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IT in the Land of Salsa, Rum & Fidel

by Timothy Ashby

Cuba is rapidly diversifying its economy and giving priority to developing a world-class information-technology sector. Considering the island's competitive advantages proximity to the United States, a highly literate population, and the lowest wages for skilled labor in the Western Hemisphere Cuba could become the digital hub between North and South America.

Capitalism and Communism

Whatever one may think about Fidel Castro, none of the profound economic changes taking place in Cuba today would be possible without his direct guidance. The 74-year-old leader and his still officially communist government have adopted a program called “entrepreneurial upgrading" constructed on the three pillars of Cuba's economic transformation: technology, markets, and new capital.

Within the past few years, Castro has quietly retired the old revolutionaries who   followed Moscow’s defunct economic model, replacing them with a new generation of cabinet ministers and senior government officials who seem to have swapped Karl Marx for Adam Smith. The average age of the members of the Cuban National Assembly is 40; the foreign minister is 35 and the minister of foreign investment and economic cooperation is a 49-year-old woman. They read the Wall Street Journal, The Economist, and George Gilder’s Telecosm, and roll their eyes when some Birkenstock-shod sociology professor from California spouts Marxist dialectic at them.

"Entrepreneurial upgrading is the most in-depth, extensive, and transcendent change that has taken place in the Cuban economy,” affirms Vice President Carlos Lage, architect of the economic reforms. The program requires state-owned enterprises (SOEs) to be self-supporting, create their own production plans, and administer their financial, material and human resources. This represents a truly revolutionary departure from the old socialist command economy, where decisions always came "from above".  In January 2000, the Cuban government established a Ministry of Information Technology and Communications (MINIT) with a mandate to make Cuba an "information society" and quickly develop trade and e-business using information technology. MINIT has various subsidiary enterprises functioning like corporate subsidiaries, each run by presidents and focusing on separate IT industries such as telecommunications, software, hardware, wireless, training, and e-commerce.

Land of Contradictions

Oxen still plow fields surrounding picturesque thatched roof villages, but the children products of Cuba's impressive educational system who live in such medieval settings are likely to greet you in English, French, or German, as well as in Spanish. And they may excitedly tell you about plans for JCC (Cuban Communist Youth) summer camp on the Isle of Youth not to be indoctrinated in Marxism-Leninism like previous generations of young Cubans, but to attend the   government's massive Computer Youth Club, inaugurated by Fidel Castro this summer.

Computer Youth Clubs exist in all 14 Cuban provinces. One in central Havana, in a large building near the Cuban capitol that once housed a "Children's Palace for communist youth, has been renamed Joven Club Palacio Central de Computacion” ("Youth Club Central Computer Palace.")

Work stations with modern Pentium computers are situated on the ground floor, occupied by goateed, long-haired young web designers who look like dot-commies from a South-of-Market start-up in San Francisco. The walls are emblazoned with slogans and posters, but not quite the ones expected in a club owned and operated by the Cuban Communist Party. The predominant slogan is "Creemos En El Futuro”("We Believe in the Future") and posters advertising courses in software programming, multimedia, hardware repair, and e-Commerce. The classes are in progress upstairs, packed by serious young people avidly learning HTML and the fundamentals of Microsoft Office.

The Information Society

Although only 2% of Cubans now have home telephones, general telecommunications access is quickly being improved and Wireless Application Protocol (WAP) is being implemented to "leapfrog" the archaic analog telephone.

"Telecommunications are a cause, rather than a consequence, of development," says Maimir Mesa Ramos, technical vice president of Cuba's national telecommunications company ETECSA. Havana will reach 65% digitalization and the rest of the country will be at 40% by the end of 2001. The plan is to bring the   national level to 78% by 2004.   The government plans for all post offices to have internet terminals so average citizens can have "full web access" on the basis of one post office to every 200 persons. Cellular telephone service, digitized with he GMS (global mobile system) employed in Europe and other parts of the world was launched in January 2000 by Empresa de Telecommunicaciones Celulares del Caribe (C-Com).

Government offices, universities, and businesses have wireless internet access. Satellite earth stations are being built across the island. Fourteen VSAT stations operate in the main tourist areas. Fiber-optic cable is being laid throughout Havana, connecting to a "fiber ring" around the capital city.  Although a new fiber-optic cable has been laid between Cuba and Florida, It has not been connected to a US terminal because of the embargo. The ARCOS 1 trans-caribbean submarine fiber optic cables a "fat pipe" developed by a consortium that includes major US Telecom companies is being laid; ARCOS 2 (an offshoot to connect Cuba) will be completed within three years, linking Cuba to the telecommunications infrastructure being built in the United States and Latin America.

Preparing the Gorilla's Bed

Why should a one-party socialist state that still curtails freedom of the press and private enterprise create a digital society, which is premised on the open exchange of information and trade? The Cuban government knows that normalized relations with the United States are imminent, and it is actively preparing for integration into the American marketplace, almost certainly as a future member of NAFTA or the FTAA. By developing a pragmatic economic development strategy now, Cuba believes that it can maintain control over its political and economic destiny even after the 800-pound American business gorilla checks in to the old Havana Hilton.

Cuba also needs to provide good jobs for its young people. More than three-quarters of all Cubans are under age 40 and this group has a 98% literacy rate. The country has the highest percentage of university graduates per capita in Latin America (higher, in fact, than most European countries), and an increasing number are being trained in technical disciplines such as information technology.

The state envisions high technology as an economic boon that will create employment, and seems willing to give young entrepreneurs a chance to nurture dreams of Silicon Valley-style fortunes. 

Strategic Location

In the 16th century, King Phillip II of Spain called Cuba "the key to the New World".  Any map of the Western Hemisphere will demonstrate why conquistadors, pirates, and a host of great powers (most recently the United States and Russia) established strategic bases in Cuba. In the past, Cuba was the key to dominance of vital sea lanes and had a starring role in the Cold War because of its proximity to the US.  Over the next decade, the country's geographic location will make it a prime location for information technology industries.

Cuba is ideally positioned to be a global hub for conventional trade as well as for  e-commerce. Both Mexico and the United States are less than 100 miles from the island, and Havana is closer to Charleston, Atlanta, New Orleans, and Houston than any of these major US ports are to Washington, DC, or New York.  Cuba has an established electronics manufacturing industry. Semiconductors, radios, television and Cuban designed computers are assembled with foreign parts.  The industry could be expanded rapidly to provide a low-cost base for export of electronics products.

A plan is being implemented for the country to become an alternative for air cargo traffic between Europe and Latin America, an activity currently held as an almost absolute monopoly by Miami. The air cargo handling capacity at Havana's Jose Marti international airport is being doubled to 3,000 tons per month, at the same time that the Wajay Free Zone is being developed in areas adjacent to the airport.  The Free Zone, located less than a mile from the air-terminal warehouses and 12 miles from downtown Havana, covers a total area of nine acres and has a basic infrastructure serving 72,000 square feet of warehouses and offices linked to the development of commercial, industrial and service activities.

Havana and Santiago de Cuba are destined to become premier sites for internet data centers, providing web-hosting services for thousands of businesses throughout the Western Hemisphere. Global data center companies are spending billions of dollars building infrastructure in Latin America to support the growth of e-business. OptiGlobe, an internet infrastructure company based in Bethesda, Maryland, plans to construct 15 data centers in Latin America by 2002 at a cost of $1.5 billion.

What Cuba Needs

Cuba's government has extended an invitation to foreign businesses interested in
helping to develop the IT industry. Although Cuba would prefer to obtain US expertise and products directly, other nations are currently providing American technology.   "Trading with the US is an American problem, not a Cuban one," says Daniel Fernández López, vice president of Grupo de la Electronica, a division of MINIT responsible for telecommunications.  "We welcome American business but we can't wait.”

Americans who are frustrated by the embargo can begin rebuilding business bridges now by providing charitable IT training, used computer equipment and exchanges between US and Cuban IT executives, a legal practice under the current embargo.  By doing so, we can generate cultural goodwill while laying foundations for future business. Wt Ashby, former director of the International Trade Administration's Office of Mexico and the Caribbean and the Dept. of Commerce's deputy assistant secretary of commerce for the Western Hemisphere, is president and CEO of the Sonrisa Foundation, a California-based  nonprofit dedicated to technology transfer for Latin America.  

INTER-FORUM is a member of the International Consortium For Alternative Academic Publication (ICAAP)

July 29, 2001

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