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Defining Privatization in Cuban Ventures

July 03, 1994

"Mexican Firm to Overhaul Cuban Phone System" (June 14) falsely stated that the deal between the Mexican firm and the Cuban government marked Cuba's "first major privatization" since the 1959 revolution. In fact, the Cuban regime does not allow any Cuban nationals to own or organize any private economic organizations.

There are no private property rights in Cuba. Individuals who have violated the regime's strict prohibition against private economic initiative have spent as much as 10 years in prison, and there are many documented cases of such sentences. Only recently did the Cuban regime allow selectively few crafts--and handymen--to operate privately, but they are not allowed to hire employees or to form private companies of any kind. All economic organizations in Cuba are therefore government-owned. The kind of deal between the Mexican firm and Cuba's Empresa de Telecomunicaciones that you reported on is therefore a joint venture with a state-owned company of the Cuban regime rather than a privatization per se.

Furthermore, the Cuban telephone company from which the current Empresa de Telecomunicaciones was formed was confiscated without compensation from U.S. interests in 1960. One wonders whether the Mexican Grupo Domos knows about this and whether it realizes that it may be in for a substantial amount of litigation (and some sizable losses) when the U.S. embargo on Cuba is lifted and expropriated U.S. interests seek to reclaim their properties or sue for compensation from current foreign owners and joint venture partners.

LUIS SUAREZ

Irvine

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