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[UQ] Recent Cuban reforms stabilize their economy. A quick transition would break Cuba. Ted Piccone, 12 (Ted Piccone is a senior fellow and deputy director for Foreign Policy at
Brookings. Piccone specializes in U.S.-Latin American relations; global democracy and human rights; and multilateral affairs. Piccone serves as an advisor to the Club of Madrid and has served on the National Security Council, at the State Department and Pentagon), Brookings, Cuba Is Changing, Slowly but Surely, January 19, 2012, http://www.brookings.edu/research/reports/2012/01/19-cuba-piccone
A closer look, however, reveals something more profounda wholesale mental shift, outlined clearly by President Raul Castro over the last two years, that the time has come to

economic reforms or updating of Cubas Soviet-style economic system, approved last spring at the Communist Partys first National Congress in 14 years, are just beginning to be enacted. They include an expansion of licenses for private enterprise (over 350,000 have been granted),
move the Cuban people from wholesale dependence on the state to a new era of individual responsibility and citizenship. This is going to take time. The

opening more idle land to farmers and cooperatives, allowing businesses to hire employees, empowering people to buy and sell their houses and cars, and opening new lines of credit with no legal ceilings on how much Cubans can borrow. Non-state actors are allowed now to sell unlimited services and commodities directly to state-owned enterprises and joint ventures, thereby opening new channels of commercial activity between farmers and tourist hotels, for example. Think Viet Nam or China. The reforms include tough measures too, like shrinking the buying power of the longstanding ration card that every Cuban gets to purchase subsidized basic goods, cutting unemployment benefits, and eventually dismissing anywhere from 500,000 to one million employees from the state sector as bureaucratic middlemen become obsolete and tax revenues rise. These

changes, while painful, are reason enough to be optimistic about Cubas economic future. But something
much more fundamental is at worka turn away from government control of pricing and subsidizing products throughout the economy to a more decentralized framework of subsidizing persons based on need. At heart, the

Castro government is prepared to move Cuba from a society based on equity of results to equality of opportunity, infused with a culture of humanism. Not that Cubas system ever offered true equality, as one taxi driver reminded me as we drove down Havanas famous seaside Malecon. The door, however, is now opening wider to the inevitable rise in inequality that comes from capitalism, even restrained forms of it. Whether one is able to prosper as a self-employed restauranteur, or is the beneficiary of generous relatives sending remittances and goods home from Miami, new gradations in Cubas economic and social strata are on the way. As long as someone arrives at their wealth legally and pays their taxes, assured
one senior party official, they are free to become rich. The big question for Cubas leaders today is whether they can bring their people with them down this new,

If reforms happen too quickly, it could cause excessive dislocation and unhappiness and potentially destabilize the regime . Already bureaucrats who have something to lose under the new system are resisting change, much to Raul Castros chagrin. If the pace of
uncertain path after five decades of Cuban-style communism.

change is too slow, on the other hand, budding entrepreneurs, the middle class and disaffected youth, who have no overt commitment to the values of the 1959 revolution, may give up sooner and head to greener pastures in the United States, Spain or Canada. As it is, Cubans are leaving the island in droves to join their families in Florida and beyond, beneficiaries of U.S. policies that grant Cubans preferred immigration benefits once their feet reach American soil, and of Spanish laws that grant some Cubans Spanish citizenship. The trick for party officials, then, is to demonstrate enough tangible improvements
that Cubans will maintain faith in their ability to lead the country even after the Castros leave the scene. This explains the Communist Partys determined effort to intensify popular consultations throughout the island and to keep up the momentum and rhetoric of slow but stead y change. In everything we do, said one official, we will try to be inclusive. There is, indeed, a daunting list of challenges ahead. Cuban officials are working overtime to update legal cod es and systems to conform to the new economic policies. A revised tax code is being drafted as well as designs for a new labor system that will handle the growing category of self-employed workers not currently covered by Cubas labor code. A massive education campaign is needed not only to inform and consult the general public but to explain to local officials and civil servants

how this is all going to work. New rules for foreign investment remain unfinished business. And major investment is needed to update Cubas sagging infrastructure, especially in the telecom munications sector where cell phones and internet penetration remain the lowest in the hemisphere. One area where Cuba seems to be moving in a positive direction is tourism. From 1990 to 2010, the estimated number of tourists has risen from 360,000 to 2.66 million. In addition, thanks to President Obamas decision to allow Cuban -American families to visit the island and send remittances as much as they want, Cubans have received over 400,000 visits and roughly $2 billion from relatives in the United States. These are proving to be important sources of currency and commerce that are helping families cope with reduced subsidies and breathe life in the burgeoning private sector. A walk through crowded Old Havana, where construction crews are busy restoring on e of the Americas great colonial treasures, offers compelling evidence that Cuba can be a strong magnet for Europeans, Canadians, Chinese and some dayhundreds of thousands of American visitors. And Pope Benedicts visit in late March will shine an international spotlight on a Cuba slowly opening its doors to the world, yes, but more importantly, to an increasingly vocal and confident Catholic Church intent on securing a more prominent and relevant place in Cuban society. For now,

Cubas slow-motion evolution toward a hybrid phase of economic liberalization and political

control remains a work in progress. The next Communist Party conference to be held later this month is likely to bring only modest
changes in the regimes aging leadership, for example, but promises of adopting term limits for senior government officials appear all but certain to be fulfilled. Raul
Castro, a military man who believes in discipline, organization and institutions, has instituted regular cabinet meetings and clear lines of communication. In this sense, he is no

These, too, are signs of change that will, with time, make long overdue reconciliation with the United States inevitable.
Fidel.

[LN] U.S. trade leads to investment in Cubathat creates an unsustainable transition

Robert David Cruz 3 (current qualifications: PhD., Chief economist for Miami-Dade County) Foreign Direct Investment in Post-Castro Cuba: Problems, Opportunities and Recommendations, University of Miami, Institute for Cuban and Cuban-American Studies, Pg. 20, http://ctp.iccas.miami.edu/Research_Studies/RDCruz.pdf

U.S. role during an economic transition is not to promote FDI in Cuba per se, but rather to help establish the foundation for a successful and rapid transition to a market economy and representative democracy. Market forces will direct FDI to Cuba as a result of the transition, the establishment of a stable democracy, and the inherent long term strengths of the Cuban economy. With such a foundation in place, Cuba will attract a significant share of the regions flow of FDI as the risk adjusted rates of return to FDI in Cuba are likely to be markedly higher than in other parts of the region during the short- and medium-run following the start of transition. Investment flows attracted solely or primarily by U.S. financial incentives without developing the foundation for long-term growth will have only transitory effects and be unsustainable in the longer run. Nonetheless, there are U.S. policy actions that can facilitate economic transition and help to ensure its success and
The appropriate durability. If a transition to democracy occurs quickly, then Cuba will need almost immediate access to the expertise and information required to take appropriate economic policy actions The U.S. should be ready to assist Cuba during such a period by compiling a library of professional studies, academic articles, literature surveys, news articles and interviews directly related to the challenges of economic transition and public policy. The U.S. should also assist in the creation of a directory of experts in the various fields of economic transition and development (for example: macroeconomic policy, international trade policy, financial and commercial institution building, legal system and judiciary, privatization, small business development, and civil society). This directory of experts could be used to assemble a team of advisors in key policy areas. These actions would build a knowledge base that a Cuban government could easily access during the early phase of economic transition. Under the appropriate business and regulatory environment, Cuba can expect a flood of new U.S. tourists drawn away from other Caribbean destinations (and away from Floridas coastal destinations as well), and re-routing of cruise-

the growth and development of export zones in a Cuba embarked on economic transition may very well lead to a shift in FDI from Caribbean nations. These developments may have significant detrimental effects on the economy of some of
ship itineraries. Similarly the U.S.s Caribbean trading partners (and perhaps, Southeast Florida as well). The U.S. should be ready to mitigate these negative economic impacts in the short- and medium

. It would be a mistake for the U.S. to adopt special fiscal incentives (tax breaks or subsidies) for U.S. companies that invest in Cuba, as this would lead to an artificial competitive advantage that may later be difficult to dismantle. Instead, the U.S. should assist Cuba in ways that strengthen the foundation of a market economy. As
run earlier suggested, the primary focus of U.S. policy toward Cuba during a transition to democracy and a market economy should be: 1) facilitate technical assistance in the area of economic policy, and in strengthening structures of governance and civil society; 2) provide financial assistance necessary to attain macroeconomic stability; and 3) lead a multilateral effort to provide the financing needed to rebuild physical infrastructure in ways that promote economic development that is spread across the island.

*****FDI= Foreign direct investment

[IM] Cuban instability leads to Caribbean Terrorism, provides a breeding ground for extremist organizations Gorrell 5 (Tim, retired Lieutenant Colonel of the US Army with decorations of the Bronze Star,
Legion of Merit, Army Commendation Medal, Meritorious Service Medal, CUBA: THE NEXT UNANTICIPATED ANTICIPATED STRATEGIC CRISIS? 3/18, http://www.dtic.mil/cgibin/GetTRDoc?AD=ADA433074) Regardless of the succession, under the current U.S. policy, Cubas problems of a post Castro transformation only worsen. In addition to Cubans on the island, there will be those in exile who will return claiming authority. And there are remnants of the dissident community within Cuba who will attempt to exercise similar authority. A power vacuum or absence of order will create the conditions for instability and civil war . Whether Raul or another successor from within the current government can hold power is debatable. However, that individual will nonetheless

extend the current policies for an indefinite period, which will only compound the Cuban situation. When Cuba finally collapses anarchy is a strong possibility if the U.S. maintains the wait and see approach. The U.S. then must deal with an unstable country 90 miles off its coast. In the midst of this chaos, thousands will flee the island. During the Mariel boatlift in 1980 125,000 fled the island.26 Many were criminals; this time the number could be several hundred thousand flee ing to the U.S., creating a refugee crisis. Equally important, by adhering to a negative containment policy, the U.S. may be creating its next series of transnational criminal problems. Cuba is along the axis of the drug-trafficking flow into the U.S. from Columbia. The Castro government as a matter of policy does not support the drug trade. In fact, Cubas actions have shown that its stance on drugs is more than hollow rhetoric as indicated by its increasing seizure of drugs 7.5 tons in 1995, 8.8 tons in 1999, and 13 tons in
2000.27 While there may be individuals within the government and outside who engage in drug trafficking and a percentage of drugs entering the U.S. may pass through Cuba, the

Cuban government is not the path of least resistance for the flow of drugs. If there were no Cuban restraints, the flow of drugs to the U.S. could be greatly facilitated by a Cuba base of operation and accelerate considerably. In the midst of an unstable Cuba, the opportunity for radical fundamentalist groups to operate in the region increases. If these groups can export terrorist activity from Cuba to the U.S. or throughout the hemisphere then the war against this extremism gets more complicated. Such activity could increase direct attacks and disrupt the economies, threaten ing the stability of the fragile democracies that are budding throughout the region. In light of a failed state in the region, the U.S. may be forced to deploy military forces to Cuba, creating the conditions for another insurgency . The ramifications of this action could very well fuel greater anti-American sentiment throughout the Americas. A
proactive policy now can mitigate these potential future problems. U.S. domestic political support is also turning against the current negative policy. The Cuban American population in the U.S. totals 1,241,685 or 3.5% of the population.28 Most of these exiles reside in Florida; their influence has been a factor in determining the margin of victory in the past two presidential elections. But this election strategy may be flawed, because recent polls of Cuban Americans reflect a decline for President Bush based on his policy crackdown. There is a clear softening in the Cuban-American community with regard to sanctions. Younger Cuban Americans do not necessarily subscribe to the hard-line approach. These changes signal an opportunity for a new approach to U.S.-Cuban relations. (Table 1) The time has come to look realistically at the Cuban issue. Castro will rule until he dies. The only issue is what happens then? The

U.S. can little afford to be distracted by a failed state 90 miles off its coast. The administration, given the present state of world affairs, does not have the luxury or the resources to pursue the traditional American model of crisis management. The President and other government and military leaders have warned that the GWOT will be long and protracted. These warnings were sounded when the administration did not anticipate operations in Iraq consuming so many military, diplomatic and economic resources. There is justifiable concern that Africa and the Caucasus region are potential hot spots for terrorist activity, so these areas should be secure. North Korea will continue to be an unpredictable crisis in waiting. We also cannot ignore China. What if China resorts to aggression to resolve the Taiwan situation? Will the U.S. go to war over Taiwan? Additionally, Iran could conceivably be the next target for U.S. pre-emptive action. These are known and potential situations that could easily require all or many of the elements of national power to resolve. In view of such global issues, can the U.S. afford to sustain the status quo and simply let the Cuban situation play out? The U.S. is at a crossroads: should the policies of the past 40 years remain in effect with vigor? Or should the U.S. pursue a new
approach to Cuba in an effort to facilitate a manageable transition to post-Castro Cuba?

[IM] Caribbean terrorism leads to attack on the US---theyll use bioweapons Bryan 1 (Anthony T. Bryan, director of the North-South Centers Caribbean Program, 10-212001. CFR, Terrorism, Porous Borders, and Homeland Security: The Case for U.S.-Caribbean Cooperation, p. http://www.cfr.org/publication/4844/terrorism_porous_borders_and%20_homeland_%20secur ity.html) Terrorist acts can take place anywhere. The Caribbean is no exception. Already the linkages between drug trafficking and terrorism are clear in countries like Colombia and Peru, and such

connections have similar potential in the Caribbean. The security of major industrial complexes in some Caribbean countries is vital. Petroleum refineries and major industrial estates in Trinidad, which host more than 100 companies that produce the majority of the worlds methanol, ammonium sulphate, and 40 percent of U.S. imports of liquefied natural gas (LNG), are vulnerable targets. Unfortunately, as experience has shown in Africa, the Middle East, and Latin America, terrorists are likely to strike at U.S. and European interests in Caribbean countries. Security issues become even more critical when one considers the possible use of Caribbean countries by terrorists as bases from which to attack the U nited S tates. An airliner hijacked after departure from an airport in the northern Caribbean or the Bahamas can be flying over South Florida in less than an hour. Terrorists can sabotage or seize control of a cruise ship after the vessel leaves a Caribbean port. Moreover, terrorists with false passports and visas issued in the Caribbean may be able to move easily through passport controls in Canada or the United States. (To help counter this possibility, some countries have suspended "economic citizenship" programs to ensure that known terrorists have not been inadvertently granted such citizenship.) Again, Caribbean countries are as vulnerable as anywhere else to the clandestine manufacture and deployment of bio logical weapons within national borders.

[IM] Bioterror leads to extinction Anders Sandberg 8, is a James Martin Research Fellow at the Future of Humanity
Institute at Oxford University; Jason G. Matheny, PhD candidate in Health Policy and Management at Johns Hopkins Bloomberg School of Public Health and special consultant to the Center for Biosecurity at the University of Pittsburgh Medical Center; Milan M. irkovi, senior research associate at the Astronomical Observatory of Belgrade and assistant professor of physics at the University of Novi Sad in Serbia and Montenegro, 9/8/8, How can we reduce the risk of human extinction?, Bulletin of the Atomic Scientists,http://www.thebulletin.org/webedition/features/how-can-we-reduce-the-risk-of-human-extinction The risks from anthropogenic hazards appear at present larger than those from natural ones. Although great progress has been made in reducing the number of nuclear weapons in the world, humanity is still threatened by the possibility of a global thermonuclear war and a resulting nuclear winter. We may face even greater risks from emerging tech nologies. Advances in synthetic biology might make it possible to engineer pathogens capable of extinction -level pandemics. The knowledge, equipment, and materials needed to engineer pathogens are more accessible than those needed to build nuclear weapons. And unlike other weapons, pathogens are self-replicating, allowing a small arsenal to become exponentially destructive. Pathogens have been implicated in the extinctions of many wild species. Although most pandemics "fade out" by reducing the density of susceptible populations, pathogens with wide host ranges in multiple species can reach even isolated individuals. The intentional or unintentional release of engineered pathogens with high transmissibility, latency, and lethality might be capable of causing human extinction . While such an event seems unlikely today, the likelihood may increase as biotechnologies continue to improve at a rate rivaling Moore's Law.

[IM] Rapid change risks Cuban civil war Feinberg 11 - professor of international political economy at UC San Dieg, nonresident senior
fellow with the Latin America Initiative at Brookings (Richard E., Reaching Out: Cubas New Economy and the International Response, November, Brookings, http://www.brookings.edu/~/media/research/files/papers/2011/11/18%20cuba%20feinberg/11 18_cuba_feinberg.pdf)//ID Some in the United States have long supported severe sanctions intended to starve the Cuban regime of resources and thereby precipitate a political breakdown . Yet, within the national security bureaucracy of the U .S . Executive Branch, notwithstanding occasional presidential rhetoric, there is a strong preference for gradual, peaceful evolution in Cuba . A sudden breakdown, it is feared, would entail substantial risks for U .S . interests, including an immigration crisis right off of our shores, and in the worst case, irresistible pressures for intervention to quell a bloody civil war and halt a mass exodus of refugees.

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We have several warrants isolated in Cruz as to why the plan overheats Cubas economy a. Experts They lack the expert analysis that is needed for large economies that have a lot of FDI b. Artificial Competition FDI creates artificial competition in Cubas economy that would be impossible to remove afterwards, hurting Cuba in the long term c. Sustainability US plans that drive FDI would no longer be sustainable and lead to state collapse after Cuba inherently requires FDI to continue its economy ( ) Cuba will become a failed state if massive changes are implemented large economic changes in Cuba would lead to destabilization and the collapse of all governmental systems in the country Azel Sep-08 (Jos, How to Think About Change in Cuba: A Guide for Policymakers, Jos Azel
is currently a Senior Research Associate at the Institute for Cuban and CubanAmerican Studies, University of Miami, http://ctp.iccas.miami.edu/Research_Studies/Article-Azel-FINAL.pdf) But suppose that the U. S. government and the other constituencies - Cubans in the island and in exile, and the international community - are persuaded that economic changes per se represent an opening that should be rewarded in some fashion. A case in point is the argument that, in the case of Cuba, a very gradual approach to changes is called for in order to avoid the possible chaos resulting from more comprehensive and rapid changes. Cubas abysmal set of initial sociopolitical and economic conditions is such that the introduction of comprehensive massive changes could result in a failed state . Some may be tempted to dismiss this concern by noting that by some parameters (e.g. the pervasive informal economy, reluctance to participate in formal employment, etc.) Cuba is already a failed state. But technically Cuba is not a failed state.10 It is a stable closed state still able to implement and enforce government policy, albeit not uniformly particularly in economic matters. Therefore the gradualist argument deserves more serious considerations as it is always possible for conditions to get worse. The main concern hinges on the precarious balance between openness in a society and stability in that society. It is certainly the case that economic reforms particularly reforms to begin a transition from a command economy to a market economy are destabilizing. Decollectivization and desocialization create enormous social dislocations. They require a repositioning of the role of the state and a new model of social relationships between the state and its people. Whatever the specific strategies selected they will demand many difficult choices. As Ian Bremmer points out in The J Curve, for a country

that is stable because its closed to become a country that is stable because it is open it must go through a transitional period of dangerous instability. These are thoughtful security considerations that must be weighted by policymakers. Unfortunately Cubas present politico-economic system can not be the starting point for a serious development and reconstruction process. The countrys existing bureaucratic, institutional, and organizational framework is not conducive to the creation of a new state.

( ) U.S. engagement leads to investment in Cubathat creates an unsustainable transition Now is key Ted Piccone, 12 (Ted Piccone is a senior fellow and deputy director for Foreign Policy at
Brookings. Piccone specializes in U.S.-Latin American relations; global democracy and human rights; and multilateral affairs. Piccone serves as an advisor to the Club of Madrid and has served on the National Security Council, at the State Department and Pentagon), Brookings, Cuba Is Changing, Slowly but Surely, January 19, 2012, http://www.brookings.edu/research/reports/2012/01/19-cuba-piccone A closer look, however, reveals something more profounda wholesale mental shift, outlined clearly by President Raul Castro over the last two years, that the time has come to move the Cuban people from wholesale dependence on the state to a new era of individual responsibility and citizenship.This is going to take time. The economic reforms or updating of Cubas Soviet-style economic system, approved last spring at the Communist Partys first National Congress in 14 years, are just beginning to be enacted. They include an expansion of licenses
for private enterprise (over 350,000 have been granted), opening more idle land to farmers and cooperatives, allowing businesses to hire employees, empowering people to buy and sell their houses and cars, and opening new lines of credit with no legal ceilings on how much Cubans can borrow. Nonstate actors are allowed now to sell unlimited services and commodities directly to state-owned enterprises and joint ventures, thereby

openingnew channels of commercial activity between farmers and tourist hotels, for example. Think Viet Nam or China. The
reforms include tough measures too, like shrinking the buying power of the longstanding ration card that every Cuban gets to purchase subsidized basic goods, cutting unemployment benefits, and eventually dismissing anywhere from 500,000 to one million employees from the state sector as bureaucratic middlemen become obsolete and tax revenues rise.These

changes, while painful, are reason enough to be optimistic about Cubas economic future. But something much more fundamental is at worka turn away from government
control of pricing and subsidizing products throughout the economy to a more decentralized framework of subsidizing persons based on need. At heart,

the Castro government is prepared to move Cuba from a society based on equity of results to equality of opportunity, infused with a culture of humanism. Not that Cubas system ever offered true equality, as one taxi driver reminded me as we drove down Havanas famous seaside Malecon. The door, however, is now opening wider tothe inevitable rise in inequality that comes from capitalism, even restrained forms of it. Whether one is able to prosper as a self-employed restauranteur, or is the beneficiary of generous relatives sending remittances and goods home from Miami, new gradations in Cubas economic and social strata are on the way. As long as someone arrives at their wealth legally and pays their taxes, assured one senior party official, they are free to become rich. The big question for Cubas leaders today is whether they can bring their people with them down this new, uncertain path after five decades of Cubanstyle communism. If reforms happen too quickly, it could cause excessive dislocation and unhappiness and potentially destabilize the regime . Already bureaucrats who have something to lose under the new system are resisting change, much to Raul Castros chagrin. If the pace of change
is too slow, on the other hand, budding entrepreneurs, the middle class and disaffected youth, who have no overt commitment to the values of the 1959 revolution, may give up sooner and head to greener pastures in the United States, Spain or Canada. As it is, Cubans are leaving the island in droves to join their families in Florida and beyond, beneficiaries of U.S. policies that grant Cubans preferred immigration benefits once their feet reach American soil, and of Spanish laws that grant some Cubans Spanish citizenship.The

trick for party officials, then, is to demonstrate enough tangible improvements that Cubans will maintain faith in their ability to lead the country even after the Castros leave the scene . This explains the Communist Partys determined effort to intensify popular consultations throughout the island and to keep up the momentum and rhetoric of slow but steady change. In everything we do, said one official, we will try to be inclusive. There is, indeed, a daunting list of challenges ahead. Cuban officials areworking overtime to update legal codes and systems to conform to the new economic policies. A revised tax

code is being drafted as well as designs for a new labor system that will handle the growing category of selfemployed workers not currently covered by Cubas labor code. A massive education campaign is needed not only to inform and consult the general public but to explain to local officials and civil servants how this is all going to work. New rules for foreign investment remain unfinished business. And major investment is needed to update Cubas sagging infrastructure, especially in
the telecommunications sector where cell phones and internet penetration remain the lowest in the hemisphere. One area where Cuba seems to be moving in a positive direction is tourism. From 1990 to 2010, the estimated number of tourists has risen from 360,000 to 2.66 million. In addition, thanks to President Obamas decision to allow Cuban-American families to visit the island and send remittances as much as they want, Cubans have received over 400,000 visits and roughly $2 billion from relatives in the United States. These are proving to be important sources of currency and commerce that are helping families cope with reduced subsidies and breathe life in the burgeoning private sector. A walk through crowded Old Havana, where construction crews are busy restoring one of the Americas great colonial treasures, offers compelling evidence that Cu ba can be a strong magnet for Europeans, Canadians, Chinese andsome dayhundreds of thousands of American visitors. And Pope Benedicts visit in late March will shine an international spotlight on a Cuba slowly opening its doors to the world, yes, but more importantly, to an increasingly vocal and confident Catholic Church intent on securing a more prominent and relevant place in Cuban society. For now, Cubas

slow-motion evolution toward a hybrid phase of economic liberalization and political control remains a work in progress. The next Communist Party conference to be held later this month is likely to bring only modest changes in the regimes aging leadership, for example, but promises of adopting term limits for senior government officials appear all but certain to be fulfilled. Raul Castro, a military man who believes in discipline, organization and institutions, hasinstituted regular cabinet meetings and clear lines of communication. In this sense, he is no Fidel. These, too, are signs of change that will, with time, make long overdue reconciliation with the United States inevitable. No Solvency 2NC

( ) FDI currently fails when applied to Cuba Robert David Cruz 03 (current qualifications: PhD., Chief economist for Miami-Dade County)
Foreign Direct Investment in Post-Castro Cuba: Problems, Opportunities and Recommendations, University of Miami, Institute for Cuban and Cuban-American Studies, Pg. 20, http://ctp.iccas.miami.edu/Research_Studies/RDCruz.pdf, JCook. The obstacles that prevent the economic success of FDI in Cuba at present are also not likely to simply disappear by embarking on a path of transition to a market economy, unless a transition government abandons the strategy of targeting industries for FDI priority and its preference for case-by-case negotiations with potential foreign investors. The focus of strategy should be on laying the institutional and regulatory foundation that facilitates FDI in general. When formulating FDI policies and pro- grams a new government would do well to focus on the factors that drive financial management decisions in market economies.

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Several reasons Cubas economy is stabilizing: a. Political Incentives Ted Piccone 13 (Ted Piccone is a senior fellow and deputy director for Foreign Policy at
Brookings. Piccone specializes in U.S.-Latin American relations; global democracy and human rights; and multilateral affairs. Piccone serves as an advisor to the Club of Madrid and has served on the National Security Council, at the State Department and Pentagon), Time to Bet on Cuba, March 18th, http://www.brookings.edu/research/opinions/2013/03/18-cuba-piccone)

Under Castro, the Cuban government has undertaken important reforms to modernize and liberalize the economy. Cubans are now permitted to buy and sell property, open their own businesses, hire employees and enter into co-ops, with state-owned enterprises on a more equal footing. The updating of the Soviet-style economic system is a gradual and highly controlled process. But the recent legal emergence of formal, small-scale private businesses (cuentapropistas) that can now compete on a more equal footing with state-owned enterprises opens a window into a profound shift in thinking already under way on the island. The reforms also offer new opportunities for U.S. engagement. Castros loosening of the apron strings extends beyond the economy. In January, the Cuban government lifted exit controls for most citizens, which is likely to accelerate the process of reconciliation within the Cuban diaspora. It could also result in a swift uptick of Cubans departing for the United States, demanding a reconsideration of U.S. migration policy to manage the increase. The gradual handoff of power to a next generation of more pragmatic party and military leaders who will determine the pace and scope of the reform process is yet further evidence that the Castro generation is looking forward to securing a viable legacy.

b. Reforms Ross 11 (Sherwood, columnist for Veterans Today, director of the Anti-War News Service,
Cuba Undergoing Silent Transition Toward A Free Market Economy, http://www.veteranstoday.com/2011/10/30/cuba-undergoing-silent-transition-toward-a-freemarket-economy/) A series of economic reforms are shrinking the size of the state-run economy and making room for a greatly expanded private sector, says Michelle Chase, professor of Latin American history at Bloomfield (N.J.) College. The reforms are being instituted slowly, however. Roberto Veiga Gonzalez, a progressive Catholic editor of a journal published by the Archdiocese of Havana calls the gradual transition responsible, but adds Cubans needs the reforms now because they cant take the hardship any longer. Cubans are enduring hard times. Many families are already spending 80% of their income just on food. Writing in the November 7th issue of The Nation magazine, Chase says some in the government want economic reforms modeled after China and Vietnam but others want Cubas reforms to be tailored in a way that would give priority to small, worker-owned cooperatives that are a kind of decentralized socialism. Whatever the shape of the future, Raul Castro, who promised Cuba would never return to capitalism, appears to be doing just that . A year ago, Chase writes, he directed mass layoffs of government workers to trim a bloated bureaucracy and designated new areas for entrepreneurial expansion. Since last April, Havana has granted some 330,000 licenses and the newly self-employed, known as cuentapropistas, are now allowed to hire Cubans outside of their own families. The governments stated goal, Chase writes, is to have nearly half the populace working in the private sector by 2015. For a country where nearly 90 percent of the economy was once in state hands, that will be a major about-face. Whereas in 1990, liberal reforms in Cuba were viewed as a necessary evil today, Chase explains, the leadership actually embraces the notion of a robust private sector. Adds Omar Everleny, a professor at the Center for the Study of the Cuban Economy at the University of Havana, When you read the Guidelines and Rauls speeches, you realize hes determined to change things.hes made the decision not to turn back.

c. Industry Cuba News 13, Analysis: Cuba is much stronger today than after USSRs collapse in the
1990s, May 20, 2013, http://www.cubanews.com/sections/analysis-cuba-is-much-strongertoday-than-after-ussrs-collapse-in-the-1990s
Similarly, University of Pittsburgh economics professor and Cuba scholar Carmelo Mesa-Lago cautions against such apocalyptical predictions. The impact would be powerful but not as severe as the loss of Soviet-bloc support and trade two decades ago, he said, writing in the Cubaencuentro website. Mesa -Lago added that this extreme scenario would

how prepared is Cuba to deal with such an impact compared to the Soviet collapse of 25 years ago? Several factors must be considered here. * For one, the old system is fading away. In its place, a socialist market economy is rising, thanks to several key reforms some of which have already been implemented, others which will become law soon. The growing private sector now involves more than 40% of Cubas working population. In some places, 50% of agricultural production is sold through private channels. None of this existed before. The trend toward reform in Cuba is evident, and suggests that an inflection point is approaching, writes noted Cuba scholar Ted Piccone of the Brookings Institution. Now is the time to employ a new paradigm by
take place only in the case of a substantial reduction or the ending of Venezuelan aid. The question then becomes: opening a long overdue direct dialogue with our next-door neighbor. A number of European Union member states agree. Theyve restored cooperation with Cuba, while others

Economic activities like tourism which were almost non-existent in 1990 today have become crucial sources of employment and hard currency. Research, production and exports of biotech and pharmaceuticals negligible 25 years ago today exceed $2 billion a year, and by 2018 could exceed $5 billion. The same is true when it comes to Cuban doctors sent abroad, whether to Angola, Venezuela or Qatar. * Remittances amounted to next to nothing in the 1980s. Today they bring in several billion dollars a year, though accurate estimates of just how much are nearly impossible to come by. Those remittances are helped by the 400,000 Cubans living abroad mostly in the U.S. who visited the island in 2012. Jorge Duany,
say theyll review the EUs seemingly outdated posicin comn. That would have been inconceivable following the Soviet collapse. * head of Florida International Universitys Cuban Research Institute, suggests that 10% to 20% of these Cubans would consider going back to the island of their birth as a second

Cubans living the United States would be ready to travel to Cuba to support its development and economic reconstruction an unthinkable development two decades ago. * In the early 1990s, Cuba had almost no oil or gas. These days, the island meets 50% of its needs with local hydrocarbons. Despite three initial major setbacks, several foreign energy companies continue to drill exploratory wells off Cubas Gulf of Mexico coast. * Nickel production, one of the lifesavers of the early 1990s, is now back on its feet after
place of residence. Since 2010, several thousand exiles have actually done so. Meanwhile, says Duany, most overcoming serious technological challenges and a slump in world prices. The industry plans to produce 61,700 metric tons of nickel plus cobalt this year, and by 2015 it should surpass the 74,000 tons it averaged annually during much of the past decade. Much of this depends on the scheduled opening in 2014 of a joint-venture ferronickel plant under construction with Venezuela. The $700 million facility will produce 21,000 tons of nickel a year once its up and running. In fact, nickel for many years has been Cubas top cash

Cuba is getting ready to make a major effort to attract foreign investors. The Mariel project, as Cuban President Ral Castro recently pointed out, will serve as a model for the promotion of new Zonas Especiales de Desarrollo (ZEDs), or special development zones. * Cuba has much more diversified trade partners and markets than it did 20 years ago. The islands priorities include all five BRICS countries, but especially China, Russia and Brazil. Even the United States has become an important market, though only for food purchases ($711.5 million in 2008, falling to $465 million in 2012). * At the same time, Cubas foreign debt has been downsized considerably thanks to final arrangements with major creditors as Russia and Japan, followed by partial payments and rescheduling with other countries outside the
export, although prices have been very unstable. * With construction proceeding at the port of Mariel and a pending investment law, Paris Club. The CIA Factbook puts Cubas foreign exchange and gold reserves at $5.23 billion, compared to near -zero in the early 1990s. * Cuba is also much more active diplomatically in the Western Hemisphere and the world in general than it was in the early 90s. The island achieved significant victories at various regional summits in Salvador (Brazil), Port of Spain (Trinidad), San Pedro Sula (Honduras), Cartagena (Colombia) and Santiago (Chile). And this year, Cuba was elected president pro tempore of CELAC. In the last three years, many of the hemispheres heads of state have visited Cuba seeking better relations. In historical terms, the Latin American lefts because there is not one but many from chavismo to social democrats, are experiencing a good period and have perspectives of continuity, said international relations professor Julio Burdman of Argentinas Universidad de Belgrano. Eight out of 10 South American countries fit this pattern not bad at all for Cuba. * Fin ally, critics of Venezuelas oil and trade policies within Petrocaribe tend to characterize relations as giving away resources or call them subsidies. But the United States and Europes former colonial empires resorted to such practices, and continue to do so today. In the early 80s, Mexico and Venezuela (long before Chvez and Maduro) agreed on such an oil arrangement, and it was ca lled the San Jos Treaty. So the policies themselves are not wrong; theyre only wrong when the chavistas do it. The latter conduct trade based on policies and terms linked to their domestic and regional goals or national interests. Trading oil for doctors is not simply a financial transaction; it also has social a nd political considerations. Even the CIA doesnt call it a

Current developments in Venezuela dont point to a debacle or a chaotic outcome. Subsequently, many of these gloomy predictions will have to remain on hold. * Even if the new Venezuelan leadership should adopt any readjustment of Petrocaribe or aid to Cuba, the island will continue to enjoy a privileged status. * Cubas current situation, in stark contrast to that of the early 1990s, will safeguard
giveaway or a subsidy; it prefers the more ac-curate description, oil on preferential terms. CONCLUSIONS *

the economy from any apocalyptic changes in Venezuela, even if those changes are as severe as the Soviet collapse. * Cubas reforms will pick up speed, making its economic ties with Venezuela less vulnerable to any unexpected contingencies. Reforms Extension

Reforms will boost Cubas economy Business Monitor Online, 11, Welcome Reform, But Greeted With Caution, November 9, 2011,
http://article.businessmonitor.com/article/542283/

The decision by Cuban President Raul Castro to lift a ban on privately-owned property is the latest and arguably one of the most significant taken as part of the government's wider economic reform agenda. The new law, due to come into effect November 10, is all the more notable given that a liberalised property market is one of the key building blocks of capitalism and wealth creation and thus a radical departure from the entrenched socialist ideology underpinning Cuban economic policy for over 50 years. However, while the announcement is certainly a step in the right direction for Cuba's underdeveloped private building industry we remain sceptical over extent of the government's willingness to relinquish its pre-dominant role in the sector. Indeed, despite the lifting of the ban, we believe the nascent private building industry will continue to show hesitancy, having long been shackled by government restrictions on forming building companies and purchasing building materials. Moreover, the construction industry remains under control of the state. BMI notes therefore that the shift from a statecontrolled to a liberalised property market will not be a smooth one and raises a host of potentially obstructive problems for the sector - particularly relating to land acquisition and property rights. The absence of impartial institutional bodies to regulate the sector and resolve any such disputes over land and property is a further concern. While inherent weaknesses within the country's business environment will continue to inhibit growth within the construction industry, we nonetheless expect the easing of restrictions to boost real estate development in the country. Although a severe housing shortage exists in the country, we expect growth to be largely driven by the mid to high income sector, with the absence of an established mortgage market favouring those able to pay in cash. If the housing sector is to experienced broad based and sustainable growth over the medium to long-term however, access to affordable credit will be necessary. Due in part to the destruction caused by three hurricanes in 2008, it is estimated that a housing shortfall of 600,000 exists in the country, according to the Latin American Herald Tribune.

Cuba seeking reforms, showing it can handle its economy alone Vicente Morin Aguado, 13, Havana Times staff writer, Havana times, Cuba: Raul Castros Responsible
Pragmatism, July 10, 2013, http://www.havanatimes.org/?p=96175

I dont believe, as many will likely say, that this is yet another speech, to be added to the huge collection of similar government pronouncements. I feel it acknowledges our everyday reality as it has never before been recognized by those in power. It implies we cannot go back to doing things as we once did, for it recognizes what is taking place around us today. Adherence to legal precepts will constitute a great step forward for Cuba, even for those who are opposed to the countrys political system. Even the opposition, therefore, can applaud the pronouncements of our president. I cant say no one could say whether the proposals advanced by our countrys current leader will be materialized, but I am certain Raul Castro has hit the nail on the head with respect to the reality we face today. Of course, Raul Castros

pragmatism is socialistic. It is aimed at preserving the revolution of which he is one of the main architects. In an attempt to define the economic model that will result from the countrys current reform process, the Head of State stated that the public ownership of the chief means of production will be maintained, while acknowledging the validity of other forms of (non-State) economic management, affirming that economic development plans will continue to be implemented without denying the importance of market forces. I am optimistic, because we are finally acknowledging, openly and thoroughly, the difficult situation we live in. It is, as Raul Castro rightly said, the first step towards replacing this situation with something better. Though there is much cause for irritation, I support the responsible pragmatism of our president. Strong Economy

Cubas economy is strong now Business and Tenders 6-25

( Business and Tenders Is an Economic Newspaper that issued weekly , it is specialized in the field of business , finance and tenders , it is

issued from Muscat Sultanate of Oman , for Zidni Foundation for Press and Publishing , it is issued in Arabic and English every Monday. Our goal is to become the first Omani newspaper that achieve success beyond prospects , to link between all segments of society. Cuba starts the New Year with more self -confidence economy http://www.businesstendersmag.com/reports/international-economy/1219-cubastarts-the-new-year-with-more-self-confidence-economy 6-25-13.)

Cuba's economy starts 2013 with more self-confidence especially that the government has adopted a sound approach for restructuring the economy through the development of laws expand the private sector activities in a wide range of business. The country did not witness this trend since Castro assumed power since 50 years. At the same time, these activities represent significant support for the budget. Cuban Parliament, during its last session in 2012, created a new system helps to manage the growing private sector in the country, where the 600 representatives led by the leader of the country "Castro" studied economic programs for the current year and economic restructuring processes in it. The new economic plan said that the Cuba's communist government will start as of the first day of the new year to collect tax. This led a number of economists to expect the Cuban economy to witness significant improvement. In a related context, semi-official data by Reuters on last December indicated that the efforts of the Cuban government to cut public sector jobs and stimulate growth of the private sector have gained large momentum in 2012 along side with the reforms on the economy by President Raul Castro. A report by the Cuban Economy Minister Adel Azkoardo said that the number of employees in the private sector increased by 23% in 2012, the number of employees in the government
and public sector fell by 5.7%, and the unemployment rate rose to a record of 3.8%, does not include Cubans jobseekers.

Link
Generic

Increased economic engagement leads to FDI in Cuba CATO 03, CATO Handbook for Congress, The CATO Institute, pp. 607-608,
http://object.cato.org/sites/cato.org/files/serials/files/cato-handbookpolicymakers/2003/9/hb108-60.pdf
Cuban officialdom appears to be well aware of that danger. For example, Cubas opening of its tourism industry to foreign investment has been accompanied by measures that restrict ordinary Cubans from visiting foreign hotels and tourist facilities. As a result, Cubans have come to resent their government for what is known as tourism

Cuban officials have also issued increasing warnings against corruption, indicating the regimes fear that unofficial business dealings, especially with foreigners, may weaken allegiance to the government and even create vested interests that favor more extensive market openings. As the Hoover Institution study concluded, In time, increasing amounts [of
apartheid. In recent years,

expanded tourism, trade, and investment] would go beyond the state, and although economics will not single-handedly liberate Cuba, it may contribute some to that end. This is so, in part, because the repressive Cubans within the state apparatus are subject to influences that can tilt their allegiances in positive ways. Further undercutting the regimes authority is the widespread dollar economy that has emerged as a consequence of foreign presence and remittances from abroad, estimated at $800 million annually, which the Helms-Burton Act had banned until the spring of 1998. Today about 50 percent of the Cuban population has access to dollars. The dollarization of the Cuban economya phenomenon now legalized by the Cuban regime as a result of its inability to control ithas essentially eliminated the regimes authority to dictate the countrys monetary policy. Replacing the all-encompassing state with one that allows greater space for voluntary interaction requires strengthening elements of civil society, that is, groups not dependent on the state. That development is more likely to come about in an environment of increased interaction with outside groups than in an environment of increased isolation and state control.

Lifting of the embargo or travel ban brings in mafia money, entrenches totalitarian structures, encourages repression, delays democracy, grows the mafia, hurts other Caribbean economies, creates a refugee flood, and looks like appeasement. Jaime Suchlicki 2K, (Emilio Bacardi Moreau Distinguished Professor and Director, Institute for
Cuban and Cuban-American Studies, University of Miami. Author of Cuba: From Columbus to Castro, and Mexico: From Montezuma to NAFTA. He is also the editor of Cuban Affairs,a quarterly electronic journal), University of Miami, The Implications of Lifting the U.S. Embargo and Travel Ban, June 2000, pp. 3-6, http://www6.miami.edu/iccas/USEmbargo.pdf The lifting of the embargo and the travel ban without meaningful changes in Cuba will: Guarantee the continuation of the current totalitarian structures. Strengthen state enterprises, since money will flow into businesses owned by the Cuban government. Most businesses are owned in Cuba by the state and, in all foreign investments, the Cuban government retains a partnership interest. Lead to greater repression and control since Castro and the leadership will fear that U.S. influence will subvert the revolution and weaken the Communist partys hold on the Cuban people. Delay instead of accelerate a transition to democracy on the island. Allow Castro to borrow from international organizations such as the IMF, the World Bank, etc. Since Cuba owes billions of dollars to the former Soviet Union, to the Club of Paris, and to others, and has refused in the past to acknowledge or pay these debts, new loans will be wasted by Castros inefficient and wasteful system, and will be uncollectible. The reason Castro has been unable to pay back loans is not because of the U.S. embargo, but because his economic system stifles productivity and he continues to spend on the military, on adventures abroad, and on supporting a bankrupt welfare system on the island. Perpetuate the rather extensive control that the military holds over the economy and foster the further development of Mafia type groups that manage and profit from important sectors of the economy, particularly tourism, biotechnology, and agriculture. Negate the basic tenets of U.S. policy in Latin America which emphasize democracy, human rights, and market economies. Send the wrong message to the enemies of the U.S.: that a foreign leader can seize U.S. properties without compensation; allow the use of his territory for the introduction of nuclear missiles aimed at the U.S.; espouse terrorism and anti-U.S. causes throughout the world; and eventually the U.S. will forget and forgive, and reward him with tourism, investments, and economic aid. Specific Considerations Tourism If tourists are allowed to visit Cuba, the

Castro government will follow the same practices of the Soviet Union and Eastern European countries in the past: tourists would have to obtain visas from the Cuban Interest Section in Washington; their travel would be controlled and channeled into the tourist resorts built in the island away from the major centers of population; and tourists will be screened carefully to prevent "subversive propaganda" from entering the island. American tourists will have limited contact with Cubans thus their influence would be limited Cuba's security apparatus tightly controls most of the tourist resort areas such as Varadero, Cayo Coco, etc. They are off-limits to the average Cuban. Employees in these resorts are carefully screened by the government and programmed to tell the visiting tourists Castro propaganda line. Tourist dollars would be spent on products. i.e. rum, tobacco, etc. produced by state enterprises, and tourists would stay in hotels owned partially or wholly by the Cuban government. The principal airline-shuffling tourists around the island, Gaviota, is owned and operated by the Cuban military. Carlos Lage, the Czar of the Cuban economy, reiterated on April 2, 1998, that the economic objective of the Cuban government was " to strengthen state enterprises." The Cuban government would select which U. S. airlines and cruise companies will be allowed to visit the island and which U.S. companies are permitted to invest in joint venture with Cuban State enterprises. The economic impact of tourism, while providing the Castro government with much needed dollars, would be limited. Dollars will flow in small quantities to the Cuban poor; state and foreign enterprises will benefit most. Since Cuba lacks a well-developed native tourist infrastructure, a large percentage of the tourist dollars spent on the island will be sent abroad by the foreign entities from Spain and Canada operating hotels and nightclubs. A large influx of tourists into Cuba will have a dislocating effect on the economies of smaller Caribbean islands such as Jamaica, the Dominican Republic, Bahamas, and Puerto Rico, highly dependent on tourism for their wellbeing. Careful planning must take place, lest we create significant hardships and social problems in these countries. Since tourism will become a two-way affair, with Cubans visiting the U.S. in great numbers, it is likely that many will stay in the U.S.as illegal immigrants, complicating a rather thorny issue in American domestic politics.

Lifting the embargo leads to FDIs CETIM 3

(As a not-for-profit organization, the CETIM deals with topics That Often the media neglect. Convinced That some social actors in Both global and national power Struggles Decided start

with a handicap, as the publisher CETIM countries to careful attention to the myriad conflicts That daily endanger peace and to the search for alternatives That Could Ensure egalitarian and lasting development. The effects of the US embargo against Cuba and the reasons of the urgent need to lift it http://www.cetim.ch/old site/2003/03js04w4.htm. 2003)

If it affects negatively all the sectors3, the embargo directly impedes - besides the exportations - the driving forces of the Cuban economic recovery, at the top of which are tourism, foreign direct investments (FDI) and currency transfers. Many European subsidiaries of US firms had recently to break off negotiations for the management of hotels, because their lawyers anticipated that the contracts would be sanctioned under the provisions of the "Helms-Burton law". In addition, the buy-out by US groups of European cruising societies, which moored their vessels in Cuba, cancelled the projects in 2002-03. The obstacles imposed by the United States, in violation of the Chicago Convention on civil aviation, to the sale or the rental of planes, to the supply of kerosene and to access to new technologies (e-reservation, radio-localization), will lead to a loss of 150 million dollars in 2003. The impact on the FDI is also very unfavourable. The institutes of promotion of FDI in Cuba received more than 500 projects of cooperation from US companies, but none of them could be realized - not even in the pharmaceutical and biotechnological industry, where Cuba has a very attractive potential. The transfer of currencies from the United States is limited (less than 100 dollars a month per family) and some European banks had to restrain their commitment under the pressure of the US

which let them know that indemnities would be required if the credits were maintained. In Cuba, the embargo penalizes the activities of the bank and finance, insurance, petrol, chemical products, construction, infrastructures and transports, shipyard, agriculture and fishing, electronics and computing, but also for the export sectors (where the US property prevailed before 1959), such as those of sugar, whose recovery is impeded by the interdiction of access to the fist international stock exchange of raw materials (New York), of nickel, tobacco, rum. Energy

Lifting the embargo on energy sends capital to Cuba Jos Azel et. al, 10 (senior research associate at the Institute for Cuban and Cuban-American
Studies, University of Miami), Edited by Jos Ral Perales (Senior Program Associate), Woodrow Wilson Center Latin American Program, The United States and Cuba: Implications of an Economic Relationship, August, 2010, pp. 6-7, http://www.wilsoncenter.org/sites/default/files/LAP_Cuba_Implications.pdf In spite of these developments, Pin argued it is in the best interests of both Cuba and the United States to begin energy collaboration today. What is needed, Pin continued, is a bilateral policy that would contribute to Cubas energy independence as well as support a broader national energy policy that embraces modernization of infrastructure, the balancing of hydrocarbons with renewable materials, and conservation and environmental stewardship. He highlighted the case of the Deepwater Horizon disaster in the Gulf of Mexico, and what would happen if such an incident happened in a Cuban oil rig (under current U.S. policy banning equipment and technological sales to the island), as a reminder of the need for an energy dialogue between Cuba and the United States. Moreover, Pin contended that if U.S. companies were allowed to contribute to developing Cubas hydrocarbon reserves, as well as renewable energy such as solar, wind, and sugarcane ethanol, it would reduce the influence of autocratic and corrupt governments on the islands road toward self determination. Most importantly, it would provide the United States and other democratic countries with a better chance of working with Cubas future leaders to carry out reforms that would lead to a more open and representative society. American oil and oil equipment and service companies have the capital, technology, and operational know-how to explore, produce, and refine in a safe and responsible manner Cubas potential oil and natural gas reserves.

Internals
Good Good Overheat

Massive increases in capital lead to overheating

Asset bubbles Inflation Excess credit kills banking No internal balance The Economist, 2011, Some like it hot: Which emerging economies are at greatest risk of overheating?
June 30 , 2011, http://www.economist.com/node/18895150?story_id=18895150&CFID=173052931&CFTOKEN=76541139
th

Our interactive index ranks these 27 emerging economies across all six individual indicators The fourth symptom of overheating, and one of the most important, is excessive credit expansion, which can lead to asset bubbles as well as inflation. The best measure of excess credit is the difference between the growth rate in bank credit and nominal GDP. It is normal for bank lending to grow a bit faster than GDP in an emerging economy as the financial sector develops, but credit is outpacing GDP by an alarming margin in Argentina, Brazil, Hong Kong and Turkey. Lending to the private sector has increased by around 20% more than nominal GDP over the past year in both Turkey and Hong Kong. But not all emerging economies are awash with liquidity. In ten of the 27 countries, including Russia, South Africa, Egypt and Chile, credit is growing more slowly than GDP. The growth rate in China's bank lending has halved over the past year or so, and is now broadly in line with GDP growth. Our fifth indicator is the real rate of interest, which is negative in over half of the economies. That may be appropriate where demand is weak but in rapidly growing economies, such as Argentina, India, Vietnam and Hong Kong, negative real rates are fuelling faster credit growth and inflation. At the other extreme, Brazil's real interest rate of almost 6% is among the highest in the world. China's benchmark lending rate is slightly positive but this understates the extent of its recent monetary tightening: the central bank has also sharply raised banks' reserve requirements and capped credit growth. Mercury rising Our final temperature gauge is the external balance. A widening currentaccount deficit can be a classic sign of overheating, as domestic demand outpaces supply. Turkey looks particularly worrying, with its deficit expected to jump to 8% of GDP this year, up from 2% in 2009. Rising current-account deficits in Brazil and India also suggest domestic demand is growing too fast.

Emerging markets risk overheating EIU 11, The Economist Intelligence Unit (forecasts economic changes for all countries, analyzes key industries, and
helps executives make decisions), Overheating in emerging markets, http://digitalresearch.eiu.com/searchforgrowth/reports/the-search-for-growth/section/overheating-in-emergingmarkets

While developed economies are struggling to sustain a cyclical recovery, the challenge for the emerging markets is very different. Their priority is to prevent the risk of overheating in a context of higher capital flows, rising inflation and closing output gaps. As margins of excess capacity are used up, the signs of overheating are starting to become more visible. Theres a limit to how fast you can grow before you cause problems, says Mr Blacklock. Sometimes its an issue with physical constraintsfor example, you physically might not be able to get enough goods in and out of the country because the ports cant keep up. I think we might also see an acceleration of policy tightening in emerging economies, as they realise that the inflation is stickier than they hoped, and it isnt going to go away by the middle of the year because food prices arent going to collapse.

Latin America runs the risk of overheating

Vernengo 11
(Matias Vernengo is the Associate Professor, Department of Economics, University of Utah Are Latin American economies overheating? http://triplecrisis.com/are-the-latinamerican-economies-overheating/. 05-24-11.)

The International Monetary Fund (IMF) in spite of all the talk about reform is pushing for fiscal adjustment around the world. The IMF argues overheating in the developing world, particularly in China and Latin America, and excessive debt accumulation in the developed world requires fiscal adjustment to reduce the risks of inflation and debt default. The IMF has suggested in their last Regional Economic Outlook Report that the Latin American economies

that have recovered swiftly from the global financial crisis may be at risk of overheating. According to the report: Overheating risks stand out in much of Latin America. Growth is moderating from fast rates last year, but remains above trend. Domestic demand has been growing even faster, pushed not only by favorable external conditions but also by macroeconomic policies that have been quite stimulative and are only gradually normalizing. Early signs of overheating pressures and possible excesses are appearing in several realms. Quick Transition

The embargo is crucial to a gradual transition Lopez 97 (Juan, revised version of a paper prepared for presentation at the Seventh annual
meeting of the Association for the Study of the Cuban Economy, IMPLICATION OF THE U.S. ECONOMIC EMBARGO FOR A POLITICAL TRANSITION IN CUBA, http://www.ascecuba.org/publications/proceedings/volume7/pdfs/Lopez.pdf) If one were to assume that a negotiated, peaceful political transition is possible in Cuba (like in Spain or Poland, for example), then an economic crisis helps to increase the probability of a negotiated transition by fostering the emergence of softliners able and willing to lead such transition. The U.S. economic embargo hurts the Cuban economy (as will be seen below). Thus, the argument by critics of the embargo that lifting the embargo would help a peaceful transition in Cuba is self-contradictory. Yet, as analyses of regime types and modes of transition indicate, a negotiated transition is extremely unlikely or impossible under the Castro regime. Hence, the economic crisis in Cuba should stimulate some regime elites to take political reformist positions, but such positions cannot be made public, doing so would result in demotion or elimination. A hypothesis that can be derived is that the combination of the Castro regime type with economic crisis produces latent softliners.39 A practical question is whether such covert political reformers would help to bring about the end of the Castro regime in the event of a political transition pushed from below. Intuitively, the answer seems positive.

Cubas reforms are coming, but a sudden transition would shock the country The Morning Star, 13, Cuban economy 'in crucial phase,' July 10, 2013,
http://www.morningstaronline.co.uk/index.php/content/view/full/135239

Cuba's economic transformation is entering a crucial phase this year with the decentralisation of state-run businesses, the socialist country's economic chief said on Tuesday. Marino Murillo said that the goal was to improve efficiency and let successful businesses keep more of their profits. Mr Murillo warned that the next 18 months would be the "most complex" part of the reforms. "The first stage has so far fundamentally been the elimination of prohibitions in society," Mr Murillo said. "During what remains of 2013 and in 2014, we will work on the most profound transformations." President Raul Castro's economic and social reforms included a leavening of free-market exercises, though officials insist that a wholesale embrace of capitalism is not planned. Hundreds of thousands of people have gone into business for themselves, private farmers are cultivating land with the government's blessing and dozens of independent non-agricultural co-operatives have been set up. Authorities have also approved home and used car sales, eased travel restrictions and established mortgages and small-business credits. Mr Murillo did not give many details about the next stage of the reforms. But he said

the coming changes included letting state enterprises keep up to 50 per cent of revenue to reinvest. "We must remove all impediments that put the brakes on possibilities," Mr Murillo said. He said the island must attract more foreign investment but insisted that Cuba would do so on its own terms and not accept business proposals that don't contribute to the island. AT// Link Turn/trade good

No offensecompanies will only export to Cubait means none of the benefits of FDI occur
FDI only seeks to USE the country, not engage it Jos Azel et. al, 10 (senior research associate at the Institute for Cuban and Cuban-American Studies, University of Miami), Edited by Jos Ral Perales (Senior Program Associate), Woodrow Wilson Center Latin American Program, The United States and Cuba: Implications of an Economic Relationship, August, 2010, pp. 6-7, http://www.wilsoncenter.org/sites/default/files/LAP_Cuba_Implications.pdf Regardless of the U.S. governments actions, a post-embargo, post-Castro Cuba does not necessarily imply a business bonanza for U.S. companies, added Professor Jos Azel of the University of Miamis Institute for Cuban and Cuban American Studies. Conventional wisdom holds that U.S. companies will rush in to invest in the island if and when the legal and political circumstances allow them. However, given Cubas difficult economic situation, the international community needs to significantly lower its expectations regarding U.S. foreign direct investment in Cuba. Azel predicted that U.S. exports to Cuba will surge following a (hopefully) peaceful regime transition on the island; however, exports will not lead to the technological transfers, expertise, and capital requirements that the country will desperately need to grow its economy. The United States will obviously want to invest in a post-Castro Cuba; but it is companies, not countries, that make investments. To support his view, Azel explained the three principal reasons that companies engage in foreign direct investment. First, companies are resource seeking; they invest to secure country-specific resources available only within that market. Oil, nickel, and tourism are examples of such resources in Cuba. These have and will continue to attract a certain level of foreign direct investment, argued Azel, regardless of who is in power or the countrys market friendliness. Second, companies are efficiency seeking; they invest to make efficiency gains. Companies engage in foreign direct investment for this reason because they are looking to take advantage of lower labor costs or of a privileged distribution location. However, Cuba lacks an ideal labor force in comparison to that of its neighbors. After more than half a century under a totalitarian regime and a centrally planned command economy, Cubas labor force has not been able to develop the kind of efficiencies needed to attract foreign direct investment. Finally, companies are market seeking; they invest to establish a foothold in a new market that is deemed strategic or dense. However, while the island nation has more than eleven million citizens, its impoverishment means that its market has few effective consumers. A far more rational strategy to supply a market exhibiting these conditions would be to manufacture finished goods elsewhere and export them to Cuba. -

AT// Impact Turn

FDI has empirically failed in Cuba specifically because of the transition Means try or die for the DA Robert David Cruz 03 (current qualifications: PhD., Chief economist for Miami-Dade County)
Foreign Direct Investment in Post-Castro Cuba: Problems, Opportunities and Recommendations, University of Miami, Institute for Cuban and Cuban-American Studies, Pg. 20, http://ctp.iccas.miami.edu/Research_Studies/RDCruz.pdf, JCook. While there is no doubt that FDI through joint ventures has been very important in expanding Cubas capacity to earn much needed foreign exchange, the employment and income effects have been very limited.7 According to Villanueva (2002), only 19,800 persons were employed in domestic/foreign joint venture firms (less than 0.5 percent of the workforce), although the average wage including benefits in joint venture firms seems to exceed the national average. FDI has yet to yield the economic success that many had expected or hoped for, and has actually been a failure on two basic fronts. First, Cubas strategy and regulatory policies governing FDI have failed to produce investment flows necessary to leave a clear, positive imprint on the economy, and, second, FDI has failed to produce either widespread economic benefits through interindustry linkages or dynamic impetus for economic growth through sustained increases in productivity.