go with the discussion on friday of topics relevant today. one. >> good afternoon.

thank you for being here with a special thanks to the audience in the c-span world for joining us this even if is recorded by c-span thanks to the team to be here and joining us. i am the director of the caribbean center we are located at florida international university here in miami and we have another campus where the center is located. the center that i direct is one of the institute's or programs of centers that the school of public international affairs we are

absolutely delighted to be hosting or coasting these events a thanks to the chaplains' school thanks for supporting this it is degraded to have on your campus. also to the cuban research institute a little bit of why we are here last year the brookings institution specific and foreign policy team from the latin american initiative reach out to me to see if we were interested in cosponsoring a steady --

a steady on one of the of more dynamic sectors of the cuban economy in the context of 2014 of the relationship since then. so ted reach out to see if they were interested helping with the study and of course, we agreed immediate easily are delighted to be a part of the steady launched in washington dc december december 2nd last year so we're doing a miami launch with the two authors joining us so i will tell you how we will proceed. i will introduce the two

co-authors to present their steady there are copies of the steady by the way in the back of the lobby featured to take one day will do the presentation then i will ask dave put out -- a panel of experts to give their reactions we will add a conversation appear onstage we will go from now when tell 6:00 let me introduce uh to co-authors. first richard feinberg a

non-residents senior fellow of the latin american initiative with the school of global policy and strategy at the university of california in san diego. previously dr. feinberg served as a specialist to president clinton for national security affairs of the national security council office of inter-american affairs from the clinton administration author of numerous books and works but one that i want to mention is his most recent book open for business building of a new cuban economy it is available with amazon as well as of website

is getting wonderful reviews that i hope you get a chance to read it. also has the new magazine and has the peace based on the exact steady cuban trade that is the name. the other richard works with the international growth center for rwanda and uganda and is part of the joint venture from oxford university from the school of economics that provides independent research based analysis from selected

countries and in africa. senior fellow, non resident and a distinguished researcher from canada and consults with a number of international organizations in the international trade center we are fortunate to have these two scholars with us gasping and and number of months with the challenges that cuba's faces as boat as -- as well as the two authors to come up and talk about their work. [applause] >> they give for the

wonderful introduction it is the pleasure for us to be here at the chapin school unit europe the right place when the school of management that you deal with is located over a wine bar. [laughter] frittered deny a our humble economist be came to the winds of growth and if we had only known you had figured out we would have started much earlier in the quest to understand uh tourism industry so bear with us as we pass the baton with this study so i will give you the headlines first if i can get this to work is

the industry was booming so asking the question who benefits? that is politically important because of the prospect of possible reversals and there has been the assertion that jurors are really doesn't benefit the economy that maybe the economy. how can be industry be structured to drive growth? back chile had growth implications of allowing them to rise much more rapidly? the short answer to both is that the industry has a wide swath the cuban society and has the potential to dry sustainable development into

the future it is well short with the state sector ownership and regulation to create obstacles to help the industry grow so we think the way this has been proven over the last four or five years has unleashed a torrent of private sector activities so that now accounts for more than 30 percent of the industry's earnings the government does have been vicious plans it would like to accommodate 10 million visitors that is

a big increase we want to look at the realism of lettuce at --- estimate. it is possible but unlikely unless cuba changes the number of its policies we will lavery with those could be and of course, finally the industry has important implications for the united states and its own national interest it should move forward with the normalization process that mr. obama has launched already so first of all, cuba has the abundant tourists attacked attraction this was uh tough assignment that fell to as with me with their budget just a photo from the north coast of cuba

and of course, it has extensive beaches like this to be developed further but that is not only is it because it does have the opportunity is vast and enormous this graph simply shows the number of arrivals over the period 1995 through 2015 you can see with a rather steady stream and course this only goes through 2015 not only asking me to do that projection but the what allowed the number of tourists to reach almost for a million by 2016. but if you look at the

earnings per tourist berries widely year-to-year in response to domestic policies but in 2014 you see an upswing governess is operating at a much higher capacity so the benefits of the industry is widespread perhaps you could clarify with bob terrorist revenues three-quarters of all merchandise earnings so was the exporter to play important role.

seventy% of tourist earnings is a pretty good number depending on wages or cultural activities and a major force linking cuba to the of global economy on a daily basis to the international environment this graph shows the cuban industry has ample opportunity to grow if you think that'll like this term carrying capacity is shows the number of visitors as a share of population relative to the dominican republic and was twice what cuba is today there are many other measures we could use.

it has not contributed as much as it could occur there are signs it is falling behind with the far left you can see in blue to point 5% of gdp if use those numbers it expands to the total contribution of the economy as well as indirect spending . but substantially less like a poster rica compared to countries that we think that there is more that cuba could be doing. this graph shows this is in index all economies and the

exact same level this is the indication of the efficiency and effectiveness of the industry and as you can see cuba does rather poor the relative to the other countries like custer rica or dominican republic another important point but the caribbean itself is doing relatively poorly compared to the rest of the world it is losing market share to other destinations major new destinations have opened in china or southeast asia and as a result the tourist dollars are spread

with a much wider array of countries which means the industry has to be competitive to survive and prosper. for one of the reasons one of the things day talk about is the service quality and lower it is nonexistent these things cuba is working on redo has some suggestions and part of the reason has to do with the nature of the organization and the incentive that it transmits to the workers now why will turnover to richard.

>> the industry in cuba there are three main enterprises to of them are under the ministry of tourism but we also see that under the military we have the preferred name so of these three states only one is the military.

of these 3140 percent is the terrorism -- tourism sector. you have heard it all goes to the cuban military is that with this graph jet says or is it illegal into gaviota which is the military on the? with uh a purely private sector care -- tourism people opening their homes remodeling the rooms so the travelers can stay at the bed and breakfasts that is another 25 percent of rooms if you add that to the total terror -- tourism capacity gaviota is only 35% of total where you could consider

staying if you visit cuba. it is simply not cute - - not true all of these revenues go to the coffers of the cuban armed forces. the appoint with 45 percent have some foreign partnership mostly spanish or canadian or other international hotel operators. most have an international presence however the way it has operated there are endless speeches that is whether growth is you don't see many cranes operating if

you look at the beach resorts you'll see a lot and so why aren't they building more capacity of those 44,000 rooms 6,000 are in havana you pay between three and $4 a night if you stay in havana the early three sites currently in reconstruction and there should be one dozen. it is easier to build boxes on the beach bin to do interesting hotel and also questioning profitability. and spreading the investment of around the second problem the the tourism sector needs

to be better integrated there were no numbers published on what percentage of food and beverages provided those that look at in those categories we roughly estimate two-thirds of food and beverages are provided domestically but it could be a higher percent that has to do with the agricultural sector providing much better incentive so there is better integration of the role sector into the overall tourism sector. third issues various organizational issues in labor international hotels is hired through the human-resources disease so

they have to bosses this confusing and not productive in the other problem is why not more direct investment? not just in management contracts by joint ventures? only 6,000 rooms right now include joint ventures the government has projected of the 110,000 rooms over the next 15 years only 30,000 or under 30 percent will have for investment so in other words, 70 percent of new investment is projected to

be paid for with domestic capital. mentioning that of private sector growing dramatically. between 15 and. [applause] thousand dollars you put up a new room you go to teach 20 with a high amount of occupancy. . .

which would provide yet more dynamism by the year. these are two places where eventually there will be plaques. these are private homes renting out, bed and breakfast breakfasts. there will be plaques eventually which will say here slept new farmer and feinberg. richard do you want to continue? >> these are nice places. these are lovely places. what's interesting about this picture the one on your left is

this is a private bed and breakfast in trinidad and you can see the sign bearer advertising it is english and i thought it was kind of revealing of the new clientele that they are catering to internationally. at one point, just to scroll back for a moment it should be mentioned here that an air bnb has now set up a program with more than 4000 listings in cuba and this to me honors a new impetus to growth because a person can go on line, look at the myriad of offerings in havana, get testimonials from people who have stayed in those areas and see what the price is, pay with a credit card in dollars and show up in cuba with your piece of paper and happily

stay in that place as well. airbnb salt to the trust problem that links individual entrepreneurs with the global marketplace. in the case of cuba as with elsewhere and i think because particularly in havana this is important and worth emphasizing. but cuba has big plans for the industry and richard and i thought it would be worthwhile to analyze those plans and think through some of the implications of them. basically the government would like to expand the current level of participation in the industry of tourism up to some 10 million from 4 million at the end of december of last year. that's a big increase. to do that they plan to build 108,000 new rooms onto a stock of 54,000 rooms of international quality.

that's three or four-star hotels in the state-owned enterprises. and it advertises sites perspective investors from all over the world including golf courses, marinas and other tourist potential developments. we met when we were in havana earlier this week we met with the head of the port authority and they are talking about doing any number investments including things like as strange as -- a theme park in cuba so there's a lot of broad thinking looking to the future. that said we wanted to look also at feasibility and some of the economic implications because in the plans that you get very frequently you don't find very much information about what are the economic investment requirements and the like. because we know that these numbers were realized would give an impetus to growth and it could be, the industry could become a real locomotive on the

economy into the future. for purposes of our calculations we wanted to protect the investment over 15 years and a steady stage of 17 per year to get that extra repacked about including they were for rich finke appreciation charges and other things. those of you who are in the business school in the tourism industry will immediately recognize the complexity of this but where -- they are with me for just a moment. we put it all together in a table which you can find in the report and i will just highlight a couple of numbers coming out of this rather complex table. the first is the 108,000. this is the number of rooms they seek to add over the next 15 years or so. the second number is the cost per room. when you talk to industry sources in the united states and in europe as well as in cuba to find out, give us an estimate of what it costs to build a hotel

room and we came up with a number of $200,000 per room. by the way we went back and talk to some industry sources earlier this week just to verify that number. we were quite pleased to hear that number to be spot on in terms of the departments view. the total calculation when you add in the other things that we put in here, depreciation, restoration and some of the rooms are out of order because many of the motels in fact have a large number of rooms which for whatever reason have not been refurbished. you added numbers to refurbish those terms an avid mobile depreciation and normal remodeling costs that should occur over every five years or so and what you end up with is $33 billion total investment will be required over the next 15 years to realize this objective. that's a big number. anyone know what the gdp of cuba

is? the gdp is probably $86 billion according to their statistics. if you were to apply depreciation to the currency was some sort of market-based formulation it would be substantially less. the point is this is a very big number relative to this rather small economy. in fact if you look at it as a share of gdp while today the numbers 2016 wouldn't look to be very big 1.3% that would more than triple over the next 15 years if this number holds correct and if cuba doesn't grow any faster than it has for the last four. if we assume it grows at 2.8% basically these numbers would have to double. more importantly they would have to, almost triple in the share of total investment. this is clearly unrealistic. it's not realistic to assume that cuba is going to be able to invest some 33% of its total,

sorry 33% of its total investment in the tourism industry loan. why is that? because it has education highways and needs major -- we conclude under the cert current circumstances under the current circumstances the industry is unlikely to be a driver of rising incomes without major internal policy changes. the internal policy changes have to focus on two or three things. one is it has to focus on increasing domestic savings particularly to begin with investment and savings. how can it do this? one ways to accelerate the development of the bmv's in the restaurants because these already represent a barely tap the potential for future growth. similarly it has to begin to also think about ways to tap

into foreign savings more efficiently than it already has. this can include foreign direct investment which is very important but also more importantly might be the savings from the diaspora savings from let's say the cuban community in florida that his party financed much of the bmv development. we have some ideas by the way on ways to structure financial intermediation so the investment coming in during a transition period and housing and expanded development might be undertaken without alienating property in cuba from cuban ownership something we think is very important during the transition period prey to make all this happen and to increase savings to finance investment let me turn it back to richard to talk about policy in cuba and in the united states.

>> would the include our study with some policy recommendations for the cuban government and of course they will make their own decisions but without our -- we put forward some suggestions for them and also of course for the u.s. government. we hope that you find these policy recommendations flow organically from our analysis. more foreign investment is clearly needed. the cuban government officials say they want to .5 zero yen in capital inflows for year. they are not even close. president castro as well as senior official -- chastise the cuban government bureaucracy for not approving more foreign investment but you might ask why hasn't more foreign investment and improved and that has to do with unclear signals from the top misaligned incentives to

your crabs and decision-making is still way too centralized. all that has to be solved and those are profound problems that we are going to be able to bring in enough foreign investment which they clearly need to do. the booming bed-and-breakfast sector one of the most exciting developments in the private sector tourism cluster that is emerging showing the entrepreneurial capacity of cubans when market forces are unleashed. cubans can still only owned legally 1001 beach property so you can't really build a chain legally a of bed and breakfasts. you can't really expand the entrepreneurial sector in the private enterprise sector. those overly strict rule should be modified. cubans should for example be able to own more than one home particularly if they will be renting some of it out for income that comes from abroad the earns foreign exchange.

cuba has to start almost from ground zero tube toga modern tax system. many options there. die you added tax, tax on personal incomes, property taxes eventually as cuba moves towards a market-based system. as a way to extract resources from the moving tourism sector so that those capital inflows can finance the rest of the economy, infrastructure, higher-quality social services growth in agriculture etc.. pricing systems is dramatically out of line. the distortions are mind-boggling. they have so much work to do in that sector. they have to reflect market conditions and have to reflect supply and demand. there had to be incentives to export. these seem obvious to anyone who has taken econ 101.

the cubans need to learn all of that. within the tourism sector itself essentially the current cuban model particularly in the beaches is low valued tourism bringing in essentially blue-collar tourist from québec, from russia and other areas of europe. it's good value but it's not optimal from the point of view of island tourism. they need to move from a model of tourism based on value, on low cost to higher value, higher-quality and that means more income but it also means they must provide higher-quality services. that means among other things more investment in training that affects the whole labor market and that means more employees per visitor, per client. that's what quality tourism is

all about, moving in that direction. of course better internet service. any of you who it didn't here know how frustrating that is and that's important to the entire economy of course but it's also very important for tourist whether in the business sector are looking for a higher-quality tourism in the luxury tourism market. and then the issue of sustainability. that in itself is a critical issue. cuba is such a vehicle island. they can accommodate many more tourists but they don't want to ruin the beauty that attracts the tourists in the first place. we have a number of recommendations in that regard. the transparency, we have done our very best in putting together some numbers to analyze the tourism sector. i have to tell you and heroic effort insofar as the amount of published data by the cuban government is very thin.

these large-scale enterprises that i talked about earlier, where's their annual report with their financials? there are none. the whole idea is the state has some responsibility to the population and it needs to publish data so people can analyze and make decisions on public policy. all that needs to be put in place so most importantly the cuban can have a better set of data for discussion. the main reason we publish this is precisely to help the cubans themselves begin to think in terms of numbers, strategy so they can drive a more rational transparent and productive and efficient tourism sector moving forward. we also suggest perhaps when we talk about sustainability that's about coral reefs and coastal areas and it's about -- but it's

also about cityscape and what will havana look like in 20 years? are they bringing to bear the best possible quality of architects and city planners not just from cuba but from around the world. what high-quality top-notch market anywhere in the world would want to advise was going to be the new havana? why not draw on that talent and set up an advisory committee that would have rules set by the cuban government of course but that would provide top-level high-quality state-of-the-art advice to the cubans. we also said just u.s. firms going into cuba ought to be encouraged to abide by high-quality corporate responsibility standards. finally now the united states where we sit today. of course we fully realize there is about to an important event

tomorrow in washington. not all of the members of the dubious -- may be in full agreement with our point of view here. nevertheless this is our best advice. we think it's in the u.s. national interests. we were encouraged when the probable next secretary of state being asked about future policy, of course we don't know where that might land. the probable future secretary of state he thought first on cuba policy we should take a careful review. a good starting point in making public policy. while we suggest first and foremost and some of you may have seen the open letter published just two days ago by a number of business groups including a study group and the american society. i'm proud to say my name was on

that as well. it was suggest it would be counterproductive to fully reverse course and once again revert to a policy of cutting and trying to squeeze the cuban economy. for among other reasons this incipient private sector pick united states on a worldwide basis has always had as a policy try to support a private investor for its own reasons, its own right but also the private sector will tend to promote a more open economy, a more friendly economy to the u.s. business interests as well as the more pluralistic and diverse policy internally. for us to try to completely eliminate travel would kill this growing private sector in cuba. it would be so counterproductive. i can imagine why we would want to do that. it would be counter to the u.s. national interests.

we can help them with connectivity as we have been doing to some degree. we suggest if you are going to allow u.s. visitors does it not make sense to allow u.s. firms to divide infrastructure necessary to support those visitors? i have argued some of you may have seen a paper published back in 2011 suggesting cuba the only country in the world that's not a member of the international financial institution. don't we want cuban economist to have the best advice on how to build an open market driven economy with the experience of so many other countries undergoing transition from a centralized economy to a more market driven globalized economy. of course that's what we wanted the cubans may or may not accept that advice by the least they

would have an opportunity to dial-up those washington d.c. based experts pretty cuban government has to take a step that wasted -- it's certainly not stand in the way. and then finally with regard to sustainable development there a lot of ngo's and u.s. government organizations some of which are involved in the island and we promote that engagement. overall to wrap up we suggest a policy of engagement at the governmental level and the level of the private sector and the level of diaspora in the cubans on the island the non-governmental sector and the nonprofit center it is within the u.s. national interest to continue connectivity and communications. thank you all very much. [applause] >> thank you richard feinberg.

if i could ask the other panelists to join me now on stage and as they come up to me briefly introduce them. first dr. maria espino. she has been at st. thomas since 1999. she was actually on the faculty in the department of economics at florida national university from 1985 to 1994. a fulbright scholar in columbia and has had several other appointments here in the united states and outside. she is an activist, on environmental issues and minority issues in something that i respect that she does on a consistent basis. john thomas. john is assistant professor here at the chaplain's school of

hospitality tourism and management. john is an employer -- an attorney for 30 years and he saw the light and became an academic now he is full-time here at fiu. he is a partner at several law offices practicing both transactions and litigation. he has earned his board certification in maritime law by the florida bar and serves as chair of the florida bar. least -- last but not certainly not least is my colleague dr. jorge sewanee that i introduced at the beginning. he's the director of the research institute and professor of anthropology at florida international university. he moved two years ago from the university of puerto rico and

his "on migration is known by many of you. he has taught research positions in a number of universities in the united states so thank you for joining us. as i mentioned at the beginning what i would like to do is have each of them and we will start with mrs. >> no for five to seven minutes and then we will have a discussion. doctors. >> no. >> let me start by thanking fiu. this is a wonderful report. there are many things that i like and that. i pretty much agree with the conclusions but i'm going to start with some of the agreements -- disagreements are some of the things i see problematic. one of the things that i thought

the report should not have used is the comparison of tourist revenue and tourist receipts from country to country. that's number one and let me tell you why. methodologies are so different from country to country and not only the methodologies that the capability of collecting data from country to country. the comparisons are really meaningless. this this is especially true when you are talking with the cuban economy vis-à-vis other caribbean economies. most countries use what we call a direct approach to estimate tourist receipts or tourist expenditures. that is a survey and try to determine -- they survey international tourists either entering or leaving mostly

leaving the country. the u.s. does not do that. the indirect approach in other words they try to figure out how much is being spent in different entities and then calculate what portion of that expenditure is a tribute did to international tourists. now in cuba the tourism sector became very hard. it's very hard to determine if we have a consistent theory. as a matter fact i have identified different theories. even the ones that we have do not really include the two things that are not usually included are tourist expenditures or if you follow

international guidelines for it. that's the first thing. the other part is you never know whether it's nominal real or what exchange rates they are using. i have looked at the data and gone down to this province level to see if i can get a better sense of how they put it together and it was mind-boggling so i gave up. some provinces reported in pesos and some -- so a couple of things there. any time you use receipts for anything including comparison to gdp i'm not sure if it's overestimated or underestimated. there are things that go either way. what is true is that it seems to have been -- for a couple of

years, remained flat. i don't think we can argue that are flack's the poor quality of the tourism industry and i agree with you. the quality of the tourism industry is important but i'm not sure that's a measure. we need to come up with a different measure of it for the reasons i said. it also gets complicated in the argument because we have a shift , we have had a shift in the last five to 10 years of who were the tourists coming to cuba the rest of the caribbean's were able to substitute the european market with americans, cuba had to substitute it with canadians. and cubans living abroad. that really ignores the tourists

calculations. i'm just going to leave it out but that was one concern that i had in this study. i can talk to you about it later. my other concern was using gdp at all as a measure. cuba has its own methodology. whether it's a better methodology or worse methodology i'm not going to argue that it's the only one to use this methodology so therefore it can't be compared to anybody else. when you use the percentage of expenditures given the cuban gdp you have a problem in the numerator in the denominator where there is no comparison. i would be wary about that.

my other concern is, it's not a concern. my other concern is the idea of what is the effect of the revenue and the linkages affect? you estimate only a 30%, 30% import component and that to me seems very real. back in the 80s in the mid-90s there was a publication cited work that estimated it to be around 70%. i tried to keep track of what has happened since then and the only thing that has been published is it's gotten a little bit better and i agree with that. it's gotten better because they public sector is tried. i cannot believe it is not much better.

it went from 70% to 30%. i'm a little bit concerned about that and i just want to put an emphasis on the concept of the multiplier here using --. here i will maybe agree with you but talk a little bit about what comes first the chicken or the ag. whenever we have the concept of multiplier rests on the idea that demand creates its own supply. if you demand there is going to be supply as you have pointed out there's incredible restriction on supplying cuba. what we are seeing right now is instead of creating, because of the restrictions what we are seeing is an increase in price. an increase in food prices which has a negative social effects in

the population, an increase in the housing prices because there is no way of producing more. there are constrains and that. for there to be a successful and sustainable tourist growth and development in cuba both have to work at the same time. the increase in expenditures with more tours coming in at the same time you have for forming the system that allows for the supply to actually be created in just one more thing. i'm a little bit concerned about every of -- everybody talked about the better breakfasts. i cannot remember that cuba has

an incredible housing shortage and we are now having some of the households instead of being open for multi-generations of the kids coming in and living with the parents are having to get out because you are renting rooms for tourists. this basically exacerbates the problem which again if you allow construction in the housing are. >> thank you very much. john. >> richard and richard i think you did a wonderful study but is that all there is? i don't think so. in fact i hope not now that i'm an academic. we need to find more things to study so i've got two that you touched upon into which you did not.

the first i will talk about is the chinese influence on tourism in cuba. the japanese school of hospitality and management has a school in china so we are familiar with their influence on hospitality and tourism around the world and we are very connected to chinese influence. there are a few cultures think are more diametrically opposed in the chinese culture and the cuban culture and you've got to wonder why do i think this has anything to do with cuba? it turns out at one time they had approximately 150,000 chinese women in cuba. now we are down to a couple thousand. it still exists and there is a great deal of cultural connection between socialist regime in cuba and the socialist country of mainland china. so was china actually doing

anything in cuba now? it turns out they are. president xi jinping visited cuba. that's an important thing for the president of china to visit their couple of years ago and the premier and vice premier of china have visited havana. three chinese navy ships paid a visit to havana. this is not something they do all over the world. they have used chinese loan money to rebuild the seaport which is being built by the chinese communication contracting companies. they are building infrastructure in cuba. row roads, communications. they are now currently building if i have the correct number here, 13 chinese hotels and resorts are currently under construction by chinese companies. not that they are going to run the hotels but they are building

the hotel's and $460 million in chinese investments. there are multiple numbers of golf courses being built by the chinese in cuba. a once a week flight now and they plan to make it three times a week. they put a lot of chinese tourist or cling to cuba. there are going to be chinese visitors, tourists coming to cuba. in a university school of tourism there are chinese students studying there as there are here in miami-dade school of hospitality -- hospitality. cuba is the second-largest trading partner after venezuela which is fading fast the second-largest trading partner is china.

the chinese military government tourism and hospitality company has produced a promotional video with chinese subtitles showing chinese people staying in four and five-star hotels who are up very interested in the chinese market. why is this important discussion here today? it's uncertain from u.s. policy with the future of american tourism and hospital -- hospitality and investment will be in cuba. i'm just bringing up the possibility that if there is a vacuum they will be the chinese tourism influence that goes into that vacuum in cuba. one other type of tourism that you did mention is the christians. khrushchev's are the easiest types of tours and to take into

cuba and i looked on today's listing on cruises going to cuba , i see six different cruise lines scheduling cruise ships going to cuba. i think 19 ports, not reports not ports with big -- who can take large cruise ships are available for stops in cuba. it's ripe for cruise ship operations. cruise ships bring their own rooms. they bring their own food. the tourists will go ashore and visit and those are the cultural places for food and dancing and other activities they have been cuba. we have the american restriction against americans traveling as tourists so even with those restrictions there's a great deal of possibility for tourism development very quickly in cuba

i'm sure the cruise lines are looking into this and it deserves more study. medical tourism. cuba has a great deal of medical technology and medical skill. they have been exporting their medical tourism. in fact export medical devices to the united states as well as the rest of the world. i've not sure what's going to happen in the united states. it ate the ag going to cuba will be a viable alternative for people looking for health care. the fourth topic that you didn't mention the agriculture sector for the vote of cannabis. people aren't talking about marijuana tourism. i think there is a market. i think there's a possibility for quick growth of that type of

agriculture in cuba and i have heard there is in fact some evidence that cannabis is in cuba. their other latin american countries that have decriminalized the use of marijuana. in this country of 3030 states they have to one extent or another decriminalize marijuana at least for medical use and maybe a connection to cuba, i don't know but it's another aspect of tourism i think needs more study. [applause] >> with that and applause for the cannabis or they presentation? hopefully the presentation. go ahead. >> i just want to begin with a minor personal comment on the report which was you suggest is morality and i'm a little insulted because i studied this

like frank did. to attribute this is a little exaggerated but everyone knows knows -- [inaudible] >> bring your mic close. >> i want to commend richard feinberg for his very serious sober well-documented report. i think he makes a very strong effort toward future prospects of cuba to industry in the 1990s and you may recall in a report that it wasn't always this way. when cuba appeared in the 1990s after the disappearance of the soviet union and the fall of soviet wall people have returned to the main source of currency which remains remittances from the cuban community and export of medical

services to other countries. i think the authors have done a great job of describing a host of different information on the structure and composition of the tourism in cuba. i've seen other detailed compass compass -- composition of the tourism industry as well as the projections of the data. they have scanned several sources and it's very difficult sometimes to compare but that's what's available. they also went further and interviewed the owners of private bed and breakfasts and restaurants. they visited hotel facilities and contacted experts so i think they have done a really good job of putting it all together and i congratulate you for that. they also i think provide an up-to-date imbalance perspective

on what may be the future growth of the industry and particularly the combination and a very strange combination to some extent of private public facilities on the island because many of the privately-owned restaurants and read and breakfasts are in fact connected to the government industry and many people have thought they are independent but in fact they are very much connected to the rest of economy and they realize that quite clearly. in order for cuba to fulfill its own projections it will have to reap $33 billion to invest in the structure and improve the quality of its facilities and attract a growing number of tourist in the next decade and a half. the question is where is that money going to come from? they have some suggestions but at this point it's difficult to imagine having access to the sources of credit to finance

extension of its tourism industry. overall the report is quite optimistic in the present and the future contribution of the tourism industry to the island's economic development. perhaps more importantly to the nonstate or or the self-employed sector. they have done a great job at getting away from strut we political considerations and different policy at options. they do go into some of the possibilities of what they the future may bring into u.s.-cuba relations in terms of possible organizations and the cuban government. of course a year or so from now we do expect major changes in at least the personnel as season as

he will retire from the presidency. they remained cautious with regard to the possibility of ending the u.s. embargo on cuba which carries the benefits are the potential benefits of the tourism. i will add three areas which i think art important. the elephant in the room is really the embargo and they refer to the embargo, i think at this point it's quite clear that the embargo will -- in the next four years with the republican-controlled congress and with donald trump in the white house although again that would be the second part of the question which is the fact that we do expect changes in u.s. policy toward cuba although we don't know exactly what that will mean once the trump administration takes office. it will clearly have an impact on travel to cuba and will probably mean a growing restriction on the number of

people in the u.s. and citizens who can travel legally to cuba although again we don't know exactly what kind of positive measures will be taken. i would imagine the cuban-american set your of the travel industry will continue to expand. it's difficult to imagine the trump administration will restrict the number of trips that cuban-americans might make but that's also possibility which has already but put in practice by george w. bush. i think the main problem that i want to raise is what exactly will the scenario b. for any kind of potential growth of the tourism industry if the u.s. tourism market is open. in other words citizens who are not cuban american are not able to travel to cuba and the

subtitle agenda the writing waive toward prosperity. i think we should also talk about what the cuban government might do to make it easier for americans who wish to travel and of course the numbers are quite difficult to get. alas figures i have seen anywhere from 3000 to 400,000 cuban-americans have traveled to cuba and it appears many more who are not of cuban origin so i think that's where the main set your of any group will rely. i draw from my own personal experience why's it so difficult for people who want to visit cuba who were born on the island to get a visa and of course last year we saw the controversy about whether cuban-americans could go on those cruise ships.

given the fact that politically speaking i doubt that more u.s. citizens who are not of cuban origin will be able to travel to cuba easily come tomorrow. the main chunk of the market will be cuban-americans and people in other countries. reducing the cost of the transactions are not requiring any type of visa for cuban passport for those of us who were born in cuba, other countries do it and it seems to work quite well in order to attract the tourism. i think that's one area that could be discussed. a final point that the report also mentions and again the estimates of cuban-americans permitted into cuba are to cooperate anywhere from $3 billion to $5 billion have been put out there so the question for me becomes how can

you harness those millions of dollars being sent to cuba so they could be used productively in addition to solving immediate issues which are important, food and housing and medicine but also as we know it's difficult to get that kind of data. a lot of the money is being invested in the bed and breakfasts and the taxi drivers and so on. what kind of policy measure would be appropriate to induce more of that money being invested in the tourism industry >> grade, thank you very much jorge. [applause] if i could ask the authors to briefly respond to anything that our panelists have said so why don't we start with you richard feinberg.

>> first of all let me thank all three-pint -- panelists very much for your very thought of comments. you clearly read the report very carefully and took it to heart and very much appreciate it. i will let richard respond to the comments and the statistics but we did what we could and richard can amplify on that we'd didn't dispute our conclusions. that's heartening. on john's comments on the point about supply restraints, of course i report very much emphasis -- emphasizes that and that's the link and the tourism sector and reform needed and that's the major thrust of the report.

we fully agree in order to relieve supply constraints many many -- john's comments about china there i have to say if i can advertise again my book open for business building a new cuban economy i do have a section they are on china. i have met from time to time with chinese authorities on the island and they very much want expansion in chinese and other asian tourism. i have to say my own view overall of relations is this is not the time to try to pull back and antagonize the hemisphere when there is obviously another emerging threat of power that would love to fill the vacuum. surely the incoming

administration understands this and will not make false steps in that regard. i completely agree. in any case if the united states restricts our tourism that will slow the tourism sector but will it stop it? there is a whole other world out there. you have european tourists coming from many european countries in part because other parts of the mediterranean are not as secure and safe as they were. the cubans are making a big effort to draw more latin american tourist. we have seen that in argentina mexico and brazil. argentina is a growth market and that's already happening and will continue to happen as you pointed out so i couldn't agree more about that point. on the issue of medical tourism

of course they are something like 40 or 50,000 cuban medical personnel moving abroad. many of them should be able to stay in cuba and provide medical assistance on an international basis. that would require better internet connections of course and other facilities but that is a long-term vision as you probably know. whether or not that links to cannabis tourism would require a dramatic change in cuban policy. cuba is very hard line in use of illegal -- you don't want to be caught in cuba in any way linked to drug trafficking or you will get a very rough prison sentence. certainly i think the idea of

increasing medical tourism is tourism in cuba becomes not so heavily a major part of our study. sun and surf, that's fine but they can dramatically diversify their tourism offer with cruise ships, adventure tourism and medical tourism. and finally thank you so much for your thoughtful comments. just responding to two of them on this issue of blair part of the 33 billion would come from. what our suggestion is, we know of many international hospitality firms that are dying to set up joint ventures in cuba and for reasons that are hard to fully comprehend cuban bureaucracy is dragging its feet rather than taking on some dead

but rather than debt financing direct investment is what we are suggesting. the final point that i would make here, yes absolutely agree diaspora make so much sense and is an expert i've written so much about it. there we suggest some other restrictions on investment in the bed number of sector or the real estate sector could be modified in ways which would encourage national investment as well as the diaspora so thank you so much for all those comments. >> but me echo richards thank you and appreciation for these comments. they are really terrific. just to pick up a couple of them professor it's been a i couldn't agree with you more.

we spent -- just trying to record accurately the number of arrivals which you would have thought would have been really basic. that's richard and i had for a long time had discussions about how russians were becoming integrated into the economy. he was wildly overestimating by the way. in any case the data are difficult. that said i think as you yourself said some of the big stick conclusions pretty much hold even if you adjust 20% down i don't think this industry is doing well relative to other countries in the caribbean. their strategy is at least as richard said maybe a little underdeveloped because imparted doesn't recognize that all the emerging private sector. these things i think we all agree on. a couple of points that maybe i

would pick up. one is the linkage effects, whether or not the industry is so important and intensive as it was 20 years ago, today i don't know. i am somewhat skeptical of that. 70% and put coefficient would be extremely high. the economy as a whole of course we don't know what imports of the total economy are. actually the import amounts are messed up too. i could go on a long time about the inadequacies of the data but the conclusions are pretty robust. one point that i would make that i think is important here is the rule of the bmps in the housing shortage. you can also think about it in terms of the competition between the industry for food and the domestic clientele.

the name of the game is changing policy is to to expand supply in growth or rapidly over time. that includes housing as well as the mystic food rations. the trick from a policymaker standpoint is to design a transitional period when you can both expand the supply of the b&b industry on the one hand and expand the supply on the other and you certainly can't do it with only 10% gdp investment rates which is what they are now so to do that they have to change policy. the kind of policies we support are the way to go but the issue of supply. your point is well taken transition has to be managed carefully to avoid addressing backlashes. let me pick up with a couple of other points. john thomas suggested a number. i have a different view than

richard. i think we will come back with a proposal if following up on studying tourism. that sounds to me to be logical and makes sense. california is moving big time into this industry in cuba is going to have a hard time. i say that all in just, please. what we the effects of increased travel restrictions because that is an interesting question. you have to put this together in combination with speculation and it is only spit elation on the future course of policy could be. if the future course of u.s. policy has to do with some travel restrictions on the one hand the combined with a very substantial stimulus but the president has promised you could see a strong growth and this is what the markets are telling us what happened to the global economy and that means rising incomes in europe and rising incomes in asia and other parts

of the world all of which will generate more money that will be spent in the tourist industry. it will make the saudis quite happy but it will also make the cubans happy because there will be more europeans and chinese tourists coming to the region. one of the things that has amazed me when you look at the numbers over the last two or three years is that since brexit you have seen no appreciable fall and european arrivals coming into cuba which this may be a result of early contracting but we don't see with the depreciation of european currency in brexit a major downturn in europeans coming to the cuban economy which is a good sign and that's only likely to increase with rising incomes associated with the trump related stimulus. the final point i want to make ghost back to the issue of investment in cuba and tapping into the enormous potential

wealth in the miami community and the united states generally and also in europe to invest in the bed and breakfast. one thing cuba lacks is any kind of a mortgage market. if you were to suddenly liberalize completely the cuban economy to permit more investment i would expect half of havana would be bought out. why is that? prices are so low and havana and in fact were finding a lot of illicit foreign investment coming in. if there were a way to set up a mortgage facility that would take through bond borrowing let's say into the miami market or the european market, put it into mortgages for the expansion of domestic housing which would allow those households to borrow in what would be an international rate much cheaper than is available in cuba they could expand the housing market,

maintain ownership and it could be a high-class debt obligation in the u.s. and foreign markets. i'm sure there are financial engineers out there in the audience that could set up this and it would be extremely diebolt. the final point i want to make is that all of the discussions we focus on here on u.s. policy are really only a small part of what will affect the industry that will affect the industry over the long run this cuban policy itself is cuba controls its own future irrespective of what the united states does. sure the united states can impose difficulty for the industry's development particularly the cruise lines of some of the others but frankly cuba could swamp any effects coming out of the trump administration. >> thank you gentlemen. [applause]

we are not at the stage of question and answers. we have got 30 more minutes. we have microphones on this side come up and make sure that our friends who see spanking here. i have just two requests. one if you could identify yourself whichever way you want and two we want to make sure that everyone has a chance to ask questions or make a comment. please make your comment or question as brief as possible and in advance i apologize for interrupting you if you go too long. sir you have a mic pre-tactic you very much. my name is nicholas sanchez professor emeritus of economics at the college of the holy cross. i will have three very brief questions. we were very surprised in your presentation you did not show

puerto rico. it appears to me to a great extent the recall is the big elephant in the room. ..

>> >> it is a funny said the of taxes that comes through on the one hand contributing surplus to the treasury

which is reallocated the other through the multiple exchange-rate which is extremely expensive and difficult system to administer and collect taxes from. it is terribly inefficient. we haven't talked about the multiple exchange-rate currency system is a major shackle around the weight of the neck of the cuban economy sea you are absolutely right and is quite important. >> you are not suggesting u.s. government support or subsidize u.s. relations with cuba but simply to say it should not impede relations freedom of travel and it is often been argued those economic sanctions cannot multilateral not likely to be effective. that is our argument.

>> one of the things i don't sea with cuba and puerto rico competing they have very different type of tourism primary. the dominican republic, jamaica are the competitors that cuba has. as a matter of fact one of the things that i think it cuba is missing is the backup tourism that puerto rico has which is the mixture of the beach one next to another that is not inclusive type of deal and they will only get there if they develop their resort but that also has social constraints and there is plans to do that but it is very long term. but until they do that there

is still less competition between tourism in cuba and puerto rico. one of the things that might be beneficial mr. poehl the taurus to gather to recognize we are talking about a completely different product people would come to all-inclusive far different than those going to havana word different from those going to medical tourism. so with each one of these you have different competitors but idol sea one competing with the other at all just like they don't compete with miami which is a completely different type of tourism. >> thanks for coming today we appreciate your insights

have you seen any tension between the growth of the private sector and the state's sector tourism as relates to competition for resources like food or those tourist dollars for attention or are there any new restrictions that have been proposed on the private sector growth other than the of limitation of home ownership the you mentioned greg. >> that is a great question in new york city of lot of the hotels are upset because they sea direct head-to-head competition with airbnb. because the state owned enterprises are not building hotels fast enough in the urban areas for the travelers are going so the

private sector is filling a need to increase supply in a cost-effective way we estimated to put in a room is between 10 and 25,000 roughly her room were state-owned operation cost 200,000. as the minister of tourism in cuba has said this is a complement between the rising private abed and breakfast sector that provide first quality food that the state owned restaurants cannot provide. there were in number of newspaper articles that said they were being squeezed by the government of bieber just there a few days ago and then made an effort to try to find out the truth.

was a couple of high-profile nightclubs and restaurants that were shattered by the inspectors you don't see as many fruit and which vegetable pushcarts the use of a for been double the whole it is booming in cuba and the had the opportunity to visit many new restaurants and nightclubs not to enjoying myself just doing research. [laughter] so on hold despite a crackdown inspectors that the inspectors dislike that they refer to as parasites there is some tension there but on whole police through january 20th continues to expand in a healthy way in cuba.

>> refers question is very? does anybody have an update on paris club? second the sequencing of reforms more advanced cable copies from the world bank struggle with water to of these problems with agricultural reform, labor reform, it is bewildering. where do you start? if you come up with policy can you take a guess? >> ashley there has been a

paper written on this it is a very good paper take a look at it. where do you start that is really the tough question the we obviously have been struggling with but i think one place to start is to be very worried about rising food prices and urban labor if we don't adjust wages at the same time for if you begin to unify the currency and eliminate the multiple exchange-rate system you have to raise wages with redistribution of income within the society of winners and losers the house to be managed very carefully. and the house to be part of a coherent program is

administered over a period of three or four years with fits and starts to do so but we have seen in the case with of chinese unification currency back in 1994 is a relatively smooth story is a complex process. if you can get your growth rate up it is the terrible time to do reform but if you can get that up of 2.8% up of 5% he makes it much easier to lubricate that process. review can liberalize the tourism industry so we have

been able to lay off people something that is documented very nicely with the unification exchange ridley be easier but now you find different exchange rates we get that growth rate up to the extent they could be helped as they make some moves to joining that to

provide an enormous commission if they had a coherent program. >> those are all good comments so castro had the 82 international borrowing as the governments would come to him to say how about all payments on the credit changes he would take contracts how about international solidarity? is that sufficient payment? so cuba's credit rating was on the for. when castro came he said we will be more serious now and try to make our payments on time to reestablish our influence summer dating from

the cold war period with the international creditors to be renegotiated around the paris club. in the struggle so hard to export so that produces a new revenue. been said to my knowledge

those negotiations have been there as the viet. been so in a private credit market and then that those are very often linked to those earnings. because the credit rating is still not high for venezuela or the nickel prices i think cuba will continue to struggle. >> i a.m. a ph.d. student in anthropology i have a comment about racial equity with the tourism industry is in cuba mrs. a significant

issue and well-documented and if this a concern on the island and in the diaspora that in terms of who is getting the jobs whether the two were guides toward particular position of hotels or other aspects of the tourism industry, there is a lack of representation some of the best jobs to speak in the tourism industry i haven't had a chance to reap read the report thoroughly but i didn't see any mention of racial inclusion or equity if you want to comment on that. thank you. >> this is an issue of income distribution to think about very carefully. because can be twisted in the way you don't intend.

some hard-liners said look at what is happening? that generates inequality therefore socially i would hope you don't mean to suggest that so house does one deal with any economy that becomes more diversified in those investments will generate any quality. if you go to a completely directed mandated economy or do you think about introducing various incentive structures or tax reform that allow you to combine greater efficiency while you try to meet your equity objectives?

first of all, talk about easing is being well documented i know none in the last 10 years that would lay out in time distribution in cuba there are no zero surveys that i have seen eddo think we have those actual numbers of the eastern part of the island were cuba has fallen behind with santiago up in the hills the government tried to redistribute money away from havana but in recent years of process has been reversed with of the dynamism partly because of u.s. law with a cultural tourism with not traveling

around the island which is more urd difficult if you're not documented vessel on the eastern part of the island one of the suggestions is the government can diversify the tourist if we talk to the commentators moving into the eastern part of the island with the hiring of the afro-american community. is there is much racism? absolutely probably not as much as 1958 but still it does have to do with the leftover stereotypes and prejudices. if you have american hotels right now what leverage do we have?

but if you have american hotels investing in cuba the and one could suggest that they themselves that best practices with corporate responsibility would bring in gender equity into play with those anti-discrimination standards. >> just to underline the last part of your comment in addition to racial equality volleyball the evidence suggest of the past 20 years but you explained very well that regional imbalance that industry has spent concentrated and the

professor did is comeback and can talk about it personally bring you have of larger concentration of people so there is a correlation between race and it is quite perverse way the tourism industry has favored those western provinces. >> we are running at a time and we have to questions. >> one thing i did not hear you touched on was the sector impact of of few months past there was a baseball game there were other baseball or basketball having an impact on the tourism? >> be i am a hospitality

student life for some of the policy align -- outline recommending cuba and the united states my question is from a policy perspective do you see cuba trying to adopt from what china ended in the '80s with free-trade areas but not to facilitate the growth of of private sector? befall those students and as a help to develop my own business how hard it is with barriers to entry for businesspeople here in united states to open their own venture in cuba from greg. >> those are terrific

questions. for the sports question this is pretty important culturally. to be developed as a baseball fan in the u.s. relationships in the early days unilaterally prevented baseball to have exhibition matches in cuba. i think there is a whole new area that there could be increased commerce with sports as a good for of the engagement sunday issue whether or not the special economics could be as they were in china with the initial liberalization you

may see part of that were the problems are difficult with a different force of liberalization but where do you begin? first with the overall macro program that adds up in second to have insisted magic the regulation cubans can do these 192 activities they can do anything they want in terms of economic commerce what would unleash a torrent of private savings to spur investment with deregulation is the second part of a story with price liberalization combined with programs to support.

there is a lot of for people in cuba pdf so with the national cisco -- fiscal policy programs have to be fought through to make that happen cuba is in a position it can do this and has the apparatus in the knowledge of working-class and people to set up those programs rather quickly so focusing on the plan or the negative list of deregulation can solve some of these problems >> this is the last shot? thanks again to our sponsors and the panel in particular for this exciting feedback on these particular questions and terms of cuba diversifying with those of

politics in cuba architecture tremendous talent in cuba and hopefully to have been a more international protection the official cuban position is u.s. citizens can participate in the cuban economy like any other citizen's for many of their parts of the world. goes through very elaborate and burdens summer approval process with no discrimination against u.s. citizens and general but the major restriction is even under obama most investments on the united states side are prohibited so here we

are january 19 the panel was saying that the interaction with the united states by a large as a danced u.s. interest to help promote an explosion of private independent activities on the island. . . .... ....

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