is talking about.

Here's Alvarez sharing a "moment" with Idaho Governor Butch Otter and former U.S. Senator Larry Craig (R-Idaho):

A Powerful Lesson in Democracy

May the world's autocrats take note.

From yesterday's opening session of the 112th Congress:

"Recognizing our roles under the Constitution, united in our love of country, we now engage in a strong symbol of American democracy: the peaceful and respectful exchange of power. I will now pass on this gavel - and the sacred trust that goes with it - to the new Speaker."

-- Outgoing Speaker of the U.S. House of Representatives, Rep. Nancy Pelosi (D-CA)

"The American people have humbled us. They have refreshed our memories as to just how temporary the privilege to serve is. They have reminded us that everything here is on loan from them. That includes this gavel, which I accept cheerfully and gratefully, knowing I am but its caretaker. After all, this is the people's House. This is their Congress. It's about them, not us. What they want is a government that is honest, accountable and responsive to their needs. A government that respects individual liberty, honors our heritage, and bows before the public it serves."

-- Incoming Speaker of the U.S. House of Representatives, Rep. John Boehner (R-OH)

Did State Hand Chavez a Victory?

Wednesday, January 5, 2011
From The Washington Post's Editorial Board:

The State Department responds to repression by Hugo Chavez

VENEZUELAN PRESIDENT Hugo Chavez celebrated the holidays with a flurry of autocracy. With opposition members due to take 40 percent of the seats in a new Congress this week, the populist strongman induced the outgoing legislature - a rubber stamp for his initiatives - to grant him the power to rule by decree for the next 18 months. The lame-duck session also approved a package of laws that provide for censorship of the Internet, ban foreign contributions to human rights groups, and make it easier for the government to nationalize banks and revoke the licenses of radio and shut TV stations.

Venezuela's opposition described Mr. Chavez's offensive as a final "coup" against the country's tattered democratic system. The State Department, too, criticized the measures; its spokesman said Mr. Chavez "seems to be finding new and creative ways to justify autocratic powers."

So how will the Obama administration respond? It will, it seems, seek to send a new U.S. ambassador to Caracas - and thereby hand the caudillo a considerable propaganda victory.

Some background is in order. Last year Mr. Obama nominated a veteran diplomat, Larry Leon Palmer, for the Caracas post. But Mr. Chavez rejected the would-be ambassador because, in written responses to questions from the Senate Foreign Relations Committee, Mr. Palmer frankly referred to "clear ties between members of the Venezuelan government and Colombian guerrillas" and "morale and equipment problems" in the Venezuelan army.

The State Department vowed to stand behind Mr. Palmer. When Mr. Chavez reiterated that he would not accept the envoy, the administration promised "consequences."

Those turned out to be mild: In the quiet of last week, the department confirmed that it had canceled the visa of Venezuela's ambassador to Washington while he was out of the country. That pleased Mr. Chavez, who according to one of the newspapers he controls was convinced that the department's decision not to publicly expel his ambassador was "a good signal."

Last Sunday more signals when Mr. Chavez and Secretary of State Hillary Rodham Clinton met at the inauguration of Brazil's new president. After shaking hands, Mr. Chavez told Ms. Clinton, according to the government paper, that he was ready to set aside the dispute over ambassadors, provided the Obama administration "corrects its mistake."
On Monday, State Department spokesman P.J. Crowley suggested the administration was ready to give in. Saying that Mr. Palmer's nomination had "formally expired with the end of the last Congress," he added, "We will have to renominate an ambassador candidate."

Venezuelans who were wondering if the United States would do anything to support the opposition parties, human rights activists, independent media and private businesses under Mr. Chavez's assault then heard the following message from Mr. Crowley: "We are interested in having good relations with Venezuela. And obviously that involves, among other things, having ambassadors at post who can help to, you know, manage that engagement."

That raises an interesting question: Will the next nominee speak truthfully about Mr. Chavez's destruction of democracy, and about his ties to terrorists and drug traffickers? Let's hope Congress provides him or her with that opportunity.

Alternative Networks Growing in Cuba

Cuban Blogger Tells VOA Alternative Information Networks are Growing in Cuba

Washington, D.C. – Well-known Cuban blogger Yoani Sanchez tells Voice of America she hopes the growth of information networks in Cuba will lead to an end of the state's information monopoly in 2011.

In an interview with VOA's Spanish Service, Sanchez said "the Cuban blogosphere had a gradual growth and enrichment in 2010," despite the continuing difficulties with Internet access and government censorship.

Sanchez, who also managed to transmit a video message to the VOA website, said, "The year 2010 has been a very important one for the alternative information nets in Cuba, for those of us reporting from here to the world, and to our people about what is happening."

Sanchez has achieved international fame and won many awards for her critical portrayal of life in Cuba under its current government. She is best known for her blog, "Generación Y" (Generation Y), which she is able to publish by emailing entries to friends outside the country who then post them online.

Sanchez said "the alternative blogosphere has grown and has been very rich on information. Now, we have more pluralism and diversity."

She said she hopes 2011 will see the "definitive ending of the state monopoly in information" in Cuba. "We hope to conquer more spaces and especially more diversity in this island (Cuba) where one day we will finally have space for all of us," she told VOA in her video message.

No News Reporting on New Political Prisoners

On the eve of International Human Rights Day (December 10th), Nestor Rodriguez Lobaina, head of Cuba's Youth for Democracy Movement, was arrested by the Castro regime for "disrespect."

That's right -- in Cuba, pro-democracy activists can be imprisoned for "disrespecting" the Castro regime.

On that day, more than 90 activists were arrested. While many for short-terms, Rodriguez Lobaina, one of the most well-know leaders of the pro-democracy movement in eastern Cuba, remains imprisoned.

Just yesterday, his wife warned that Rodriguez Lobaina has been placed by military police in a cell filled with violent prisoners at the nefarious Combinado de Guantanamo Prison, where he was subject to brutal threats and beatings. This is a common method of intimidation used by the Castro regime against political prisoners.

Since December 9th, virtually every news story out of Havana mentions the supposed "release" of 52 Cuban political prisoners this last year -- in reality, 41 forcibly exiled to Spain.

To be fair, there have been some reports about the other 11 (of these 52 political prisoners) that remain in prison for not accepting exile as a condition for their release.

Yet, there has not been a single news story about new political prisoners, such as Nestor Rodriguez Robaina, arrested during this same period.

It may not fit into the storyline of a supposedly "changing" Castro regime, but the well-being of these political prisoners should trump the storyline.

Will the U.S. Move to Bailout This Regime?

Tuesday, January 4, 2011
We hope not.

The following is an insightful risk analysis from Reuters Havana bureau:

Cash Crunch

Cuba, drained of cash by hurricanes in 2008 and by the global financial crisis, defaulted on payments and froze foreign business bank accounts two years ago.

The situation has eased but is not yet resolved.

Castro has cut spending, slashed imports by a third and sought more state income to avert future cash shortages.

Cuba is hoping to collect taxes from the newly self-employed and boost revenues from old standbys like nickel exports and tourism, two of its top hard currency earners.

The government has said it will allow construction of golf course developments, with the goal of attracting wealthier tourists.

Expectations the nearby United States would ease its ban on most American travel to Cuba, part of its 48-year-old trade embargo against the island, have faded after Republican Party gains in the U.S. Congress in November elections.

Will Castro Feel Chavez's Pinch?

From The Diplomatic Courier:

Hugo Chavez is Feeling the Squeeze

Over the past few weeks, the Venezuelan ruling party and Hugo Chavez have been consolidating power and embellishing the already far reaching role of the Executive Office. Opposition parties were relatively successful in Venezuela's most recent National Assembly elections; therefore, Chavez will face increased opposition when the new Assembly convenes. This is a good thing for democracy, but not for Chavez.

Before the new Assembly can take their seats, the ruling party has been working to pass major legislation that would expand presidential powers. According to the new legislation, Chavez would have the ability to rule by executive decree for up to one year; his executive decree would extend to any issue that is a matter of national security—land use, housing, financial sectors, etc.—basically anything.

The ruling party supports such drastic measures not only because of the presumed dilution of the party by opposition parties taking over seats, but because numerous analysts have predicted 2011 to be a rough year for Venezuela. Currently, Venezuela has four major supporters—China, Russia, Iran, and Cuba. The main objectives of these four allies are diverse, but the interests do overlap at times. Cuba provides intelligence and personal security services to the government, but as the global economy continues to falter, Cuba is looking for more than the traditional payday that providing intelligence can offer.

Cuba is seeking loans. Normally Venezuela can provide such loans, but in recent months and in 2011, these loans will be increasingly difficult to provide.
One of the primary reasons for this difficulty is the United States' growing interest in Venezuelan-Iranian relations. Iran has integrated itself into the Venezuelan financial sector in order to circumvent sanctions. As the nuclear program in Iran continues to develop and the controversy deepens, the United States has kept a closer eye on economic relations between Iran and Venezuela and would happily disrupt such financial links.

Russia and China are also two of the main providers of loans and investments to Venezuela. Both countries have a similar impetus for investment—oil resources. Russia has begun to look elsewhere for economic relationships and energy security. China continues to rely on Venezuela to provide cheap energy for the country's development and expansion, but is diligently working to build new partnerships and energy resources that are closer and less controversial than a Hugo Chavez led Venezuela.

As China and Russia begin to look elsewhere for energy investments and as the United States increases oversight on Iranian-Venezuelan relations, Chavez will find it harder to keep Cuba happy. Without foreign investment, Venezuela does not have the capital to satisfy Cuba's growing need for loans and Cuba may find a growing need to relinquish intelligence and security services in Venezuela leaving Chavez even more vulnerable to the growing opposition movements. As the ruling party clamps down on opposition and further empowers Presidictator Chavez, personal security becomes an increasing concern, especially since rumblings of coup attempts have already been heard, pacifying Cuba will be of escalating importance in the upcoming year—something that may be increasingly difficult for Chavez.

Tehran-Caracas-Havana

Excerpts from a critical, yet thought provoking, editorial by Chet Nagle in The Daily Caller:

Hugo Chavez, the yanqui-hating dictator of Venezuela, will not accept Washington's proposed emissary and has dared the United States to break diplomatic relations. It seems Ambassador-select Larry Palmer's sin is that he did not applaud Chavez when he used his rubber-stamp parliament to perpetuate his dictatorial regime. The State Department's limp-wristed response was to cancel the visa of the Venezuelan ambassador. That, and silence from the White House, told the megalomaniac in Caracas exactly what the United States will do when Iran finishes building a nuclear missile base in Venezuela — absolutely nothing [...]

Planning for Iran's penetration of the Western Hemisphere is well underway. On November 25th, the respected German journal Die Welt published a report that Iran and Venezuela agreed on October 19th to build a joint military base. That complex will include medium-range ballistic missiles (MRBMs) like the Shahab-3 (range 1,200 miles) and Scud-B and Scud-C missiles (range 185-340 miles). Those weapons will enable Chavez to make missile strikes on much of South America, the Caribbean Basin and, with the Shahab-3, even American cities. Longer-range missiles being developed by Iran will threaten all of the United States when they are installed in Venezuela.

Iran has already built what it calls a "tractor factory" in Venezuela, the most heavily guarded and secret tractor factory in the world. The fenced compound is so secret that even Venezuelans are not allowed to enter it; only Iranians are allowed inside. (There are reports that Ahmadinejad visited the facility some months ago.) The factory is in a remote area, not far from a uranium deposit former Venezuelan officials estimate holds 50,000 tons of ore. Is it a stretch to connect the secret "tractor factory" and the uranium? It may be just smoke, but so much more is happening in Venezuela that one can only think there is fire, too.

A few examples:

- In November 2008, Russia and Venezuela agreed on "cooperation in thermonuclear fusion" involving the same Russian company that built the Bushehr reactor in Iran: Atomstroyexport. Russia has kindly extended a $4 billion line of credit to Chavez.

- In October 2010, Russia agreed to build two 1,200-megawatt nuclear reactors and a research reactor.

- Russia needs a new customer for the SA-300 missiles Iran tried to buy to protect its nuclear program from air attack. Now Venezuela tells Russia that it likes the SA-300. Might those missiles slip into Iran through a Venezuelan back door?

- Iran uses Venezuela and other Latin American countries as havens for its terrorists. For months Hezbollah, Iran's terror army, has metastasized across our undefended border with Mexico to set up sleeper cells in our cities. And now we learn a senior Hezbollah thug was appointed as Venezuela's Deputy Chief of Mission to Syria?

So now it's on our borders once again: two dictators who hate America, uranium, secret factories, and rocket bases. What is to be done?

In 1962 President John F. Kennedy blew the dust off the Monroe Doctrine. He saw Soviet and Cuban dictators building missile bases that threatened America, and he sent me and other airmen and sailors to Cuba to end that menace. We did it because President Kennedy's resolve to protect the United States was firm and clear. The foreign menace was driven away.

My service in Cuba in 1962 gives me the standing to ask Mr. Obama a simple question: Why do you allow Iranian missiles to threaten our homeland?

Chet Nagle is a graduate of the U.S. Naval Academy and the author of Iran Covenant.

Out With the Old

Or so we hope -- in this particular case.

H/T Babalu

A Dirty Regime (and Reporting)

Monday, January 3, 2011
We've always known the Castro regime was dirty.

Last Wednesday, it announced that soap, toothpaste and detergent will be eliminated from the monthly ration books.

But just as dirty is the factually deficient spin by the AP
in reporting this news item, when it asserts:

The ration program began in 1962 as a temporary way to guarantee food staples for all Cubans in the face of the United States' then-new embargo.

And not just the AP, here's Reuters:

The ration was begun three years after Fidel Castro took power in a 1959 revolution to assure Cubans food following the imposition of a trade embargo by the United States.

Talk about historical revisionism, or maybe they're just getting their information from Castro's new version of Wikipedia, Ecured.

Cuba's rationing system began March 12, 1962. It was a result of the Castro regime's illegal confiscation of all of the island's means of production. (It was the confiscation, without compensation, of property owned by U.S. citizens and corporations that led to the trade embargo).

As a matter of fact, food and medicine were fully exempted from the U.S. trade embargo until May 14, 1963 -- more than one-year after Castro's food rationing began -- when specific approval for exports by the Department of Commerce became required.

Thus, Cuba's rationing system was a result of the Castro brothers' zeal for absolute power and central planning of the economy -- not of the U.S. trade embargo.

If the state controls all means of production, then the state must (or should) provide all basic staples, for there are no alternatives.

That's Communism 101 (and its inefficiency). Note that Fidel formally declared Cuba a Marxist-Leninist state on December 2, 1961.

It's also why all communist states (e.g. the former Soviet Union, North Korea, etc.) ration basic staples, regardless of whether sanctioned or not.

Such shoddy reporting might earn AP and Reuters another year's stay in Havana, but it lacks journalistic integrity.

Castro's 2011 Dilemma

An excerpt from Spain's center-left newspaper, El Pais:

Cuba: Change or Die, The Dilemma of 2011

In the next few years, they [Castro regime] want 1,800,000 people -- approximately 40% of Cubans that work for the State -- to earn a living on their own. But no one knows exactly how to take a leap of that magnitude without financing, while the rules of the game are still unclear and with warnings that the accumulation of capital will not be permitted. The difficulties encountered in eliminating the ration card are just an example of the dilemma the government finds itself in.

Telecom Italia Tired of Tapping Cuban Phones

Sunday, January 2, 2011
Advocates of normalizing relations with the Castro regime constantly argue that the U.S. is "losing" business opportunities in Cuba -- due to sanctions -- and that foreign companies are taking advantage.

We recently discussed this farce pursuant to a Wikileak-released cable in which Brazil's government admits that investing in Cuban ports only makes sense if the U.S. and Cuba developed a trading relationship.

In other words, that the target market for foreign investment in Cuba was the U.S., not the bankrupt Castro regime.

It seems Telecom Italia has learned the same lesson.

In 1995, Telecom Italia purchased a 27% stake in Cuba's provider, ETECSA. The rest is owned by the Castro regime's Ministry of Information and Communication, led by ruthless General (and former Minister of the Interior) Ramiro Valdes.

Thus, ETECSA is responsible, together with Castro's secret police, for tapping phone lines, monitoring conversations, Internet censorship and persecuting Cubans with home-made satellite dishes.

Think of the Oscar-winning movie about life in pre-1989 East Germany, The Lives of Others.

After 15 years of violating the Cuban people's rights, Telecom Italia has apparently had enough and is looking to sell back its stake to the Castro regime.

Yet now, it's doubtful whether it can even obtain a premium for its repugnant work, as the Castro regime is broke and facing a severe liquidity crisis.

Meanwhile, there are still people in the U.S. distastefully lobbying to invest in ETECSA, in order to collude in censoring the Cuban people.

According to Business Monitor International (BMI):

TI To Sell Etecsa Stake, But BMI Has Questions

Telecom Italia (TI) is understood to be on the point of returning its 27% stake in incumbent Empresa de Telecomunicaciones de Cuba SA (Etecsa) to the Cuban state. TI's decision comes as no surprise after talk of it selling to Spanish incumbent Telefónica circulated in 2009 and TI's CEO Franco Bernabè announced in October 2010 that the company was in advanced talks on the matter. The government wishing to take full control of Etecsa seems easy to understand, but BMI is skeptical the Cuban government is in a position to pay the 'premium' reportedly sought by TI.

At the time of Telefónica's reported interest in 2009, TI was said to have asked for US$780mn for the 27% stake. In its H110 report, the stake was reported to be worth EUR367mn (US$490mn). However, Cuba's mobile market, at less than 10% penetration, has exceptionally high potential for growth, a factor likely to attract considerable interest from potential investors.

Cuba's Attitude

Cuba's government has been enacting austerity measures in an attempt to bring the country out of its deep economic crisis. Rules regarding small businesses and self-employment have been relaxed, while it was announced in October 2010 that a million state employees are to be laid off by 2012. As the government seeks to cut spending and state subsidies, it is difficult to see how it might afford to buy back TI's share in Etecsa, particularly with the premium the Italian company is believed to be seeking.