CNBC’s Michelle Caruso-Cabrera plugs away on another Cuba story (be sure to see her special on Cuba taped from the island a few years ago). This time she’s focusing on a soon to be released foreign investor law that the regime is set to announce this week:
According to the proposed law, a copy of which has been seen by NBC News, fully foreign-owned firms will be permitted, and taxes will be either lowered or eliminated for some time. Additionally the taxes will be streamlined to cover net income rather than labor.
Read the entire story here.
No matter what the Cubans say on paper or in the puppet Congress, it is reform in name only. The regime is tinkering at the edges, at best. It creates yet one more layer of complexity in an already moribund Potemkin political and economic system. It also creates something I thought I’d never see, investor apartheid. Foreigners will have more rights than Cubans themselves. Assuming they could get a handle on all this, and they never will, there are two key items that the Cuban system fails to address, and it is why this reform will fail.
From Michelle’s story:
Washington attorney Jason Poblete says Cuba still lacks two of the bedrocks of investing: rule of law, and protection of property rights. “You need a stable legal system that protects investor rights and has a path to resolve disputes,” said Poblete, who represents American clients with claims against Cuba stemming from the mass nationalization of private property in the early 1960s, after Fidel Castro took control of the island in a 1959 coup d’etat.
Cuban regime officials, and their supporters in this town, need to realize and accept that access to the U.S. market is a privilege, not a right. There is a very comprehensive U.S. statutory roadmap in place detailing what they need to do to secure that access. Trying to legislate around it makes absolutely no sense. No Communist or Socialist policy does.
Potential foreign investors have an easy choice to make. Do they wait until there is regime change or do they try to prop up a failing system and, in the process, risk upsetting future leaders who may not look to kindly on foreigners who facilitated the Communist party’s economic stranglehold on the island? And, if they happen to invest in property subject to a U.S. certified claim, they also risk, at least in the near term, political headaches in this town.