cuba ifis cp - michigan7 2013 cfjpv

8/11/2019 Cuba Ifis Cp - Michigan7 2013 Cfjpv

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IFIs CPs


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IMF Cuba Membership CP


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Text: the IMF should request that Cuba apply for membership and accept itsapplication in exchange for demonstrated Cuban economic reform.

IMF membership key to rapid and sustainable Cuban growthsends a signal

that Cuba is a stable place for foreign investment

Pujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMIC

GROWTH IN CUBA,Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

Let me state at the outset that, in my view, to bringabout rapid and sustainable growth of the Cubaneconomy, the flow of direct private capital invest-ment would need to be re-established, and therewould need to be a major modernization of the dete-riorated capital stock of the country. Years of lack ofmaintenance and of refurbishing of existing plantand equipment, obsolete technologies, and lack of in-

centives to modernize have taken their toll and major

investments will be needed. The current Cuban ad-

ministration does not have the necessary financial re-sources to carry out such an effort, nor does it haveaccess to external financing to do so. Cuba is heavilyindebted and has little access to external credits otherthan those obtained from Venezuela and a few gov-ernments that are political allies and whose credits

are conditioned on political commitments of doubt-ful duration. This has resulted in a concentration ofCubas international trade in just a few countries anda heavy reliance in the export of professional services,

mainly to Venezuela, that have a very low multiplier

effect on domestic activities. Moreover, the economysuffers from very low productivity and is hamperedby the lack of appropriate incentives to the economicagents, distortions arising from a multiple currencysystem and excessive State intervention on economicdecisions. Substantial structural reforms are needed


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to bring about a change in this situation.Under these conditions, the reestablishment of Cu-bas membership and participation in theactivities ofthe main multilateral financial institutions wouldsend an important signal to the rest of the world. It

would indicate that Cuba is ready to adhere to a code

of international behavior consistent with respect forinternational law, to respect the rights of its tradingpartners, and to make the necessary structural adjust-ments to bring about an increase in productivity ofthe economy. Such membership would be an im-portant step to reestablish Cubas creditworthiness

and its full participation in the world economic andfinancial system


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Cuba Says Yes

Cuba wants to re-engage with IFIsmost recent evidence proves

Feinberg 11- Senior Fellow at the Brookings Institute professor of international politics at the University of California-San Diego (Richard THE INTERNATIONAL FINANCIAL INSTITUTIONS AND CUBA: RELATIONS WITH NON-MEMBERSTATES, 2011 ,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdf)//RT

Public debates regarding the relations between Cuba and the international financialinstitutions (IFIs) have been laced with serious misconceptions. Contrary tocommon belief, the United States does not hold veto power over IFI votingprocedures on new memberships. And while it may have been true in the past thatCuba was disinterested, this article presents fresh evidence that today, Cuba may beprepared to re-engage with the IFIs (pre-revolutionary Cuba was a member of theIMF and World Bank). Often, it is assumed that the IFIs cannot engage with non-members. In fact, there are numerous precedents for extending technical assistanceand even financial resources to non-member states and entities, for example

through the establishment of trust funds administered and financed by thirdparties. As this paper will argue, in the case of Cuba a gradual step-by-step processof confidence-building, through various channels of technical assistance, is feasibleand would be most responsive to various political sensitivities. Also contrary toconventional wisdom, Cubas nonparticipation in the Organization of AmericanStates (OAS) is not a legal obstacle to membership in the Inter-AmericanDevelopment Bank (IDB). Nor is U.S. voting power in the IDB sufficient to defeat avote on new members.

Cuba says yesencouraged by Chinas deepening influence in the IMF

Hearn, 12Senior Research Fellow, University of Sydney, and Chair Section forAsia and the Americas, Latin American Studies Association (China GlobalGovernance, and the Future of Cuba, Journal of Current Chines Affairs, 1/12,

http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFile/498/496)

As Cubas need for capital deepens, its leaders have expressed no

principled position against relations with the IMF or World Bank

(quoted in Feinberg 2011: 67). Having defaulted on IMF loans and re-porting requirements in the early years of the revolution, Cuba preempt-ed expulsion by voluntarily withdrawing from the institution in 1964

(and subsequently repaying its debt). The United States remains firmlyopposed to Cubas reentry, but as Feinberg has argued, CubaIMF dia-logue could prove beneficial across a range of topics, from developingmicro-enterprise to sharing insights from previous Eastern Europeanand Asian transitions (Feinberg 2011: 74, 78-83). The internal evolutionof the IMF to accommodate changing global conditions, including Chi-nas deepening influence, makes engagement with Cuba more likely.
http://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdfhttp://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdfhttp://journals.sub.uni-hamburg.de/giga/jcca/article/viewFile/498/496http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFile/498/496http://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdf


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Growing international reliance on the renminbiand greater provisions forpublic spending are important in this regard, but equally important areCubas domestic reforms, which are bringing the island into closer

alignment with conventions of economic governance. China sits at thecrossroads of these local and global developments, encouraging Cuba

toward rapprochement with international norms even as it works toreform them.

Cuba says yes - IMF seal of approval is uniquely key to increasing foreign

investmentPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER

INTERNATIONAL FINANCIAL INSTITUTIONS AND THEIR

POSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

International investors are deterred by risks related tothe lack of liquidity, the absence of investment pro-tection by a sound legal system, and the limited avail-ability of reliable information. Liberalization of theexchange and trade system would be an importantstep to regain investors confidence, as would be the

freedom to remit dividends and repatriate capital.Commercial lenders and investors in general, attach

significant value to the IFIs knowledge and capacity

for policy and project appraisal, and draw significantcomfort from the co-financing instruments of theseinstitutions. This gives the resources of the IFIs animportant leverage effect in attracting financial capi-tal to member countries that implement appropriatemacroeconomic policies. The seal of approval of theIFIs, and in particular of the IMF, can usually betranslated into an increase in the financial resources

available to a country from all sources.

Cuba will say yesmoving towards market reforms now

Feinberg 11- Senior Fellow at the Brookings Institute professor of international politics at the University of California-San Diego (Richard The New Cuban Economy What Roles for Foreign Investment?,

December,2012,http://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=en)//RT
http://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=en


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In April 2011, under the leadership of Ral Castro, the Cuban Communist Partyapproved The Guidelines for the Economic and Social Policies of the Partyand the Revolution. A lengthy document with 313 points, theofficial blueprint recognizes theeconomys major shortcomings and proposes pathways forward. Theguidelines assert that national savings must be increased, exports need to be

bolstered, and domestic production of food stuffs should substitute forimports . To accomplish these goals and raise efficiency and productivity, decision-making will bedecentralized to state-owned enterprises (SOEs) and municipalities. The non-state sectorincluding small-scale private enterprise, cooperatives, andprivate farmingwill grow to absorb workers shed from the bloated statesector.As of mid-2012, some reforms were already underway and Cubans were eagerly anticipating additional measures.11 Reforms already in progress included liberalizing private markets forrestaurants, bed-and-breakfast establishments, small retail shops, and othermicro-businesses; private markets for some farm products; the distributionof idle state lands; and the limited buying and selling of automobiles andresidential homes which has set off a burst of property registration.Reforms

widely presumed to be in the pipeline included a new law encouraging andregulating non-farm cooperatives; leasing many smaller retail outlets,including cafeterias and barber shops, to their employees to operate asindependent cooperatives; fiscal reforms placing greater emphasis ontaxation as opposed to intra-state transfers; as a pilot project, allowing selectSOEs to sell excess production on the open market, after honoring their statecontracts; and of possibly great long-term significance(and also on a pilot basis), creatingOrganizaciones Superiores de Direccin Empresarial (Superior Organizations of Management), or industrialholdings companies, that would take over many of the management functionscurrently in the hands of the powerful ministries


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Solves Cuban Economy

IMF seal of approval is uniquely key to increasing foreign investmentPujol, 12Member of the Board of Directors of the Association for the Study of the

Cuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

International investors are deterred by risks related tothe lack of liquidity, the absence of investment pro-tection by a sound legal system, and the limited avail-ability of reliable information. Liberalization of theexchange and trade system would be an important

step to regain investors confidence, as would be thefreedom to remit dividends and repatriate capital.

Commercial lenders and investors in general, attachsignificant value to the IFIs knowledge and capacity

for policy and project appraisal, and draw significantcomfort from the co-financing instruments of theseinstitutions. This gives the resources of the IFIs animportant leverage effect in attracting financial capi-tal to member countries that implement appropriatemacroeconomic policies. The seal of approval of theIFIs, and in particular of the IMF, can usually be

translated into an increase in the financial resourcesavailable to a country from all sources.

Stable international financing is key to sustainable Cuban economic growthPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,

http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

At present, Cuba is extremely dependent on a veryfew international trading partners. Five countries arethe destination of 77% of Cuban exports, seven thesuppliers of 73% of its imports, and 70% of the total

foreign trade of Cuba is concentrated in six coun-


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tries, with Venezuela alone accounting for 37% ofCubas exports and 40% of imports. Moreover, Cubahas no access to international credits other that thosearising from bilateral political negotiations. Cubaclearly needs to change this dependency on such a

small number of countries and to widen the sources

and financing of its foreign trade. Such a step wouldcontribute to improve the likelihood of a prompt re-cuperation of economic activity on a much sounderbasis. Having available stable sources of internationalfinancing on competitive terms for the process of in-vestment and to meet domestic supplies needs of in-termediate and consumer goods can significantlyhelp the achievement of the goals of a sustainable economic growth and an improvement if the stan-dard of living of its citizens. Cuba, in its recent past,

has experienced the consequences of extreme reliance

on one source for its trade and financial support with

the demise of the Soviet Union and now faces a simi-lar risk with its dependence on Venezuela. The au-thorities must take this in consideration in planning

their next moves.

IFI membership creates transparency and informed investment decisionsPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIR

POSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

Membership in the multilateral international finan-cial institutions (known as IFIs) can play an import-ant role in Cuba gaining access to financial resourcesand technical assistance to support economic recon-struction. It would also help normalize access tocredit from international commercial banks, includ-

ing access to financing for import transactions that

currently have to be paid largely through cash pay-ments. But more importantly, advice from the IFIs,and their participation in helping Cuba frame eco-nomic policies, can provide credibility to the effortsundertaken by the authorities and facilitate access toother sources of finance on competitiveand thusmuch cheaperterms, making it possible to unlock


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financing from multilateral and bilateral lenders, aswell as to facilitate the rescheduling or reduction ofthe outstanding external debt. Data provided by theCuban authorities about its economy in the past havebeen questioned with respect to their transparency

and accuracy. Membership and full participation in

the activities of the IFIs and adherence to interna-tional standards, including independent evaluationof information, would go a long way to lend credibil-ity to the data provided and make it possible for eco-nomic actors to make informed decisions.

IMF membership unlocks a range of benefitstechnical support, access to

other IFI resources, and debt renegotiation

Pujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER

INTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

Membership in the IMF would bring Cuba back intothe mainstream of international economic and finan-cial activities and could potentially give it access tosubstantial financial resources if it was prepared to

adopt appropriate policies to redress its balance of

payments problems. It would also give Cuba accessto important technical assistance and make it possi-ble to benefit from access to the information that isexchanged through the forum of the Fund about thegeneral world economy and the economic policies ofother IMF members.In addition, membership in the IMF would have acatalytic role to attract other financial resources.Membership in the IMF is a pre-condition to joiningthe World Bank and its organizations and gain access

to their resources. Moreover, having a program sup-ported by the Fund significantly facilitates renegotia-tion of outstanding external debt with the membersof the Paris Club (see below), as well as access to oth-er sources of international credits to support invest-ment and trade activities on competitive terms. The


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international financial community generally consid-ers an IMF approval of a program a prerequisite forunlocking a whole range of financing by other multi-lateral and bilateral lenders, and for the reschedulingor reduction of official or private debt.

World Bank provides concessional resources, foreign investment loans, and

technical advicePujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

WORLD BANKThe World Bank Group in fact involves several insti-tutions. First, the Bank itself (formally known as theInternational Bank for Reconstruction and Develop-

ment, IBRD), which can give loans directly to thegovernment of member countries, or with govern-ment guarantees. Second, the International FinanceCorporation (IFC), which provides financial supportfor private investors without government guarantees.Third, the International Development Association

(IDA), which provides assistance on concessionary

terms to the poorest developing countries. Fourth,the Multilateral Investment Guarantee Agency(MIGA), which helps encourage foreign investmentin developing countries by providing guarantees toforeign investors against losses caused by noncom-mercial risks, advices governments on the design andimplementation of policies, programs and proceduresrelated to foreign investments, and sponsors a dia-logue between the international business communityand hosts governments on investments issues. And

fifth, the International Center for Settlement of In-vestment Disputes (ICSID), which advices develop-ing countries on how to attract and keep direct for-eign investment.


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Solves Cash Payment

IFI membership solves for cash payment obstaclePujol, 12Member of the Board of Directors of the Association for the Study of the


Membership in the multilateral international finan-cial institutions (known as IFIs) can play an import-ant role in Cuba gaining access to financial resourcesand technical assistance to support economic recon-struction. It would also help normalize access to

credit from international commercial banks, includ-ing access to financing for import transactions that

currently have to be paid largely through cash pay-ments. But more importantly, advice from the IFIs,and their participation in helping Cuba frame eco-nomic policies, can provide credibility to the effortsundertaken by the authorities and facilitate access toother sources of finance on competitiveand thusmuch cheaperterms, making it possible to unlockfinancing from multilateral and bilateral lenders, aswell as to facilitate the rescheduling or reduction of

the outstanding external debt. Data provided by theCuban authorities about its economy in the past havebeen questioned with respect to their transparencyand accuracy. Membership and full participation inthe activities of the IFIs and adherence to interna-tional standards, including independent evaluationof information, would go a long way to lend credibil-ity to the data provided and make it possible for eco-

nomic actors to make informed decisions.


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Solves Technical Advice

World Bank provides concessional resources, foreign investment loans, and

technical advice



WORLD BANKThe World Bank Group in fact involves several insti-

tutions. First, the Bank itself (formally known as the

International Bank for Reconstruction and Develop-ment, IBRD), which can give loans directly to thegovernment of member countries, or with govern-ment guarantees. Second, the International FinanceCorporation (IFC), which provides financial supportfor private investors without government guarantees.Third, the International Development Association(IDA), which provides assistance on concessionaryterms to the poorest developing countries. Fourth,the Multilateral Investment Guarantee Agency

(MIGA), which helps encourage foreign investment

in developing countries by providing guarantees toforeign investors against losses caused by noncom-mercial risks, advices governments on the design andimplementation of policies, programs and proceduresrelated to foreign investments, and sponsors a dia-logue between the international business communityand hosts governments on investments issues. Andfifth, the International Center for Settlement of In-vestment Disputes (ICSID), which advices develop-ing countries on how to attract and keep direct for-eign investment.


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Solves Social/Development Projects

IBD can fund social and economic developmentPujol, 12Member of the Board of Directors of the Association for the Study of the


In addition to its own funds, and those it borrows inthe market, the IDB also has available funds thathave been turned over to the Bank for its administra-tion in support of economic and social development

by certain countries. These funds are generally avail-able to finance low income individual projects on

concessional terms.


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Solves Private Investment

IMF can lend directly to private enterprisesPujol, 12Member of the Board of Directors of the Association for the Study of the


The Banks Articles of Agreement do not precludethe Bank from lending to private enterprises, but re-quire government guarantees on principal and inter-est payments. The Bank keeps track of the externalpublic debt of member countries and the availability

of this data would be of assistance in any renegotia-tion of Cubas external debt with the Paris Club and other possible grantors and/or lenders.


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AT Links Politics/U.S. Opposes

U.S. cannot block membership and wont defund the IMF its organizationalpower is declining

Perez, 12Economist at ASCE, graduate of The Wharton School, University ofPennsylvania (Lorenzo, Association for the Study of the Cuban Economy, Comment:

Cuba and the International Financial Institutions, Volume 22,

http://www.ascecuba.org/publications/proceedings/volume22/pdfs/perez1.pdf)

It is clear that under the existing legislation, the U.S.would have to oppose Cubas membership in the

IMF and that a consensus could not be reached onthis issue. But acceptance of an application for mem-

bership is a decision by the IMF that only requires a

majority vote and the U.S. cannot really block Cu-bas membership. Moreover, the U.S. does not have

the dominant role in the IMF that it had in previousdecades, and many countries of rising economic im-portance would be willing to stand up to the U.S. onthis issue reflecting the voting patterns that happen atthe United Nations regarding the U.S. embargo ofCuba. If Cuba were admitted to the IMF, the U.S.would find itself in the position of not being able tomake any more contributions to the IMF, something

that would clearly be against its interests and wouldforce it to seek legal changes. So really, the ball is inCubas court.


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AT IFIs Strengthen the Regime

IFI membership brings political reform and helps the Cuban people

Perez, 12Economist at ASCE, graduate of The Wharton School, University of

Pennsylvania (Lorenzo, Association for the Study of the Cuban Economy, Comment:Cuba and the International Financial Institutions, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/perez1.pdf)

However, if Cuba joined the IFIs, it would be forcedto adopt more rational economic policies that wouldimprove the well being of the Cuban people. Policytransparency and government accountability wouldneed to improve, which would give more power tothe Cuban people and help establish a process of po-litical reform. One can support Cuba joining the IFIs

while at the same time using other means and institu-tions to promote respect of human rights in Cuba

and the democratization of its political process.


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AT IFIs FailGenerally

IFI fears are unfoundedmany successes proveand IMF is uniquely

positioned to solve Cuban exchange rate problem



In Cuba the activities of the IFIs have been demon-

ized, painting them as a tool of foreign imperialism

that would be imposed on the island. These fears aretotally unfounded. Today, nearly all countries of theworld belong to these organizations and benefit frommembership. Both the International Monetary Fund(IMF) and the World Bank have played significantroles in assisting countries like Russia, Nicaragua andViet Nam, among others, in their transition fromcentrally-planned to societies in which the free mar-ket plays a significant role. The results in Viet Namhave been particularly impressive, with a doubling of

income per capita in just a few years since the liberal-

ization process was begun. Cuba would particularly

benefit, for example, from the IMFs experience in

gradually dismantling multiple exchange rates re-gimes, one of the problems currently faced by theCuban economy that results in tremendous econom-ic distortions and contributes to inefficiencies in the system.

IMFs unique expertise benefits Cuba economic theory, technical assistance

superior to alternatives

Perez, 12Economist at ASCE, graduate of The Wharton School, University ofPennsylvania (Lorenzo, Association for the Study of the Cuban Economy, Comment:

Cuba and the International Financial Institutions, Volume 22,

http://www.ascecuba.org/publications/proceedings/volume22/pdfs/perez1.pdf)

Undoubtedly, Cuba would benefit greatly from IMF


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support. Cuba would receive objective policy advicein addressing its economic challenges based not onlyon well-grounded economic theory, but also on expe-rience of what has worked and not worked in itsmember countries. Through its technical assistance

and its data standardization work, IMF supportwould help rationalize Cubas economic system. IMF

technical assistance will have a stronger positive im-pact than assistance offered Cuba in the past by for-eign universities and assorted organizations in thesense that the IMF would train Cuban officials incollecting and disseminating data and formulatingpolicies according to international standards. Cubawould be expected to follow these standards in its re-lations with the IMF and other countries.

IMF policies work where countries cooperate - Argentina, Brazil, Peru prove

Pop-Eleches, 11 Associate Professor of Politics and Public and International Affairs (Grigore, From Economic Crisisto Reform: IMF Programs in Latin American and Eastern Euro, p. 238)//YSDECEMBER 1998 THE ARGENTINE PRESIDENT, Carlos Menem, addressed the joint meeting of theInternational Monetary Fund and the World Bank in the wake of the East Asian financial crisis, during which the Funds policy

prescriptions had attracted sharp and widespread criticism from a wide range of observers. Menem recountedArgentinas remarkable turnaround following the hyperinflationary chaos of

the 198991 period, and ascribed this success to his government having

workedside by side with the IMF, the World Bank, and the IDB to achieve

macroeconomic stability, deepen structural reforms, and adopt policies aimedat improving the economic fortunes of the poorest members of society. 1 Comingfrom the leader of the populist, labor-based Peronist party a year before a crucial presidential and parliamentary contest, thisneoliberal proclamation in the very cradle of the Washington Consensus would have been inconceivable barely a decade

earlier. And Menem was not alone in this posture of an unexpected Latin Americanneoliberal: The list of committed market reformers also included BrazilianpresidentEnrique Cardoso, one of the intellectual founders of the Latin American dependency school, and

Alberto Fujimori, the Peruvian populist president, whose initial electoralcampaign in 1990 had stressed the avoidance of painful austerity measures.However, only a few years later, the political pendulum in Latin America started to swing back to the left following a series ofdecisive victories for presidential candidates ranging from moderate social democrats, such as Chiles Bachelet, UruguaysVazquez, and (somewhat unexpectedly) Brazils Lula, to more combative leftists such as Argentinas Kirchner, and particularlyBolivias Morales and Venezuelas Chavez (Castaneda 2006).

Reformed IMF solvesnow has both carrots and sticksempirically has

become effective at facilitating economic integration

Pop-Eleches, 11 Associate Professor of Politics and Public and International Affairs (Grigore, From Economic Crisisto Reform: IMF Programs in Latin American and Eastern Euro, p. 264)//YSThis sections brief analysis of Latin American IMF programs in the 1990s has revealed a political economy landscape whose

dynamics were closer to those of the post-communist transition than to the Latin American experience during the debt crisis


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of the 1980s; thus, external financial pressures reduced and even reversedtraditional ideological policy differences between the left and the right, anddemocracy was no longer incompatible with the neoliberal reform agendapromoted by the IMF. Seen from this perspective,the crucial driver of this transformation appears to have beenthe dramatic change from the inhospitable international economic environment of the 1980s to the much more favorableclimate of the 1990s. Given the Funds intermediary role between developing country governments and international financial

markets, this international economic transformation set a very different basic tone for the interactions between the Fund andits potential clients; thus, as a debt collector with more sticks than carrots at itsdisposal, the IMFs interventions during the 1980s triggered heated

ideological debates and widespread popular resistance, thereby shaping the divisive andconfrontational nature of economic reforms during the debt crisis. By contrast, the significant economicbenefits of the international financial and economic boom of the 1990sallowed the Fund to play a much more constructive role as a facilitator ofinternational economic integration, which muted the ideological undertonesof domestic policy debates and reduced the tensions between democraticpolitics and neoliberal reforms.


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AT Structural Adjustment Bad

Vast majority of IMF funding involves project loans - or direct resource transfers

- not adjustment loans



Bank operations consist mainly of two kinds of lend-

ing: adjustment loans and project loans.

About a quarter of the Banks lending is for ad-justment. Adjustment loans help countries tacklemacroeconomic difficulties, usually manifestedin rising inflation and current or projected bal-ance of payments problems. They are intendedto support the transition of an economy to anew, sustainable and poverty-reducing growthpath and are often undertaken in conjunctionwith an IMF-supported stabilization program.Typical adjustment policies involve reallocating

and reducing public spending, opening an econ-

omy up to external or domestic competition,freeing prices to allow them to reflect economicvalues, improving government delivery of infra-structure and social services, and developing theinstitutions required of a well-functioning mar-ket economy, notably a sound financial system.Adjustment loans tend to emphasize private sec-tor development as an instrument for promotingequitable and sustainable growth. Project lending can provide support to develop-

ment both through direct resource transfers and

through the backing given to policy, legal, and

regulatory reforms that strengthen the competi-tiveness of the economy. These loans are normal-ly for agriculture, infrastructure projects, educa-tion and health.


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IMF social service funding is concessional - meaning no interest is charged and

payments are stretched over 25-40 years

Pujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)

(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHERINTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

The IFC plays a complementary role to the opera-tions of the Bank, with the Bank providing an im-proved environment for the private sector to prosperand the IFC directly investing in, and lending to, the

private sector. Many of the loans of the Bank arechanneled through local financial intermediaries,

while those of the IFC are given directly to the pri-vate sector. About a quarter of the Banks lending is

for adjustment. These loans help countries tacklemacroeconomic difficulties, usually manifested in ris-ing inflation and current or projected balance of pay-ments problems. Adjustment loans are intended tosupport the transition of an economy to a new, sus-tainable and poverty-reducing growth path and areoften undertaken in conjunction with an IMF-sup-

ported stabilization program. MIGAs activities takethe form of investment guarantees against the risks of

currency transfers, expropriation, war and civil dis-turbances, and breach of contracts by the host gov-ernment. Established in 1960, IDA aims to reducepoverty by providing loans (called credits) andgrants for programs that boost economic growth, re-duce inequalities, and improve peoples living condi-tions in the poorest developing countries. IDA lendsmoney on concessional terms. This means that IDAcharges little or no interest and repayments are

stretched over 25 to 40 years, including a 5to 10

year grace period. It is the single largest source of do-nor funds for basic social services in these countries.

Category D countries receive preferential IMF financing90% concessional

funding availablePujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)


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(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER


The Bank distinguishes four categories of borrowingcountries according to need: In Group A are the largest and financially mostdeveloped countries in the regionArgentina,Brazil, Mexico and Venezuela, In Group B are Colombia, Chile, and Peru. Group C comprises Bahamas, Barbados, Costa

Rica, Jamaica, Panama, Suriname, Trinidad andTobago, and Uruguay; these countries are con-

sidered to have a limited market.The least developed countries are in group DBolivia, Ecuador, El Salvador, Guatemala, Guy-ana, Haiti, Honduras, Nicaragua, Paraguay, andthe Dominican Republic. Cuba would probablybe classified into the category D.The Bank finances different proportion of the totalcost of the projects depending on the countrys classi-fication; ranging from 50% for countries in group A,to 80% in countries in group D. These proportionscan be increased by up to 10 percentage points to theextent that at least 50% of the net benefits of theprojects are received by low income groups. While

countries in categories A and B are expected to be netcontributors to the Fund for Special Operations,those in categories C and D are given priority in theaccess to concessional funds. In the case of countriesin group D, the Bank may finance up to 90% of the

cost of a project with concessional funds. Countriesin groups C and D have received about one third ofthe total financing granted by the Bank, but 63% ofthe concessional funds.

World Bank provides concessional resources, foreign investment loans, andtechnical advicePujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER

INTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMIC


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GROWTH IN CUBA, Volume 22,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

WORLD BANK

The World Bank Group in fact involves several insti-

tutions. First, the Bank itself (formally known as theInternational Bank for Reconstruction and Develop-ment, IBRD), which can give loans directly to thegovernment of member countries, or with govern-ment guarantees. Second, the International FinanceCorporation (IFC), which provides financial supportfor private investors without government guarantees.

Third, the International Development Association(IDA), which provides assistance on concessionaryterms to the poorest developing countries. Fourth,

the Multilateral Investment Guarantee Agency

(MIGA), which helps encourage foreign investmentin developing countries by providing guarantees toforeign investors against losses caused by noncom-mercial risks, advices governments on the design andimplementation of policies, programs and proceduresrelated to foreign investments, and sponsors a dia-logue between the international business communityand hosts governments on investments issues. Andfifth, the International Center for Settlement of In-vestment Disputes (ICSID), which advices develop-ing countries on how to attract and keep direct for-eign investment.


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AT No Funding

IMF membership entitles Cuba to substantial resources from other IFIsPujol, 12Member of the Board of Directors of the Association for the Study of the


Access to Fund resources under the various Fundlending windows or facilities are usually specified interms of members quotas. For example, the limits onaccess to Fund resources under stand-by or extendedarrangements are currently 110% of quota on an an-

nual basis, or 440% of quota on a cumulative basis (the latter defined net of outstanding obligations).

This means that if Cuba, for example, had a quota ofUS$200 million and negotiated an extended arrange-ment with the IMF, it may be able to draw as muchas US$880 million from the Fund over a three yearperiod in support of an adjustment program The sizeof the financial arrangement is dictated by the bal-ance of payments need of the country at that time.Nicaragua is among the countries that has benefittedfrom an extended arrangement from the IMF in sup-

port of its economic policies, as have also other LatinAmerican countries. The approval of an extended ar-rangement with the IMF has allowed these countriesto gain access to additional financial support fromthe World Bank and other international sources of fi-nancing amounting to several times the amountsavailable under the extended arrangement.

IMF membership unlocks a range of benefitstechnical support, access to

other IFI resources, and debt renegotiationPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER



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Membership in the IMF would bring Cuba back intothe mainstream of international economic and finan-cial activities and could potentially give it access tosubstantial financial resources if it was prepared to

adopt appropriate policies to redress its balance of

payments problems. It would also give Cuba accessto important technical assistance and make it possi-ble to benefit from access to the information that isexchanged through the forum of the Fund about thegeneral world economy and the economic policies ofother IMF members.In addition, membership in the IMF would have acatalytic role to attract other financial resources.Membership in the IMF is a pre-condition to joiningthe World Bank and its organizations and gain access

to their resources. Moreover, having a program sup-

ported by the Fund significantly facilitates renegotia-

tion of outstanding external debt with the membersof the Paris Club (see below), as well as access to oth-er sources of international credits to support invest-

ment and trade activities on competitive terms. Theinternational financial community generally consid-ers an IMF approval of a program a prerequisite forunlocking a whole range of financing by other multi-lateral and bilateral lenders, and for the reschedulingor reduction of official or private debt.

IMF has ample resources to solve CubaPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER


Resources Available

To assist member countries in abiding by the code of

conduct, the Fund has available a pool of financialresources (currently US$845.4 billion, of whichUS$426 billion are presently uncommitted and us-able3) that it can make available to members thathave run into balance of payments difficulties, on atemporary basis while taking appropriate policies toresolve the underlying problems. The financial re-


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sources that may be available to any individual coun-try can be fairly sizeable and are related to the quota(see below) that the country has contributed to theIMF. They can be made available provided: (1) thereis a balance of payments need; and (2) the country is

adopting appropriate policies to resolve the underly-

ing problems.

IMF membership guarantees access to World Bank resourcesPujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER


A key requirementis that only members of the IMF may become mem-bers of the World Bank. Once the Fund determinesthe initial quota and the Executive Board of the IMFapproves membership in the Fund, the initial sub-scription to the Banks capital is determined linked

to the Fund quota. The Board of Governors of theBank votes on the terms and conditions of member-ship once the Executive Directors of the Bank have

approved the management recommendation to ac-cept the request for membership. Cuba may classifyas a middle-income country for purposes of WorldBank lending, but it would be hard to see the WorldBank or other bilateral international lenders beingwilling to lend considerable sums in support of aneconomic transition in Cuba without an IMF pro-gram.

Category D countries receive preferential IMF financing90% concessionalfunding availablePujol, 12Member of the Board of Directors of the Association for the Study of theCuban Economy (ASCE)(Joaquin, CUBAS MEMBERSHIP IN THE IMF AND OTHER

INTERNATIONAL FINANCIAL INSTITUTIONS AND THEIRPOSSIBLE ROLE IN PROMOTING SUSTAINABLE ECONOMICGROWTH IN CUBA, Volume 22,


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http://www.ascecuba.org/publications/proceedings/volume22/pdfs/pujol2.pdf)

The Bank distinguishes four categories of borrowingcountries according to need:

In Group A are the largest and financially most

developed countries in the regionArgentina,Brazil, Mexico and Venezuela, In Group B are Colombia, Chile, and Peru. Group C comprises Bahamas, Barbados, Costa

Rica, Jamaica, Panama, Suriname, Trinidad andTobago, and Uruguay; these countries are con-sidered to have a limited market.The least developed countries are in group DBolivia, Ecuador, El Salvador, Guatemala, Guy-ana, Haiti, Honduras, Nicaragua, Paraguay, and

the Dominican Republic. Cuba would probably

be classified into the category D.The Bank finances different proportion of the totalcost of the projects depending on the countrys classi-fication; ranging from 50% for countries in group A,to 80% in countries in group D. These proportionscan be increased by up to 10 percentage points to theextent that at least 50% of the net benefits of theprojects are received by low income groups. Whilecountries in categories A and B are expected to be netcontributors to the Fund for Special Operations,those in categories C and D are given priority in theaccess to concessional funds. In the case of countries

in group D, the Bank may finance up to 90% of thecost of a project with concessional funds. Countriesin groups C and D have received about one third ofthe total financing granted by the Bank, but 63% of


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AT No Sponsor

Brazil will sponsor Cuba for IMF membershipPujol, 12Member of the Board of Directors of the Association for the Study of the


In practice, an aspiring candidate needs to have oneor more sponsoring members who are prepared to ac-tively lobby the members of the Executive Board toensure a positive response to an application for mem-bership. Brazil has publicly called for Cuba to join

the IMF and other IFIs and could play the role ofCubas sponsor.


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AT Membership Takes Too Long

IMF solves quicklySoviet republics reintegration experience proves



The main issue with the possible re-integration ofCuba to the international financial system is the will-ingness on the part of the Cuban authorities tochange the kind of economic policies it has been im-

plementing and obtaining the political support of theother countries to be able to become active members

of the IFIs and be able to reap the benefits of mem-bership. The process of re-integration would not nec-essarily be a very long one, as can be seen from theexperience of the former Soviet republics.


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IMF/Cuba Trust Fund


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1NC

Text: The IMF should provide assistance to Cuba through a trust fund.

IFIs solve Cubas economy recent success in similar countries provesuniqueability to produce gradual change

French, 11(Anya, 11/18http://www.csmonitor.com/World/Americas/Latin-America-Monitor/2011/1118/How-the-IMF-and-World-Bank-could-save-Cuba-s-economy-defying-the-US-embargo/(page)/2)

Feinberg unravels the conventional wisdom that says Cuba and the IFIs would makeunhappy bedfellows Cuba withdrew from the World Bank and the InternationalMonetary Fund more than 40 years ago by pointing to successful IFI engagementwith nonmembers likeKosovoandSouth Sudan,and with proud and strong states

likeDaniel Ortega'sNicaraguaandVietnam,with which Cuba shares keysimilarities. The IFIs are more interested in the long game, Feinberg argues, andtheir willingness to take things step by step would fit nicely with Cubas (urgent)need for gradual changes. He talks to both sides, and a senior Cuban diplomat tellshim that Cuba has no principled position against engagement with the IFIs astatement Feinberg believes signals a real shift in Cuban policy (hopefully a Cubanofficial will field that question publicly in the not too distant future).Meanwhile, IFI experts are more than ready to engage Cuba, and Feinberg arguesthat US opposition to IFI assistance isnt as insurmountable as it might seem. Inparticular, IFIs can work through trust funds and other donors can administerprograms. Feinberg also sees a role for regional development banks such as the

Inter-American Development Bankand theAndean Development Corporation,asthe US isnt a member.
http://www.csmonitor.com/tags/topic/Kosovohttp://www.csmonitor.com/tags/topic/Kosovohttp://www.csmonitor.com/tags/topic/Kosovohttp://www.csmonitor.com/tags/topic/Southern+Sudanhttp://www.csmonitor.com/tags/topic/Southern+Sudanhttp://www.csmonitor.com/tags/topic/Southern+Sudanhttp://www.csmonitor.com/tags/topic/Daniel+Ortegahttp://www.csmonitor.com/tags/topic/Daniel+Ortegahttp://www.csmonitor.com/tags/topic/Daniel+Ortegahttp://www.csmonitor.com/tags/topic/Nicaraguahttp://www.csmonitor.com/tags/topic/Nicaraguahttp://www.csmonitor.com/tags/topic/Nicaraguahttp://www.csmonitor.com/tags/topic/Vietnamhttp://www.csmonitor.com/tags/topic/Vietnamhttp://www.csmonitor.com/tags/topic/Vietnamhttp://www.csmonitor.com/tags/topic/Inter-American+Development+Bankhttp://www.csmonitor.com/tags/topic/Inter-American+Development+Bankhttp://www.csmonitor.com/tags/topic/Andean+Development+Corporationhttp://www.csmonitor.com/tags/topic/Andean+Development+Corporationhttp://www.csmonitor.com/tags/topic/Andean+Development+Corporationhttp://www.csmonitor.com/tags/topic/Andean+Development+Corporationhttp://www.csmonitor.com/tags/topic/Inter-American+Development+Bankhttp://www.csmonitor.com/tags/topic/Vietnamhttp://www.csmonitor.com/tags/topic/Nicaraguahttp://www.csmonitor.com/tags/topic/Daniel+Ortegahttp://www.csmonitor.com/tags/topic/Southern+Sudanhttp://www.csmonitor.com/tags/topic/Kosovo


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Trust Fund Solves

IMF trust fund solvesno country can match its expertiseempirically proven

mechanism for financial and technical expertise

Feinberg 11-Senior associate at the Brookings Institute (Richard E., The Brookings Institute, Reaching Out Cubas NewEconomy and the International Response, 11/2011,http://thehavananote.com/sites/thehavananote.newamerica.net/files/111811%20Feinberg%20Brookings%20report.pdf)//VS

IFI Engagement with Non-Member StatesAs Cuba enters its arduous process of economic reform,it could benefit tremendously from the accumulated expertise housed in theinternational financial institutions. On a wide range of tough issues facingCuban policymakers, the IMF and World Bank can bring to bear knowledge of pastexperiences from around the globe as well as their capacity to analyze specificcountry circumstances in the context of todays global economy. True, Cuba canturn to individual governments, private consulting firms, and academic economists for advice, and theirvoices can be valuable additives to enrich policy debates, but none can match the scope and depth of

IFI expertise. 87 The IFIs are also well equipped to provide the large-scaletraining and capacity-building that Cuba sorely requires. It is not a matter of mechanicallyapplying the Chinese, Vietnamese, Singaporean, South Korean, Brazilian, Chilean or other models to Cuba . It is well

understand within the economics profession and the IFIs that whatever lessons can be culled from history must be carefullyadjusted to the peculiar conditions of each country . Every nation has its own history, culture, location, comparativeadvantages, and governance structures . For example, Cuba has developed its human capital, through superior education andhealth programs, gaining its own dynamic comparative advantages such that it is exporting the services of large numbers ofskilled professionals . At the same time, debates on the island sometimes exaggerate Cuban exceptionalism, as thoughcertain widely observed economic rules and relationships do not apply and Cuba has nothing to learn from the rest of theworld . 88 Neither a cookie-cutter one-size-fits-all imposition of a foreign model, nor a blind refusal to learn from the

successes and failures of other countries, makes good sense . There are plentiful precedents of theIMF providing technical assistance to non-member states and territories. Recentcases include South Sudan, Kosovo, and West Bank/Gaza, and in earlier decades,the former Soviet Union and its Eastern European allies . 89 Often but not always suchassistance has been linked to expectations of future membership . Because IMF policy is to provide technical assistance butnot financial resources to non-members, to cover staff and administer costs the Fund sometimes establishes trust funds,financed by third parties and at times managed by another international entity . For example, the IMF explained its policy

toward South Sudan, not yet a member, thusly: In view of South Sudans application for IMF membership, the IMF

intends to seek donor contributions to a special Trust Fund for IMF Capacity Building

for South Sudan . This trust fund will provide intense IMF technical assistance to the

authorities in critical areas relevant to building the new countrys

macroeconomic institutions . Harnessing its expertise and infrastructure, the IMF would

provide technical assistance in its areas of core expertise to enable the design,implementation and monitoring of sound macroeconomic policies, including

by developing a fiscal framework, establishing the central bank and its coreactivities, building statistical capacity and putting in place the legislativeframework required for effective economic and financial management. The trustfund would total US$10 .6 million for just under four years and aims to mobilize quickly, given the urgency of needs in SouthSudan . 90 The IMF has even found mechanisms to provide extensive assistance to West Bank/Gaza (WBG), which is neithera member nor even a state, as described in this IMF press release: The office of the IMF Resident Representative for the WestBank and Gaza was established in July 1995, to help fulfill the IMFs mandate to assist the Palestinian Authority (PA) asspecified under the Oslo Accords . While the IMF cannot provide financial support to WBG (because it is not a member state),

it has been providing policy advice in the macroeconomic, fiscal, and financial areas since 1994 . The IMF has also
http://thehavananote.com/sites/thehavananote.newamerica.net/files/111811%20Feinberg%20Brookings%20report.pdfhttp://thehavananote.com/sites/thehavananote.newamerica.net/files/111811%20Feinberg%20Brookings%20report.pdf


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been providing technical assistance to support capacity building in the areasof tax administration, public expenditure management, banking supervisionand regulation, and macroeconomic statistics. More recently, IMF staff worked with the PA todevelop the Palestinian Reform and Development Plan presented at the Paris Donors Conference in 2007 . The IMFs staff

reports since then have reviewed progress in implementing the plan, with a focus on the macroeconomic and fiscal areas .These reports have been taken into account by donors in their disbursement decisions . 91 The IFIs devised mechanisms for

collaboration with Kosovo many years before it became a member in 2009 . For example, in 2003, an IMF mission produced areport with a complete set of findings on the Kosovo economy and comprehensive policy recommendations . The IMF reportdescribed in detail the division of labor among donors, including the IMF and World Bank


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CBMs Solve

IMF solvesemploys unique expertise and incorporates Cuban experts

Feinberg 11-Senior associate at the Brookings Institute (Richard E., The Brookings Institute, Reaching Out Cubas NewEconomy and the International Response, 11/2011,

http://thehavananote.com/sites/thehavananote.newamerica.net/files/111811%20Feinberg%20Brookings%20report.pdf)//VS

IFI Technical Assistance to Cuba: Options After years of imagining that the IFIs were instruments of the historic enemy (i .e,the United States) and the stronghold of pernicious imperialist ideologies, Cubaboth government and peopleare not

prepared for a sudden embrace . Rather, a gradual process of confidence-building will be required.Technical assistance, even prior to membership, can take a variety of forms: Brief visits by IFI staff forconsultations and data-gathering IFI staff studies of less controversial topics,such as sector studies of tourism, sugar, nickel, and biotechnology, informed byan awareness of global markets and supply chains IFI staff studies that drawupon world-wide experiences with economicreform, on such topics as the reform of state-ownedenterprises, the growth of micro and medium-size enterprises, and energy-efficient transportation systems Joint

studies of a mutually agreed upon research agenda by IFI staff and Cubaneconomists Participation by IFI staff in Cuban academic seminars, possiblycomplemented with third country expert sReaching Out: Cubas New Economy and the International Response Latin AmericaInitiative at Brookings 74 Participation by IFI staff and Cuban economists in seminars organized by academic centers or

think tanks in other countries (e .g ., in Spain, Brazil, Canada, or the United States) Oncesufficient mutual trust hasbeen established, IFI staff could undertake studies in their core areas ofexpertise, including the more controversial strategic areas of macroeconomicand monetary policies, again incorporating Cuban experts in related research. Acomprehensive joint IMF-World Bank country strategy paper could follow, presenting proposals and options for thesequencing of reforms . The strategy paper might be composed within a broad-based process of consultations with Cubanstakeholders; a prominent role in this participatory process and in the elaboration of the report might be assigned to Cuban

officials and economists .A jointly elaborated plan for the financing of reforms,including the division of labor among international donors, would be anothercritical step in propelling reform forward. In considering external sources of funds and expertise,the helping hand of the Cuban Diaspora, in the United States but also in Canada, Europe, and Latin America, should be givenfull play . To cover the costs of IFI technical assistance to a non-member, a trust fund with third-party financing could beestablished . The UNDP, already well established in Cuba (see Section 1), could play a central role, as it has done elsewhere . Inan informal discussion in June 2011 in Havana with the author, a leading Cuban economist suggested ten topics that, amongothers, would make for interesting IFI studies (not necessarily in order of importance): Comparative development

strategies including assessing the experiences of Vietnam and Eastern Europe Monetary and financialsolutions Salaries and incentives Productivity International commerce,exports and supply chains The transformation of state-owned enterprisesinto non-agricultural cooperatives Micro-enterprises Financing socialwelfare Diasporas and development Institutions, laws and regulations. Byresponding to such a list, the IFIs could begin a constructive, step-by-step dialogue with

leading Cuban economists and policymakers. In a preliminary reaction, World Bank economistsfamiliar with the Cuban economy agreed that these were all important topics .Reaching Out: Cubas New Economy and theInternational Response Latin America Initiative at Brookings 75 98 CARTACs estimated budget for 2011-2015 is a substantial$62 .2 million and is funded with external contributions . Canada has been the major contributor . Other internationalcontributors have been the European Commission, the UK Department of International Development (DFID), the CaribbeanDevelopment Bank, and the Inter-American Development Bank (IDB) . Source: IMF, Caribbean Regional Technical AssistanceCenter (CARTAC), Program Document, Annex VII: Expanded Budget by Section, December 2010, p .113 . CAPTAC-DR inGuatemala is supported by the European Commission, Spain, Canada, Mexico, Germany, the Central American Bank forEconomic Integration, and the Inter-American Development Bank . Source: IMF, Annual Report 2010, p .36 . In addition,training of mid-level technical personnel will be vital to energizing Cuban government institutions at all levels, national,

provincial, and municipal . The IMFs regional technical assistance centers for the


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Caribbean(in Barbados), and for Central America and the Dominican Republic (in Guatemala) could serve asestablished and well-equipped venues. These centers have resident expertsand also draw on expertise from IMF headquarters and the IMF Institute. TheCaribbean Regional Technical Assistance Center (CARTAC) focuses its capacity-building technical assistance and policy adviceon topics that will be of urgent interest to a reform-minded Cuba: macroeconomic analysis, tax and customs administration,public financial management, economic statistics, and financial sector and capital markets regulation and supervision . Ofparticular relevance, CARTAC promotes the use of internationally accepted concepts and statistical methodologies, helpingcountries to develop compilation and dissemination procedures in line with international standards and codes of goodpractices . 98 Located in Barbados and Guatemala, these technical assistance centers could be ideal cost -effective andpolitically neutral venues for offering seminars and workshops to Cubans, avoiding at the outset a visible IMF presence inHavana or a potentially controversial Cuban presence in Washington, DC . Such events could either be exclusive to Cubans or,more discreetly, could be scheduled for regional members while allowing Cuban participation . In the Cuban case, a separate

trust fund might be established for the training of Cuban nationals . Training for new private-sectorentrepreneurs empowered by Cubas economic reforms will also be highonany agenda but this is more the expertise of bilateral donors, non-governmental organizations, and internationalbusiness schools than of the IMF or IBRD . Further down the road, Cuba could call upon theInternationalFinancial Corporation (IFC)of the World Bank and the privatesector arms of the IDB where relevant expertise lies.


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Cuba Says Yes

Cuba wants to re-engage with IFIsmost recent evidence proves

Feinberg 11- Senior Fellow at the Brookings Institute professor of international politics at the University of California-San Diego (Richard THE INTERNATIONAL FINANCIAL INSTITUTIONS AND CUBA: RELATIONS WITH NON-MEMBERSTATES, 2011 ,http://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdf)//RT

Public debates regarding the relations between Cuba and the international financialinstitutions (IFIs) have been laced with serious misconceptions. Contrary tocommon belief, the United States does not hold veto power over IFI votingprocedures on new memberships. And while it may have been true in the past thatCuba was disinterested, this article presents fresh evidence that today, Cuba may beprepared to re-engage with the IFIs (pre-revolutionary Cuba was a member of theIMF and World Bank). Often, it is assumed that the IFIs cannot engage with non-members. In fact, there are numerous precedents for extending technical assistanceand even financial resources to non-member states and entities, for example

through the establishment of trust funds administered and financed by thirdparties. As this paper will argue, in the case of Cuba a gradual step-by-step processof confidence-building, through various channels of technical assistance, is feasibleand would be most responsive to various political sensitivities. Also contrary toconventional wisdom, Cubas nonparticipation in the Organization of AmericanStates (OAS) is not a legal obstacle to membership in the Inter-AmericanDevelopment Bank (IDB). Nor is U.S. voting power in the IDB sufficient to defeat avote on new members.

Cuba will say yesmoving towards market reforms now

Feinberg 11- Senior Fellow at the Brookings Institute professor of international politics at the University of California-San Diego (Richard The New Cuban Economy What Roles for Foreign Investment?,

December,2012,http://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=en)//RT

In April 2011, under the leadership of Ral Castro, the Cuban Communist Partyapproved The Guidelines for the Economic and Social Policies of the Partyand the Revolution. A lengthy document with 313 points, theofficial blueprint recognizes theeconomys major shortcomings and proposes pathways forward. Theguidelines assert that national savings must be increased, exports need to be bolstered, and domestic production of food stuffs should substitute forimports . To accomplish these goals and raise efficiency and productivity, decision-making will be

decentralized to state-owned enterprises (SOEs) and municipalities. The non-state sectorincluding small-scale private enterprise, cooperatives, andprivate farmingwill grow to absorb workers shed from the bloated statesector.As of mid-2012, some reforms were already underway and Cubans were eagerly anticipating additional measures.11 Reforms already in progress included liberalizing private markets forrestaurants, bed-and-breakfast establishments, small retail shops, and othermicro-businesses; private markets for some farm products; the distribution
http://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdfhttp://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdfhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.brookings.edu/~/media/Research/Files/Papers/2012/12/cuba%20economy%20feinberg/cuba%20economy%20feinberg%209.pdf?_lang=enhttp://www.ascecuba.org/publications/proceedings/volume22/pdfs/feinberg.pdf


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of idle state lands; and the limited buying and selling of automobiles andresidential homes which has set off a burst of property registration.Reformswidely presumed to be in the pipeline included a new law encouraging andregulating non-farm cooperatives; leasing many smaller retail outlets,including cafeterias and barber shops, to their employees to operate as

independent cooperatives; fiscal reforms placing greater emphasis ontaxation as opposed to intra-state transfers; as a pilot project, allowing selectSOEs to sell excess production on the open market, after honoring their statecontracts; and of possibly great long-term significance(and also on a pilot basis), creatingOrganizaciones Superiores de Direccin Empresarial (Superior Organizations of Management), or industrialholdings companies, that would take over many of the management functionscurrently in the hands of the powerful ministries

Cuba says yesgradual economic reforms now

English News 13- Newspaper, Business Section (Cuba's economic reforms moving "at good pace": president April5, 2013 http://news.xinhuanet.com/english/business/2013-04/05/c_132285874.htm)//RT

HAVANA, April 4 (Xinhua) -- Cuba's economic reforms are progressing "at a good pace,"President Raul Castro was quoted as sayingby official daily Granma on Thursday."If we analyzethe progress made so far, we can see that we are progressing at a good pace," Castro told acabinet meeting in Havana Tuesday night.He said the government could not solve all problemsovernight given the "magnitude and complexity of the problems," adding that "we must resist pressure fromthose who insist we should be moving faster."Castro urged officials to"systematically" improve the quality and efficiency in economic planning, andhailed the ruling Communist Party's programs as having "helped us to work ina more orderly and disciplined way."The ministersat the meeting discussed

economic and budget plans for 2014 and more flexibility in financial dealings.

Since officially assuming power in 2008, Castro has gradually introduced a series of reformsto modernize the country's economic model to spur productivity and trim thepublic sector, by far the country's biggest employer.
http://news.xinhuanet.com/english/business/2013-04/05/c_132285874.htm)/RThttp://news.xinhuanet.com/english/business/2013-04/05/c_132285874.htm)/RT


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IMF Solve Cuban Economy

IMF solves Cuban economyforeign aid is essential to recovery - leads to

successful transition

Tamayo 12- Staff Writer for the Inter American Security Watch (Juan Cuba still searching for economic model thatworks, August 3, 2012,http://interamericansecuritywatch.com/cuba-still-searching-for-economic-model-that-works/)//RT

Vegard Bye, a Cuba expert at the Norwegian Institute of International Affairs, saidVietnam more than China is a model for the Castro government as it pushes towarda more market-oriented economy, although Cuba is unique in many ways. Cuba isdifferent from everybody, he said, adding that it will be difficult for island leadersto copy anyone elses economic model during a transition. Cuba, for example, hasnt

done as well as China or Vietnam in recruiting new generations of leaders andmanagers, Bye said, and as it reforms the economy, it is less likely to be able to

maintain political controls as easily as Vietnam has done. Bye noted that the thrust of Castrosrecent visit to China, Vietnam and Russia seems to be an effort to figure out how a market economy can be implemented andinstitutionalized without losing political control. He said that the Cuban military and former military officers who have hadvast experience in managing a large majority of the islands state-owned enterprises are likely to have a strong voice in the

islands economic future. Cuba,Bye said, essentially faces two scenarios: a Vietnam-like shifttoward a more market-oriented economy with space for small- and medium-sizedprivate businesses but with the government clearly in political control or theperhaps more likely authoritarian militarized transition in which military

technocrats take control through cronyism and corruption. I hope for No. 1, but thetendency is very much toward the second one,Bye noted. He pointed out that in the economictransitions in Russia and Eastern Europe, three-quarters of the current economic leaders were previous party leaders duringthe Communist regime. In Russia particularly, he said, the old party chiefs became the owners of formerly public property,while in the other countries the trend has been for them to form the new managerial class. In Cuba there is a strong tradition

for small-scale capitalism, said Pujol. But he said,There is no way the Cuban economy can recoverwithout strong foreign investment. Several analysts said they thought Cubanmembership in international financial institutions could aid in its transition. Cubaneeds foreign direct investment and membership in international financial

institutions is vital for Cuba eventually, said Richard Feinberg, a professor of

international political economy at the University of California, San Diego. Feinberghas laid out a strategy for Cubas reconnection with international financial

institutions such as the International Monetary Fund and the World Bank.Membership [in the IMF] does not require you be a liberal democracy,he said. A lot ofstrange governments and rogue governments are in the IMF and the World Bank. But one big problem is that a country must

express a desire to join the IMF, and at this point Cuba, which left the fund in 1964, hasnt shown interest in applying, saidLorenzo Perez, who retired from the IMF after a 30-year career. Cuba would also need a sponsor. Countries such as Brazil and

China that are friendly with Cuba might be willing to fulfill the role, he said, although at this point they might have to bringCuba kicking and screaming into the IMF. While IMF membership wouldnt immediately promote democracy in Cuba, Perezsaid it could promote political reform in the longer term by forcing Cuba to adopt a more rational economy policy and byencouraging policy transparency and government accountability.
http://interamericansecuritywatch.com/cuba-still-searching-for-economic-model-that-works/http://interamericansecuritywatch.com/cuba-still-searching-for-economic-model-that-works/http://interamericansecuritywatch.com/cuba-still-searching-for-economic-model-that-works/


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AT IMF Fails

IFIs have unique expertiseknow how to promote growth in strong states and

how to adjust to local circumstancesempirically provenFeinberg 11- Senior Fellow at the Brookings Institute professor of international politics at the University of California-San Diego (Richard Reaching Out Cubas New Economy and the International Response, November, 2011,

http://thehavananote.com/sites/thehavananote.newamerica.net/files/111811%20Feinberg%20Brookings%20report.pdf)//RT

The major international(IMF, World Bank) and regional(IDB, CAF)financialinstitutions house a wealth of accumulated knowledge and expertise, and massive financial resources, which fit well with Cubas needs. In recent years,the IMF and World Bank have learned a great deal about how to promoteefficient growth and poverty reduction in the context of strong states .The IFIshave also become more attuned to clients political sensitivities and more flexible

in adjusting requirements to local circumstances, as evident in their successfulrelationships with Vietnam and Nicaragua . IFI staff economists and sectorspecialists are chomping at the bit to engage in Cubathey should be allowed andencouraged to do so

IMF policies work where countries cooperate - Argentina, Brazil, Peru prove

Pop-Eleches, 11 Associate Professor of Politics and Public and International Affairs (Grigore, From Economic Crisisto Reform: IMF Programs in Latin American and Eastern Euro, p. 238)//YSDECEMBER 1998 THE ARGENTINE PRESIDENT, Carlos Menem, addressed the joint meeting of theInternational Monetary Fund and the World Bank in the wake of the East Asian financial crisis, during which the Funds policy

prescriptions had attracted sharp and widespread criticism from a wide range of observers. Menem recounted

Argentinas remarkable turnaround following the hyperinflationary chaos of

the 198991 period, and ascribed this success to his government having

workedside by side with the IMF, the World Bank, and the IDB to achieve

macroeconomic stability, deepen structural reforms, and adopt policies aimedat improving the economic fortunes of the poorest members of society. 1 Comingfrom the leader of the populist, labor-based Peronist party a year before a crucial presidential and parliamentary contest, thisneoliberal proclamation in the very cradle of the Washington Consensus would have been inconceivable barely a decade

earlier. And Menem was not alone in this posture of an unexpected Latin Americanneoliberal: The list of committed market reformers also included BrazilianpresidentEnrique Cardoso, one of the intellectual founders of the Latin American dependency school, and

Alberto Fujimori, the Peruvian populist president, whose initial electoral

campaign in 1990 had stressed the avoidance of painful austerity measures.However, only a few years later, the political pendulum in Latin America started to swing back to the left following a series ofdecisive victories for presidential candidates ranging from moderate social democrats, such as Chiles Bachelet, Uruguays

Vazquez, and (somewhat unexpectedly) Brazils Lula, to more combative leftists such as Argentinas Kirchner, and particularlyBolivias Morales and Venezuelas Chavez (Castaneda 2006).


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Reformed IMF solvesnow has both carrots and sticksempirically has

become effective at facilitating economic integration

Pop-Eleches, 11 Associate Professor of Politics and Public and International Affairs (Grigore, From Economic Crisisto Reform: IMF Programs in Latin American and Eastern Euro, p. 264)//YSThis sections brief analysis of Latin American IMF programs in the 1990s has revealed a political economy landscape whose

dynamics were closer to those of the post-communist transition than to the Latin American experience during the debt crisis

of the 1980s; thus, external financial pressures reduced and even reversedtraditional ideological policy differences between the left and the right, anddemocracy was no longer incompatible with the neoliberal reform agendapromoted by the IMF. Seen from this perspective,the crucial driver of this transformation appears to have beenthe dramatic change from the inhospitable international economic environment of the 1980s to the much more favorableclimate of the 1990s. Given the Funds intermediary role between developing country governments and international financialmarkets, this international economic transformation set a very different basic tone for the interactions between the Fund and

its potential clients; thus, as a debt collector with more sticks than carrots at itsdisposal, the IMFs interventions during the 1980s triggered heated

ideological debates and widespread popular resistance, thereby shaping the divisive andconfrontational nature of economic reforms during the debt crisis. By contrast, the significant economicbenefits of the international financial and economic boom of the 1990s

allowed the Fund to play a much more constructive role as a facilitator ofinternational economic integration, which muted the ideological undertonesof domestic policy debates and reduced the tensions between democraticpolitics and neoliberal reforms.


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Aff Answers


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Bailouts/Aid Fails

IMF empirically worsens crises through failed bailoutsGreece provescreates

incentives for misbehavior

Kibbe 11-president and CEO of FreedomWorks, a nationwide grassroots organization fighting for freedom, lower taxesand less government (Matt, WHAT HAS THE IMF DONE WITH OUR MONEY? IT'S LONG PAST TIME TO END ITSSUBSIDIZATION OF FAILURE., 1/26/2011, http://www.lexisnexis.com.proxy.lib.umich.edu/hottopics/lnacademic/)//VSFor decades government officials have been touting the fallacy that International Monetary Fund payments cost Americantaxpayers nothing. Even former U.S. Treasury Secretary Robert Rubin claimed that "the IMF has not cost the taxpayer a dime."

This is misleading. Since the IMF operates under a veil of secrecy, these hidden taxpayersubsidiesare not subject to annual appropriations, and they are nowhere to be found in thefederal budget. Out of the IMF's 187 member countries, U.S. taxpayers have the highest burden, providing over 17%,around $55 billion, of the IMF's total funding. Since voting weight is determined by the amount of money a country provides tothe IMF, the U.S. also has the highest voting stake, at roughly 16.74% of the vote. This means that the U.S. is the only nationwith the power to veto all major decisions that require an 85% supermajority to pass. We must put pressure on U.S. Treasury

Secretary Tim Geithner to vetoIMF bailouts for the first time in history. Theoriginal mission of the IMF wastotemporarily assist nations with short-term balance of payments problemsunder the

Bretton Woods system. When that system of fixed exchange rates fell apart in the early 1970s,the IMF had no justification to continue. Instead of closing down, the fund simply redefined its mission.In recent years the IMF has shown itself to be a prime example of our bailout culture.The fund has regularly put American taxpayers on the hook to bail out powerful banks and profligate nations with poor

economic policies. Most recently the IMF sent $145 billion to the widely profligate Greece.The nation had long been living far beyond its means. According to the Organisation for Economic Co-operation andDevelopment, total government expenditures in Greece were 44.8% of GDP in 2008. Greece's failure to cut its bloated public

sector and lavish welfare programs left it bankrupt. We were forced to pay for its mistakes. Thishas opened thefloodgates to massive European bailouts. As the Hoover Institution at Stanford University notes, " itwould be difficult to devise a more regressive wealth transfer scheme thanIMF financing programs. IMF loans are used to rescue wealthy, politicallyconnected bankers, investors, and financiers at the expense of domestic

taxpayers." The IMF recently announced plans to send $130 billion to spendthriftIreland. It is reported that Portugal and Spain may be next in lineto seek funding, followed by Italyand Belgium. The IMF has institutionalized what economists call moral hazard. Ithasencouraged reckless behavior by holding out the prospect of a bailout to anynation or large, politically connected bank that fails. The IMF'scounterproductive efforts have made financial crises much worse . Even formerRussian Deputy Prime Minister Boris Federov has stated, "I strongly believe that IMF money injections in 1994-1998 were detrimental to the Russian economy and interests of the Russianpeople. Instead of speeding up reforms, they slowed them ." Take Argentina. For many yearsthe IMF poured into the country taxpayer-subsidized loans with an exceptionally low interest rate of 2.6%.Afterreceiving IMF bailout packagesof more than $40 billion, the Argentine economy

collapsed. The Joint Economic Committee found that the IMF "led to moral hazard problems"and "sustained and subsidized a bankrupt Argentine economic policy, whosecollapse is now all the more serious."Rather than encouraging pro-growth policies, IMF loansfoster a culture of dependency among developing nations.It has created a horde ofloan addicts. More than 70 countrieshave relied on IMF loansfor more than 20 years, and most ofthese countries are left with massive debts that they cannot afford to pay, which only escalates poverty and instability. T

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