Cuba Sugar Disadvantage - HSS 2013.docx

8/14/2019 Cuba Sugar Disadvantage - HSS 2013.docx

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1nc(Brazil)

Brazil Economy is on the tipping point but slowly rising-inflation reduction

Malinowski7/1(Mathew Malinowski, Bloomberg Economist, 7/1/13, Brazil Economists See

Higher Selic and Slower Economic Growth, http://www.bloomberg.com/news/2013-07-01/brazil-economists-see-higher-selic-and-slower-economic-growth.html)Brazil economists raised their benchmark interest rate forecast and cut economic growth

expectations for this yearand next, as inflation persists above the central banks target.Brazils central bank will raise the Selic to 9.25percent this year and hold it at that levelthrough 2014, up from the previous weeks forecast of 9 percent for this year and next,

according to a June 28 central bank survey of about 100 analysts published today. The economywill expand 2.4 percent this year and 3 percent next year, compared with the previous

forecast of 2.46 percent and 3.1 percent, respectively.President Dilma Rousseffs administration is working to reverse a deteriorating economicoutlook in the worlds second largest emerging market. Brazils central bank last week cut its

forecast for gross domestic product expansion this year, as quickening inflation drags downfamily and business sentiment. Economic and social discontent has prompted the biggest streetprotests in decades, as more than a million demonstrators have taken to the streets in the pastmonth to oppose inflation, corruption and poor public services.Swap rates on the contract due in January 2015 were unchanged at 9.87 percent at 9:05 localtime. The real strengthened by 0.2 percent to 2.2271 per U.S. dollar.Central bankers, in their quarterly inflation report released on June 27, said inflation will reach

6 percent this year should the benchmark rate remain unchanged at 8 percent, up from a

March forecast of 5.7 percent.They also cut the 2013 growth prediction to 2.7 percent, from3.1 percent.

Lifting the embargo allows for investment and trades off with Caribbean andCentral American economies

Suchlicki2k(Jaime Suchlicki, Founding Director of the Cuba Transition Project at the Univeristyof Miami and Director of the Institute for Cuban and Cuban-American Studies, 6/2000 The U.S.Embargo of Cuba, http://www6.miami.edu/iccas/USEmbargo.pdf)Trade No foreign trade that is independent from the state is permitted in Cuba. Cuba would export to the U.S. most of itsproducts, cigars, rum, citrus, vegetables, nickel, seafood, biotechnology, etc. Yet, since all of these products are produced byCuban state enterprises, with workers being paid below comparable wages, and Cuba has great need for dollars, the Cubangovernment could dump products in the U.S. market at very low prices, and without regard for cost or economic rationality. Many of these products will compete unfairly with U.S. agriculture and manufactured products, or with products imported from

the Caribbean and elsewhere. If the U.S. were to buy sugar from Cuba, it would be to the

detriment of U.S. or Caribbean producers. 1 Cuban products are not strategically important to the U.S., and are ingreat abundance in the U.S. internal market, or from other traditional U.S. trading partners. There is little question about Cubas

chronic need for U.S. technology, products and services. Yet, need alone does not determine the size or viability of a market.Cubas large foreign debt, owed to both Western and former Socialist countries, the abysmal performance of its economy, andthe low prices for its major exports make the bountiful market perception a perilous mirage. From the U.S. point of view,

therefore, the reestablishment of commercial ties with Cuba would be at best problematic. It

would create severe market distortions for the already precarious regional economies of

the Caribbean and Central America since the United States would have to shift some of these

countries sugar quota to Cuba. It would provide the U.S. market with products that are of

little value and in abundant supply. And, while some U.S. firms could benefit from a resumed

trade relationship, it would not help in any significant way the overall U.S. economy. Cuba does


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not have the potential to become an important client like China, Russia, or even Vietnam. Investments Cuba has promotedinvestments in tourism as its highest priority and only recently has begun to promote investments in other sectors. Cuba has notyet attempted to link Foreign Direct Investments (FDI) with technology transfer. Nor has it permitted 2reater individual freedom ineconomic matters. While the Cuban government is allowing some workers to operate independently, these activities are highlyregulated. Unlike China, Cuba has not legalized private agriculture or manufacturing. Investments will be directed and approvedby the Cuban government. The Cuban government is unlikely to create a level plain field for American companies, allowing someto invest while discriminating capriciously against others. U. S. investments in Cuba would be limited, however, given the lackof an extensive internal market, the uncertainties surrounding the long-term risk to foreign investment, an uncertain political

situation; and the opportunities provided by other markets in Latin America and elsewhere. Modest initial investments would be directed primarily to exploiting Cuba's tourist, mining, and natural resource industries. The Cuban constitution still outlawsforeign ownership of most properties and forbids any Cubans from participating in joint ventures with foreigners. Jointventures are only permitted with state enterprises; many of these are now under military control. It is illegal for foreigncompanies to hire or fire Cuban workers directly. Hiring is done by the Ministry of Labor. Foreign companies must pay the wagesowed to their employees directly to the Cuban government in hard currency. The Cuban government then pays out to the Cubanworkers in Cuban pesos, which are 2orth 1/20 of a U.S. dollar, pocketing 90 percent of every dollar it receives. While Cuba'sforeign investment law provides protection against government expropriation, all arbitration must take place in the corrupt andarbitrary government offices where little protection is given to the investor. There is no independent judicial system in the island. Foreign investors must also confront political uncertainties that do not exist in many other countries. They must contend withthe possibility of the regimes reversing policy, the legal questions surrounding previously confiscated properties, and potential sanctions against foreign investors that cooperated with the Castro government in the event that an anti-Castro governmentcomes to power. Castro's opposition to market reforms will limit the extent to which the private sector emerges and functionseffectively, and thereby will slow, if not prevent, attaining a measurable degree of economic recovery. While Castro and hard-liners recognize the need for economic recovery, they also see the likely erosion of political power and control that accompanies

the restructuring of the

economy along free-market rules. Adoption of market reforms may

well represent a solution to theeconomic crisis, but a full-blown reform process carries with it the risk of loss of control over society, as well as the economy, andthreatens to alienate some of the regimes key constituencies. 2HY MAINTAIN THE EMBARGO The embargo should be held as acarrot to be lifted when Cuba changes its current system and develops a democratic society. The embargo is not an anachronismbut a legitimate instrument of U.S. policy for achieving the goal of a free Cuba. While most of the freely elected governments inLatin America pursue moderate, neo-liberal economic policies, Castro has deliberately staked out a position as the last defenderof Marxism-Leninism. In October 1997 he held a meeting in Havana of Communist leaders from all over the world to reassert thesupremacy of communist ideology and to plan for a comeback when capitalism fails. The lifting of the embargo now will be animportant psychological victory for Castro. It would be interpreted as a defeat for U.S. policy and as an enforced acceptance ofthe Castro regime as a permanent neighbor in the Caribbean. The long held belief that through negotiations and incentives wecan influence Castros behavior has been weakened by Castros unwillingness to provide major concessions. Castro prefers tosacrifice the economic well being of his people rather than cave in to demands for a different Cuba. Neither economic incentivesnor punishment have worked with Castro in the past. They are not likely to work in the future. 2Not all differences and problems ininternational affairs can be solved through negotiations or can be solved at all. There are disputes that are not negotiable andcan only be solved either through the use of force or through prolonged patience until the leadership disappears or situationschange. Ignoring or supporting regimes that violate human rights and abuse their population is an ill-advised policy. The Castro

era may be coming to an end if for no other reason than biological realities. Fidel Castro is seventy-three and deteriorating physically. U.S. policy should stay the course and wait for Castros disappearance. The gradual lifting of the embargo now willcondemn the Cuban people to a longer dictatorship and the perpetuation of a failed MarxistLeninist society. The gradual lifting ofthe embargo entails a real danger that the U.S. may implement irreversible policies toward Cuba while Castro provides no concessions to the U.S. or concessions that he can reverse. A piecemeal lifting of the embargo will guarantee the continuance of the present totalitarian political structures and prevent a rapid transformation of Cuba into a free and democratic society. 2 Thelifting of the travel ban without meaningful and irreversible concessions from the Castro regime could provide the Castro brotherswith much needed foreign exchange. It would represent one of the first steps in ending the U.S. embargo and prolong thesuffering of the Cuban people. PECIFIC ISSUES If the U.S. has relations with China, why not with Cuba? Relations with China werepropelled by U.S. strategic and economic interests 1) to counter growing Soviet power; 2) to increase U.S. influence in SoutheastAsia; and 3) to tap the one billion-dollar China market. Cuba is small, poor, and strategically and economically unimportant. InLatin America, the U.S. has followed a regional policy that fosters human rights, neo-liberal economic policies, and democraticallyelected civilian governments. U.S.-Cuba policy should be no different. The U.S. has been willing to intervene militarily in Grenada,Panama, and Haiti to restore democracy. In Chile it established a military embargo against the Pinochet dictatorship. In othercountries it supported free and transparent elections. Why should U.S. policy toward Cuba be different? Arent the Cubans alsoentitled to a free society? The Cubans are suffering economically because of the U.S. embargo. The Cubans can buy any products,

including food and medicine from any country in the world. Dollar stores in Cuba have numerous U.S. products, including Coca-Cola, and other symbols of American consumerism. American dollars can purchase almost anything in Cuba. 2There are shortagesin Cuba of fruits, vegetables, potatoes, bananas, mangos, boniatos, and other foodstuffs that have been traditionally produced locally. What do these shortages have to do with the U.S. embargo? The reason for Cubas economic suffering is a Marxist systemthat discourages incentives. As in Eastern Europe under Communism, the failed Communist system is the cause of the economicsuffering of the Cubans, not the U.S. embargo. Tourism, trade and investment will accelerate the downfall of Communism inCuba as it did in the Soviet Union. There is no evidence that tourism, trade, or investment had anything to do with the collapse ofcommunism. Tourism peaked in the Soviet Union in 1980, almost a decade before the collapse of communism. In the Soviet Union tourism was tightly controlled with few tourists having any contact with Russians. The collapse of Communism was theresult of a decaying system that did not work, the corruption and inefficiency of the Communist Party, the economic bankruptcyof the Soviet Union in part because of military competition with the West, an unpopular war in Afghanistan, and the reformist


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policies of Mikhail Gorbachev that accelerated the process of change. 3he driving force for capitalism in Russia and China is nottrade or investment but a strong domestic market economy, tolerated by the government and dominated by millions of smallentrepreneurs. The will to liberalize the economy does not exist in Cuba. Cuba is a potential economic bonanza for U.S.

companies. Given Cubas scant foreign exchange, its ability to buy U.S. products remains very

limited. Cubas major exports, i.e. sugar, tobacco, nickel, citrus, are neither economically nor

strategically important to the United States. Lifting the embargo would create severe

market distortions in the already precarious economies of the Caribbean and CentralAmerica since the U.S. would have to divert some portion of the existing sugar quota away

from these countries to accommodate Cuba. The impact of tourism diversion toward Cuba would profoundly hurtthe economies of the Caribbean and Central American countries. Cuba, cited as one of the worst political and commercial risks inthe world by several recently issued country risk guides, lags far behind China and Vietnam in establishing the necessaryconditions for economic development and successful corporate involvement. Current foreign investments are small and limitedto dollar sectors of the economy such as the tourist industry and mining. American companies are not losing out. In a freeCuba, U.S. companies will quickly regain the prominent role they held in pre-Castro Cuba.

Specifically-Sugar is Key to brazils economy

Reuters12(Leading News Source, US-BrazilEconomyhttp://in.reuters.com/article/2012/08/27/us-brazil-economy-agriculture-idINBRE87Q0RV20120827

Agriculture has long been known as the green anchor of Brazil's economy, now the world'ssixth-largest. One of the world's breadbaskets, Brazil is a major producer of soybeans, corn,sugar, coffee, oranges and beef, and has invested heavily in the past decade to keep up withsurging global demand. But the agricultural sector kicked off 2012 on the wrong foot, adding tothe woes of an economy that has been struggling for the past year. Agricultural outputcontracted 8.5 percent in the first quarter, hit by a drought in the grains belt, a poor sugar canecrop and tight credit markets. The slump in Brazil's farm belt, however, was short-lived. Theagricultural sector, which accounts for nearly 30 percent of Brazil's gross domestic product,isexpected to be a bright spot when GDP data for the second quarter is released on Friday.

Brazil economic stability key to regional stability

Cohen09*Salu Bernard Cohen. Geopolitics: The Geography of International Relations.Rowman & Littlefield. Google Books.158-159. 2009]However, the independence of South America as a geopolitical region is strengthened by Brazils

continued economic growth, political stability, and world influence. It is clearly the dominant

political and economic power within South America and one of the major regional powers of

the world. It dwarfs the rest of the continent in population (190 million out of a total of 360 million), in area (3.3 million square

miles out of a total of 6.4 million square miles), and in GDP ($1.65 trillion, or over 55 percent). Possessing common

borders with every other South American statewith the exceptions of Chile and Ecuador, the South

American regional giant is geographically positioned to influence and pressure the other

states, especially as various transcontinental transportationand energy projects are brought to

completion. Factors that favor the economic development prospects of Brazil are the attractiveness of its vast market toinvestment capital, and its rich natural resources of bauxite, gold, iron, manganese, nickel, phosphates, uranium, timber, andhydropower. It has made rapid strides in petroleum development, and in 2006 the country became completely self-sufficient in oil.Discovery of the vast deepwater Tupi oil field off its southeastern coast followed by discovery of the even larger offshore Cariocafield offers the potential for transforming Brazil into a global energy powerhouse. When this oil eventually comes online, thecountrys reserves will provide brazil with the additional political weight to country Chavezs petro -supported foreign policy goals.Now reliant on Bolivia and Argentina for natural gas, Brazil can develop its large offshore gas deposits in the Santos Basin and movetoward national self-sufficiency in gas. This would require major investment to double the countrys gas line distribution system, making the timetable for bringing in the gas fields uncertain


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Links

Embargo allows for investment-lifts reprocutions and increases incentives

Escandon8(Jennifer Gerz-Escandon, Writer for The Christian Science Monitor, 10/9/8, End

the US-Cuba embargo: Its a win-win,http://www.csmonitor.com/Commentary/Opinion/2008/1009/p09s02-coop.html/(page)/2)Secondly, direct US engagement could allow two of the nation's largest revenue generators, the

Cuban nickel and sugar industries, to expand into more capital-intensive energy research through

university and private-sector partnerships.Most Cuban exports are currently destined for Canada, China, or the

Netherlands as raw or lightly refined materials. Yet, with funding for technology and without the fear

of embargo-based repercussions from the US, Cuban research opportunities and export

products could have the potential to diversify. By gaining the freedom and cooperative assistance to make this

transition, Cuba could address its own energy dependence while leap-frogging years ahead on modernization. For starters, Cuba could

explore the sugar-bioenergy marketand the energy-related uses of nickel. Given the abundance of well-

trained but under-employed Cuban engineers, the ingredients for a perfect storm of

innovation are already present.For its part, by ending the embargo, the US si multaneously gains security through stability in Cuba.

More important, by investing in the future prototype for emerging marketsa 42,803-square-mile green

energy and technology lab called CubaAmerica gains a dedicated partner in the search for

energy independence.

Embargo is the only restraint on Cuban Sugar

Frank10(Mark Frank, Writer for Financial Times, 5/18/10, Cuba Worries as Sugar IndustryDissolves, http://www.ft.com/intl/cms/s/0/7ae9965e-6290-11df-991f-00144feab49a.html#axzz2adOpt5RL)Sugar production is expected to weigh in at around 1.1m tonnes this year, compared with 8mtonnes in 1990 before the Soviet Union collapsed and the poorest result since 1905, accordingto a rare recent admission by Granma, the Communist party daily. Negotiations are under way

with several groups to co-administer some of the eight largest mills, built after the revolution,say foreign business sources and Cubans with knowledge of the industry. It is a big shift in policyunder Ral Castro, president, whose brother Fidel insisted the island knew as much aboutproducing sugar as anyone. A big obstacle is the US Helms-Burton law, penalising investmentin properties expropriated from US owners and containing a yet-to-be implemented chapter

allowing Cuban-Americans to sue investors who traffic in their expropriated properties. Allbut eight of Cubas mills were built before the revolution and therefore nationalised, and most

plantations are lands expropriated by the government after Fidel Castro took power in 1959

Lifting the embargo allows for investment-saves the industry

Krisher 5(Ben Krisher, B.A. In political Science from University of Vermont, 12/6/5, Lifting theU.S-Cuban Embargo: A Case of Current Events, http://voices.yahoo.com/lifting-us-cuban-embargo-case-current-events-12262.html?cat=37)A lifting of the embargo would have serious economic consequences for Cuba,allowing

businesses in the US and elsewhere to do business on and with the island . This economic opening would

certainly benefit the country, which, in the past two years, has experienced a blow to its agricultural sector from

a prolonged drought, seriously injuring the sugar industry. Indeed, according to a September 20th, 2005 article in theCarribean and Central American Report, the sugar industry, which used to provide Cuba's "most important export for more than a century" is now

being dismantled, and only produced 1.3 million tons of sugar in 2005, a marked decrease from the 8


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million tons produced in 1990. Despite agricultural problems, Cuba's Castro has claimed a 9% growth rate for 2005, a figure which, according to aSeptember 6th, 2005 article in Latin American Economy and Business, is artificially high. In fact, the same article identifies a number of problems with

Cuba's economy, including an increasing reliance on the cheap oil provided by Venezuela to keep the economy from collapsing. A lifting of the

embargo would allow US oil companies to do business with Cuba, perhaps relieving some

pressure, and would open American markets up to Cuba's nickle deposits, which, according to the Latin American Economy and Business article, areplentiful.

Lifting restrictions allows for investment

Conason 8(Joe Conason, Journalist-Writer for Salon, 6/18/8, One more good reason to liftthe Embargo on Cuba, http://www.salon.com/2008/07/18/cuba_6/)Now there is at least one more incentive to change course. With its huge potential for producing

clean, renewable, sugar-based ethanol, Cuba represents a significant source of energy that will

remain unavailable to American consumers unless we undo the embargo. Agricultural experts

have estimated that Cuba could eventually provide more than 3 billion gallons of fuel

annually, perhaps even more when new technologies for extracting energy from sugar cane

waste(known as bagasse) come online placing the island third in world ethanol production, behind the

U.S. and Brazil.Given the relatively small demand for auto fuel in Cuba, nearly all of that ethanol would be available for export to its nearestneighbor.Today the Cuban government manufactures only nominal amounts of ethanol, mainly because of government policies favoring table sugarand rum instead. Fidel Castro reportedly feels that using cane for fuel instead of food is a c apitalist crime against the poor. Having ceded power to hisbrother Ral, however, the aging ruler may no longer control economic policy and Ral is widely viewed as the more flexible and pragmatic Castro.

A revitalized ethanol industry in Cuba would have an enormous ready market only 90 miles

away. It is also worth noting that sugar ethanol not only seems to burn cleaner than the kind made from grain but could also reduce pressure on

food prices. (Besides, everyone would be better off eating less sugar.)Like offshore oil, Cuban ethanol would not be

available overnight. Sugar production has dropped precipitously under Castro and Cuba lacks

substantial biorefinery capacity. Whether that capacity can be constructed faster than Exxon

can find oil and build platforms is an open question. But the difference is that Cuba could

certainly grow far more sugar cane than it does currently. And once the oil is gone, there will be no more, while canecan grow year after year indefinitely without contributing to climate change or polluting the oceans.

Cuba Sugar industry is on the brink-Investment key to growth

Grogg13(Patricia Grogg, Writer for the Inter Press Service-News Agency, 1/9/13, Cuban SugarSector Aims for Recovery in 2013, http://www.ipsnews.net/2013/01/cuban-sugar-sector-aims-for-recovery-in-2013/)The Cuban sugar industry seems to be experiencing a rebirth thanks to an economic

modernisation programme that has allowed for an injection of foreign capital as part of a strategy to

strengthen and diversify this key sector.There is a recovery, an awakening in the production of sugar

cane, sugar and sugar derivatives, said specialist Liobel Prez from the state-owned business group Azcuba, createdjust over a year ago to replace the once powerful Ministry of Sugar. Azcubas effectiveness will be put to the test in 2013 as it

implements new forms of management in the sector.Foreign investment in the sugar industry was formerlylimited to a handful of sugar derivative enterprises. Its extension to sugar production was one

of the innovations introduced by Azcuba in 2012.There are two major investments which complement themeasures that have contributed to sustained growth in production, Prez told IPS.The contract between COI and EmpresaAzucarera Cienfuegos, an Azcuba subsidiary, is for joint management over the next 13 years of the 5 de Septiembre sugar mill,located in the province of Cienfuegos, 232 km southeast of Havana.The Brazilian company will invest in agricultural mechanisationto raise crop yields and in industrial processing technology.It is hoped that this injection of capital will optimise human andindustrial resources and thus help the Cienfuegos mill to raise production to the 90,000 tons per harvest for which it was d esigned,from the 25,000 to 30,000 tons it has produced in recent years.As for Havana Energy, it is entering into a joint venture with Azcubasubsidiary Zerus SA to build a biomass power plant near the Ciro Redondo sugar mill in the province of Ciego de vila, in central


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Cuba.The plant will be built with an investment of between 45 million and 55 million dollars,

and is scheduled to begin generating electricity in 2015. During the harvest, it will be powered

with the sugar cane bagasse left over after sugar processing.The rest of the year, it will run on marabuweed, which has taken over large areas of idle farmland in the country.A number of other foreign investment projects are beingstudied, involving joint management, which seems to be Cubas preferred strategy for suga r mills.However, other potential joint

venture initiatives are also being considered, primarily in the energy and sugar derivatives sectors, said Prez. Sugar cane is

a source of a wide array of derivatives used in the food, chemical, pharmaceutical andbiotechnology industries. The long list of by-products includes animal feed, resins, preservatives, plastics and rawmaterials for paper and furniture production.Cuba has over 400 years of experience in sugar cane cultivation, as well as trainedhuman resources, facilities, land, scientific research centres, infrastructure and organisation. What it lacks is technology and, aboveall, the money to buy it, explained Prez.He believes that what is most important is the new vision of how the recovery of thesector can be achieved, which makes it possible to speak of sustained growth in sugar production, he said.Prez preferred not tohazard an estimate for the 2012-2013 harvest, which began in November of last year with the so-called small harvestand willcontinue until May, with the participation of 50 sugar mills. He did however indicate that production is expected to be 20 percent

greater than last years.Other sources close to the sugar sector said that the current harvest should

yield enough cane to produce 1.8 million tonnes, although the plan is to produce just over 1.6

million. Sugar continues to be the leading product but not the only one produced by this

industry which was the mainstay of the centralised Cuban economy until the late 20th

century.

Cuba Sugar industries need foreign investment-new tech

Garcia13(Jose Garcia, Economist, 6/14/13, Economists Assess Challenges of Cuban SugarSector, http://www.periodico26.cu/index.php/en/cuba-news/9228-economists-assess-challenges-of-cuban-sugar-sector)Gathered in working commissions at Havana's International Convention Center, academics, experts and officials addressed the

importance of the sugar industry for the country's economic and social developmentand the need

to find ways for its recovery.EconomistJose Antonio Garcia said that all sugar mills must undergo a thorough

testing stage before joining the harvest, pointing to the breakdown of a boiler in a sugar plant

in the province of Mayabeque, two days after beginning the harvest.The expert also called

for having sugar cane plantations nearer the industry, bearing in mind the properties of thesoil, selecting the seeds appropriately, guaranteeing the repair of all equipment used in the harvest, and having a la rger participation by research

centers.Finance and Price Minister Alfredo Alvarez said that sugar workers must be paid according to the prices of

the product on the world market, and in tune with the diversification of the sector, since

many of the products are exported and others generate electrical power from biomass.

Economist Jose Luis Rodrguez said that there is a lot of efficiency to recover in the sector, particularly

in the production of sugar cane derivatives. He also stressed the need for foreign investment

to obtain new technologies.

An end to the embargo would result in cheaper sugar

Knapp 9(Thomas Knapp, Senior news Analyst at the Center for Stateless Society-Think tank,2009, Who Benefits From the US Trade Embargo of Cuba?, Online,

http://c4ss.org/content/1369)

What would be the result of an end to the embargoassuming, as it is never safe to do, that both governments

were actually willing to drop it into the wastebasket of history? On the economic side, consumers andnon-rent-seeking

producers in both countries would benefit. Sugarin particular would get cheaper in the US

as American producers were forced to compete in an open market instead of being protected from


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Cuban cane. Goods of all types would get cheaper in Cubaas American imports which only have to be shipped across

90 miles of ocean arrive to compete with their European equivalents. Producers in both countries would have new

markets opened to them, and capital from both countries would have new,

competitive places to flow to.

US businesspeople want to invest in Cubaembargo is the only thing stopping

them

Wall Street Journal 12(2012,Investing in Cuba: Good Luck With That,http://blogs.wsj.com/totalreturn/2012/03/26/investing-in-cuba-good-luck-with-that/)

This weekend, we wroteastoryabout a closed-end mutual-fundmanagerwho has been waiting nearly 20

years for the opportunity to invest directly in Cuba. Indeed, the business opportunity

seems tempting:90 miles south of Key West, Florida isan island of more than 11 million people with

infrastructure thats seen little update since the 1960s.Thats led many a businessman

to dream of the day when he or she could get exposure to that market . Of course, theres a

daunting hurdle: The U.S. hasbanned most business with Cubasince 1962. As a result, it is near impossible

for ordinary investors to get more than minimal exposure to Cuba , according to lawyers and investmentadvisers. In 1958, as Fidel Castros revolutionaries fought the Cuban government, the U.S. imposed an arms embargo. After Mr.Castro took power and his government aligned

with the Soviet Union, the U.S. broadened the trade limits. The restrictions have remained mostly in place, though

the Obama administration has eased restrictions on travel and money sent to family

members Cuba. U.S. companies in certain industries, such as food, medical supplies, and entertainment can do business in Cuba if they get the proper licensesfrom the U.S Treasury Department and the U.S. Commerce Department, said Erich Ferrari, a lawyerbased in Washington who specializes in U.S. economic sanctions. Even so,

the penalties for violating the embargo are severe: between $65,000 and $100,000 in

fines and 10 years in prison

The sugar industry in Cuba seeks foreign investment

Peters 3(Phillip Peters ,degrees from the Georgetown University School of Foreign Service andthe Georgetown University Graduate School, International Studies, 2003, Cutting Losses: Cuba

Downsizes its Sugar Industry,

http://www.lexingtoninstitute.org/library/resources/documents/Cuba/ResearchProducts/cutting-losses.pdf)

The sugar ministry is activelyseeking foreign investors to boost production of

derivatives,andofficials use Cuban workers educational leveland the nations scientific

infrastructure,low production costs, location, and the markets growth potential as

sellingpoints. They saythey see substantial interest among potential partners. There are

moreforeign capitalists that come to make offers than those we seek out, claims one

official.

U.S. investment and bilateral cooperation with Cuba key to Cubas sugarcane

ethanol industry

Perales 10(Jose Raul Perales, senior program associate of the Latin American Program at theWoodrow Wilson International Center for Scholars, 2010, The United States and Cuba:Implications of an Economic Relationship,

http://www.wilsoncenter.org/sites/default/files/LAP_Cuba_Implications.pdf)
http://online.wsj.com/article/SB10001424052702303812904577299632008976046.htmlhttp://online.wsj.com/article/SB10001424052702303812904577299632008976046.htmlhttp://online.wsj.com/article/SB10001424052702303812904577299632008976046.htmlhttp://www.herzfeld.com/http://www.herzfeld.com/http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspxhttp://www.ferrari-legal.com/http://www.ferrari-legal.com/http://www.ferrari-legal.com/http://www.ferrari-legal.com/http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspxhttp://www.herzfeld.com/http://online.wsj.com/article/SB10001424052702303812904577299632008976046.html


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In spite of these developments, Pin argued it is in the best interest, 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 hydrocarbonswith renewable materials, and conservation and environmental stewardship. He highlighted the case of the Deepwater Horizon disaster in the Gulf of Mexico, and what wouldhappen 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 tocontribute to developing Cubas hydrocarbon reserves, as well as renewable energy such assolar, 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. Americanoil 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 potentialoil and natural gas reserves. In terms of specific U.S.

industries,agribusiness is pushing for a lifting of certain restrictions in the U.S. embargo in

order to increase its participation in the Cuban market, explainedChris Garza, senior director

of congressional relations at the American Farm Bureau. At present the industry has not

been able to see its full potential in Cuba due to existing restrictions. U.S. agribusiness

is not demanding that the embargo against Cuba be lifted; rather, it seeks key

concessions to ensure that U.S. firms can better compete in the Cuban market. Indeed, Garzahighlighted how U.S. businesses can sell agricultural products to other U.S.-sanctioned countries and U.S. citizens can travel to such countries. In this s ense, agribusiness is notseeking drastic changes to U.S. foreign policy; it is merely asking for the ability to treat Cuba as it does other countries subject to U.S. economic and other sanctions.

Cuba in need of foreign investment to build ethanol industry

Specht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,

http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)Additionally, because Cubas ethanol industry is currently almost nonexistent,it will need a

great deal of foreign expertise and investment to getstarted.However, such investments are unlikely to

be made unless Cuba makesfundamental changes in its business climate. In the words of Gonzalez and McCarthy, [C]apital

investment, which Cubas economy desperately needs andwhich is most likely to be

supplied by foreign investors, will be difficult toattract without enforceable

contracts, access to neutral adjudication of disputes,and a degree of predictability

that hasheretofore been lacking.54 Any post-Castro government will likely begin to make

such changes to increase the appealof the island nation to foreign investment. However,implementing thesechanges will take time and trial and error, which will slow the creation of a sugarcane-based ethanol industry.

The 2012 drought supplies even more incentive to withdraw the embargo and

invest in the Cuban sugar industry

Specht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,

http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)The drought of 2012not only highlighted the drawbacks of the U.S. ethanol status quo , but also the

importance of not abandoning biofuels in general. The2012drought substantiated criticisms that the current corn-


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based system of ethanol production is flawed.Yet, policy-makers should not automatically

respond by withdrawing federal government support for the creation of bio- based

alternatives to fossil fuels.Given that the RFS would be critical for futuredevelopment of a Cuban sugarcane-based ethanol industry,the abolition of this standard that some have called for would have long-lasting effects.While it is currently impossible to blame any singleclimatological event on climate change, even one as large as a major regional drought, scientists have long predicted that such droughts as the Midwestexperienced in 2012 are the type of events that will result from climate change.192 Adding to the already overwhelming evidence that climate changeis occurring (and should no longer be a matter of debate),193 July 2012 was the hottest month the United S tates has experienced in 118 years of

meteorological records.194 The key to halting (or at least slowing) climate change will be to keep as large an a mount as is possible o f the carbon storedin fossil fuels coal, oil, and natural gas in the ground and out of the atmosphere.195 By providing an alternative to petroleum, biofuels can help to

reduce oil consumption and therefore aid in the extremely important challenge of keeping carbon underground. As the United States

faces the twin challenges of climate change and peak oil, biofuels must be a part of the

solution. However, it is imperative that policies promoting biofuels are capable of

accomplishing the United States environmental and energy goals.Neither a wholesale

abandonment of federal involvement in the development of biofuels nor a continuation of the

corn- centric status quo is an acceptable way forward. The development of a Cuban

sugarcane-based ethanol industry is part of a potentialsolution. Whether the former incentives for the domestic

ethanol that expired at the end of 2011 will be revived by a future Farm Bill remains to be seen. Even if they are not, as long as the U.S.

trade embargo against Cuba continues there will be little chance of that country making a

substantial investment in the development of an entire new industry.It is understandable, for face-saving

reasons, that United States

policy-makers would not consider ending the decades-long trade embargo against Cuba as long as Fidel Castro remainsalive.196 But, as soon as possible after a governmental transition begins in Cuba, United States policy-makers should consider

taking steps to encourage the creation of such an industry.


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I/L Sugar Key Brazil

No alt causes to growth-agriculture is the base for future diversity-Dutch

disease

Sapp12(William Sapp, Writer for Geopolitical Monitor, 2012 The Fragility of Brazils EconomicStrength,

http://www.geopoliticalmonitor.com/the-fragility-of-brazils-economic-strength-4657)When a significant segment of a countrys economy is based around raw material exports,

inflows of foreign capital tend to artificially raise the value of the domestic currency. Theresult is inflation and an increased reliance on international savings to finance growth. Intheory, capital flows from developed nations should be welcomed in developing economies likeBrazil.After all, foreign capital can improve social welfare and increase industrial diversification.But, in practice,the negative effects of a commodity based economy often outweigh thepositive. Dutch disease is not a new phenomenon in Brazil. Whether sugar, coffee, gold orrubber, the Brazilian economy has frequently been a prisoner of the boom and bust nature of

commodities. Since its independence in 1825, Brazil has defaulted on (or restructured) itsdebt a staggering seven times. Indeed, it would be more appropriate to call the economicphenomenon Brazilian disease considering the nations long history of economic turmoil. Ofcourse, the Brazilian economy of today is significantly different from the Brazil of the past. Itseconomy, which for centuries has been based on the exportation of a small number of

primary products, now reads like a weekend shopping list.Brazil is the worlds leadingexporter of poultry, beef, orange juice, coffee, and sugarand the worlds second leadingexporter of soybeans and iron ore. In terms of monetary value, its top five exports are iron ore,oil & fuel, transport equipment (aircraft), soy, sugar, and ethanol. Despite Brazils impressiveportfolio of export commodities, economists remain concernedlargely because of the recentdiscovery of the 800 km pre-salt deep water oil reserves off the Brazilian coast. In a recentFinancial Times article, former Petrobras President Sergio Gabrielli, estimated that the oil

industry will grow from around 10% of GDP to an astounding 25% in coming decades. Whetherthis unprecedented projectestimated to attract 1 trillion (USD) in capital investment over thenext decadeturns into an economic windfall or an economic oil spill for the Brazilian peoplewill largely depend on the governments economic decisions in the next few years. On March13th the Brazilian government amped up its protective measures, and broadened its tax onfinancial operations (IOF) by levying a 6% tax on foreign loans and bonds that exit Brazil withinfive years. According to Mantega, the goal is to curb the inflow of speculative capital thatenters Brazil seeking to capitalize on the difference between interest rates in developedcountries and Brazil. The IOF may well contain inflation for the 2012 financial year: the real iscurrently hovering at approximately (BRL) $R 1.8 to the USD (from a high of (BRL) $R1.53 in July2011) and is expected to plateau at (BRL) $R2.0 to the dollar by the end of the 3rd quarter.

Regardless of whether Brazils manufacturing sector returns to previous levels of productionor continues to decline, the price of commodities should remain stable in the short-term. As

an economic immunization shot,the Brazilian government might heed the advice of legendaryeconomist Edmar Bacha who recommends creating an oil sovereign fundin the Chilean model- that would function as an economic buffer protecting the nation against commodity volatility. If the Brazilian government fails to implement significant economic safeguards, there is the

unpleasant possibility that the countrys Dutch disease, currently in remission, may indeed

recur.


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Even if sugar isnt key-the ethanol it produces fuels the economy

Neves13(Marcos Fava Neves, Professor of Business at Unviersity of Sao Paulo, Expert onGlobal Ag Business, 4/11/13, Sugar cane vital to Economy,

http://www.energyforecastonline.co.za/articles/sugar-cane-can-fuel-economy)The impacts for agrifood system participants are hard to ignore.Farmers and agribusinesscompanies are now expected to reduce their environmental footprint, to increase transparencyand facilitate a better flow of information, to be better governed and promote corporate socialresponsibility, to be more inclusive, and to be better stewards of the environment and increasethe usage of renewable energy sources. The legitimacy of agribusiness firmsand entireagrifood value chainsis not only dependent on economic factors but also on social andenvironmental sustainability. Simply put, in the 21st century planet and people matter as muchas profits. The role of biofuels in delivering sustainabilitySome researchers suggest thatbiofuels could play a big part in the solution for poor countries to diversify business and ensuresustainable development. Several countries that implemented biofuels developmentprogrammes have experienced significant job creation, especially in rural areas but also along

the value chain.The International Labour Organization estimates the number of jobs created inthe renewable energy sector will double by 2020 with about 300 000 new jobs. In the earlyphase of the bio-ethanol programme in the US, around 147 000 jobs were created in differentsectors of the economy. This short article outlines some potential benefits of biofueldevelopment in Africa. The development of the sugarcane industry in Brazil may serve as amodel.The industry output is impressive: 550 million metric tons of sugarcane is used as raw

material to produce 31 MMT of sugar(equivalent to 20% of world production), 27 billion litersof ethanol(30% of world production) and bio-electricity. Ethanol production alone creates 465000 direct jobs, which is six times larger than the oil industry in Brazil.

Ag Key to Brazil EconWaring 13(David Waring, Writer at ForexNews, 3/14/13,http://www.forexnews.com/blog/2013/03/14/brazilian-economy/)Agriculture represents 5.5% of the brazilian economy and employs 15% of the workforce,

approximately 10 million people.Brazil is often called the food basket of the world and forgood reason, many of the products you take for granted are actually produced in Brazil. Sugarcane is by far Brazils biggest food export, its responsible for 6.5% of overall exports. This isfollowed by soybeans (5.4%), poultry (2.9%), coffee (2.6%), bovine meat (1.6%) and fruit juice(1.6%). The agricultural sector in Brazil is one of the fastest growing sectors, growing at a rateof 9.6% annually.This rapid growth comes at a cost however. There is continued pressure onBrazil to increase its arable land stocks.


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US Wont Increase Quotas

US wont increase sugar quotas

Josephs13(Leslie Josephs, Writer for Wall Street Journal, 2/19/13, U.S. Unlikely to Raise

Sugar-Import Quota,http://online.wsj.com/article/SB10001424127887323495104578314510772923662.html)The U.S. government is unlikely to raise the quota forno- or low-tariff sugar imports for thefirst time in four years, due to increased domestic production, a person who works for the U.S.Department of Agriculture said Tuesday. Big U.S. sugar production is mirroring the globalmarket, where output is expected to outpace demand this season.If the U.S. buys lessof thesweetener from the global market, it could put more pressure on sugar prices, which have beentrading near 30-month lows. While U.S. sugar cane and sugar beet growers produce most of thecountry's supply of the sweetener, the World Trade Organization requires the U.S. to allow aminimum of 1.23 million short tons of no- or low-tariff raw-sugar imports each year. Whetherthat much sugar is brought into the U.S. depends on demand and market prices. The U.S. usuallychooses to allow more than the minimum, a decision the USDA makes after April 1. "It's highlyunlikely that there would be any quota increases in the current market situation," the personsaid. The last time the U.S. didn't raise the tariff-rate quota, or TRQ, for raw sugar was the2009 fiscal year, according to the USDA. Favorable weather in major sugar cane- and sugarbeet-growing areas are expected to lift production this season, as well as those in Mexico. Under theNorth American Free Trade Agreement, the U.S. can import sugar duty-free from its southernneighbor. A mild winter, timely rains and dry harvesting weather in late 2012 helped productionreach a record, said Jim Simon, general manager of the American Sugar Cane League, anindustry group that represents 450 farms in Louisiana. The USDA estimates Louisiana willproduce 1.7 million short tons of sugar this season, which Mr. Simon said was "a record."Louisiana is the second-largest sugarcane-growing state, after Florida. The U.S. consumes 11.5million short tons of sugar annually.


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Cuba Spills Over

A Cuban Sugar Ethanol Industry Would Be World Class if Developed.

Specht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:

Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)To speak of a Cuban sugarcane-based ethanol industry is, at this point, largely a matter of speculation.46 Because of the anti-ethanol views of FidelCastro (who has said that ethanol should be discouraged because it diverts crops from food to fuel),47 Cuba currently has almost no ethanol industry.

In the words of Ronald Soligo and Amy Myers Jaffe of the Brookings Inst itution, Despite the fact that Cuba is dependent on oil

imports and is aware of the demonstrated success of Brazil in using ethanol to achieve energy

self-sufficiency, it has not embarked on a policy to develop a larger ethanol industry from

sugarcane.48There is, however, no reason why such an industry cannot be developed.As Soligo and Jaffe

wrote, In addition, Cuba has large land areas that once produced sugar but now lie idle. These could

be revived to provide a basis for a world-class ethanol industry. We estimate that if Cuba

achieves the yield levels attained in Nicaragua and Brazil and the area planted with sugarcane

approaches levels seen in the 1970s and 1980s, Cuba could produce up to 2 billion gallons of

sugar-based ethanol per year.49

Cuba is the ideal area in which to grow sugarcane for ethanol, but needs

investment

Specht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)To speak of a Cuban sugarcane-based ethanol industry is, at this point, largely a matter of speculation.46 Because of the anti-ethanol views of Fidel

Castro (who has said that ethanol should be discouraged because it diverts crops from food to fuel),47 Cuba currently has almost no

ethanol industry.In the words of Ronald Soligo and Amy Myers Jaffe of the Broo kings Institution, Despite the fact that Cuba is dependent onoil imports and is aware of the demonstrated success of Brazil in using ethanol to achieve energy self-sufficiency, it has not embarked on a policy to

develop a larger ethanol industry from sugarcane.48 There is, however, no reason why such an industry cannot bedeveloped.As Soligo and Jaffe wrote, In addition, Cuba has large land areas that once produced sugar but

now lie idle. These could be revived to provide a basis for a world-class ethanol industry. We

estimate that if Cuba achieves the yield levels attained in Nicaragua and Brazil and the area

planted with sugarcane approaches levels seen in the 1970s and 1980s, Cuba could produce

up to 2 billion gallons of sugar-based ethanol per year.49The ideal domestic policy scenario

for the creation of a robust Cuban sugarcane ethanol industry would be a situation in which:

the U.S. trade embargo on Cuba is ended; U.S. tariff barriers are removed (in the case of

sugar) or not revived (in the case of ethanol); and the RFS requiring that a certain percentage

of U.S. fuel come from ethanol remain in place. Of course, changes in United States policy alone, eventhose that

ensure a steady source of demand for Cuban sugarcane-based ethanol, would not be enough to create an ethanol

industry from scratch. Cuba will need to foster the industry as a key goal of the post-Castro

era and shape its domestic policies to encourage the growth of the industry.Given that the Cuban sugarindustry lived and died by its ties with the Soviet Union for several decades of the Twentieth Century,50 Cuba will likely be quite wary of investing toomuch in the creation of a sugarcane ethanol industry that it perceives as being largely a creature of U.S. energy and agricultural policy. Therefore, thecreation of a significant sugarcane ethanol industry in Cuba will require a large increase in domestic demand for ethanol. On e way that Cuba couldencourage domestic demand for ethanol would be to follow the Brazilian model of encouragi ng the purchase of Flex Fuel vehicles, which can run onany blend of fuel between 100% gasoline and 100% ethanol.51 Given t he relative poverty of Cubas population, as indicated by the number of vehiclesin the country that are several decades old,52 expecting new vehicles to provide a source of demand for ethanol may be an extremely unrealisticprospect. On the other hand, potential pent-up demand for new automobiles, alongside sufficient and well-directed government incentives, couldaccelerate demand for Flex Fuel vehicles relative to other countries.Like all new capitalist industries to emerge in the post-Castro era, whatever

ethanol industry arises will have to deal with the painful transition from socialism to capitalism. The Cuban sugarcane ethanol

industry will face similar challenges to other private sector industries that arisein the post-Fidel era.


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One of thesechallenges will besimply a lack of people with skills necessary for any industry.According toEdward Gonzalez and Kevin McCarthy of the RAND Corporation, *A+s a result of 40-plus years of communism, the labor force lacks the kinds of trainedmanagers, accountants, auditors, bankers, insurers, etc., that a robust market economy requires.53 While these challenges wi ll not be unique toCubas ethanol industry, they will put the country at a competitive disadvantage vis --vis existing ethanol exporters such as Brazil. This will be especiallytrue if there is a significant lag time between the expiration of the ethanol tariff barriers at the end of 2011 and the eventual removal of the United

States trade embargo against Cuba.Additionally, because Cubas ethanol industry is currently almost non-

existent, it will need a great deal of foreign expertise and investment to get started.However, such

investments are unlikely to be made unless Cuba makes fundamental changes in its business climate. In the words of Gonzalez and McCarthy, *C+apitalinvestment, which Cubas economy desperately needs and which is most likely to be supplied by foreign investors, will be difficult to attract withoutenforceable contracts, access to neutral adjudication of disputes, and a degree of predictability that has heretofore been la cking.54 Any post- Castrogovernment will likely begin to make such changes to increase the appeal of the island nation to foreign investment. However, implementing thesechanges will take time and trial and error, which will slow the creation of a sugarcane -based ethanol industry.


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Aff answers

Imported Cuban biofuel would trade off with corn ethanol production in

the US(US Biofuels impacts)Specht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,

http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)Unless Congress raises the RFS by a sufficient degree to absorb all domestic ethanol production on top of these new imports, the

increase in such imports would likely damage the domestic ethanol industry. Whatever the level or type of biofuel,

increased imports (holding other factors constant) would reduce the quantity of domestically

produced biofuels, which would reduce the demand for biofuel feedstocks.138 Because very little

ethanol is currently imported into the United States, law and policy changes that successfully fostered the development of a

Cuban sugarcane-based ethanol industry would have a significant economic impact on the

United States.Such a change would have the largest economic effect on two regions: the Midwest, which is currently theprimary source of ethanol production in the United States, and the Southeast, especially Florida. This Part of the Article will discuss

the likely economic effects of such policy changes first on the Midwest, then on Florida, then on the United States generally.

Sugar Ethonal solves fossil fuels(add warming or oil dependence impacts)

Newsweek 7 (Sugar Rush,2007, http://www.thedailybeast.com/newsweek/2007/04/15/sugar-rush.html)He won't be the last. Thanks to global climate change, sugar now is in big demand. Thedrum-beat of

alarm over global warming has set businesses clamoring for a piece of the sugar-cane action.There are plenty of other ways to make ethanol, of course, and scientists the world over are busy tinkering with everything from

switchgrass to sweet potatoes. U.S. farmers make it from corn, but with the scarcity of arable land there's just so much

they can plant without crowding out other premium crops, like soy beans. (Meantime, the combination of limited land

and surging demand have sent corn prices through the roof). So far nothing beats sugarcane

which grows in the tropicsfor an abundant, cheap source of energy. Unlike beets or corn, whichare

confined to temperate zones and must be transformed into carbohydrates before they can be

converted into sugar and finally alcohol, sugarcane is already halfway there . That means the

sugar barons like Ometto spend much less energy than the competition, not to mention money.

The moral imperative of finding a substitute for fossil fuels has lent an air of respectability to

new ventures to produce biofuels from sugara marked contrast to the sugar barons of old, known for theirruthless ways and their appetite for taxpayers' money. "The distillers who ten years ago were the bandits of agribusiness are

becoming national and world heroes," Brazilian president Luiz Incio Lula da Silva. Lula declared recently. "[E]thanol and

biodiesel are more than an answer to our dangerous 'addiction' to fossil fuels. This is the

beginning of a reassessment of the global strategy to protect our environment."

Changes in US Policy Are Not Enough To Create a Cuban Ethanol IndustrySpecht 4/24 (Jonathan Specht, BA from University of California Davis, 4/24/13, Raising Cane:Cuban Sugarcane Ethanols Economic and Environmental Effects on the United States,http://environs.law.ucdavis.edu/issues/36/2/specht.pdf)The ideal domestic policy scenario for the creation of a robust Cuban sugarcane ethanol

industry would bea situation in which: the U.S. trade embargo on Cuba is ended; U.S. tariff barriers

are removed (in the case of sugar) or not revived (in the case of ethanol); and the RFS requiring

that a certain percentage of U.S. fuel come from ethanol remain in place. Of course, changes


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in United States policy alone, even those that ensure a steady source of demand for Cuban

sugarcane-based ethanol, would not be enough to create an ethanol industry from scratch.Cuba will need to foster the industry as a key goal of the post-Castro era and shape its domestic policies to encourage the growth ofthe industry.

Brazil Econ ResilientRathbone12(John Paul Rathbone, Economist at the Financial times, 9/20/12, Mantega saysBrazils economy resilient, http://www.ft.com/intl/cms/s/0/91677578-0341-11e2-bad2-00144feabdc0.html#axzz2ajYEh3nX)Brazils economy is more resilient than other big countriesand its economic development model moreconsistent too, he says.It is a contentious position given that Brazils economy, until recently a market darling and many investorsfavourite among the so-called Bric nations of it, Russia, India and China, has lurched from boom to near stagnation. The worldssixth-biggest economy is expected to expand by 1.6 per cent this year, after 7.5 per cent in 2010. Still, Mr Mantega says Brazil is now

back on the right track, despite difficult global conditions.We are taking measures to ensure that growth is

long-term, he said, forecasting a return to an annual growth rate of 4 per cent by the year end, even with Europe

close to recession and the US economy moving sideways.Be that as it may, many have

questioned Brazils growth model of late and wondered how sustainable it is. For the past

decade, Brazil has surfed the global commodity boom. At home, it has enjoyed an explosion of credit-drivenconsumption.Critics say these drivers have now run out of steam and, to compensate, Brazil has increasingly turned to the staterather than the private sector to provide growth. Furthermore, Brazil is held back by an over-regulated labour market, a highlycomplex tax system and crumbling infrastructure.Mr Mantega says that is looking at Brazil through a rear -view mirror and,besides, when the state does act it is to provide a counter-cyclical boost or to step in when the market fails. He cites the example ofBanco do Brasil, a state-controlled bank that enjoys private-sector levels of profitability, but that on recent government orders cutlending spreads. Competing private banks soon followed suit.The 63-year old also reacts adroitly to charges that Brazilsoccasionally erratic growth path is a result of ad hoc state intervention and that other Latin American countries, such as Chile orMexico, achieve more consistent growth with more market-friendly policies.I dont call this chicken flight, he says, whipping out

a chart, handwritten on a piece of lined notepaper, which compares Brazilian growth with Mexicos over the

past six years. It shows that Brazil averaged 4.2 per cent and Mexico 2.1 per cent. At least by

that measure, even though it is backward looking, Brazil is in the lead.What of the future? Mr

Mantega says a series of recent measuresfrom cuts in payroll taxes to lower electricity tariffs and a $66bn

package of new privately operated infrastructure projectswill reduce the infamous custo

Brasil, the high cost of doing business in Brazil.This is not wishful thinking. This is something that is already

taking place, he says. We are going to continue reducing costs and taxes.The result will be a more competitive

economy,a theme much on his mind as the US, Japan and Europe embark on their latest round of quantitative-easing policies.These, though, will have little effect on their home economies, he says, but will inevitably led to beggar-thy-neighbour devaluationsand growing trade friction.

Brazil economy down-mulitple warrants

Seibt13(Sebastian Seibt, Writer for Franch24, 6/20/13, Behind the Protests,Brazilsdysfunctional Economy, http://www.france24.com/en/20130620-brazil-protests-sao-paulo-dilma-rousseff-world-cup-economy-inflation)The increase in bus ticket prices(0.20 real, or 0.06 euros) is symptomatic of the inflation that has

been plaguing Brazil for several months. Prices are going up at a rate higher than 6% per

month, which is higher than the 4.5% objective established by the government, explained Christine

Rifflart, an economist specialised in Latin America at the French Economic Observatory (OFCE).The rise in public

transportation costs is part of a larger increase in the cost of living in Brazil.Prices of basic

goods like tomatoes rose by as much as 90% in a year , for example. Rent has also been on the rise over the

past several years, increasing by an average of 120%since 2008. This inflation is essentially due to the

increase in salaries, Rifflart pointed out.Consequently, the poorest Braziliansthose whose salaries have not risenare


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getting poorer.Brazil remains one of the countries with the highest level of inequality when it

comes to salary and access to social services, noted Jrmie Gignoux, an economist at the Paris School of

Economics.If the Brazilian government succeeded in significantly lowering the poverty rate in

the country, which went from 34% of the population in 2004 to 22% in 2009, authorities today

are having a difficult time stopping the spiralling inflation.The government is indeed stuck between two,somewhat conflicting priorities: the need to fight inflation and the need to stimulate the economy so that it is healthy again. Brazils

economy, the seventh largest, grew by only 0.9% in 2012, essentially because of low export levels, Rifflart said compared to anaverage annual growth rate of 3.6% over the past decade.In order to revitalise the sale of Brazilian products

abroad, the government could lower its currency rate in order to make exports less expensive,

but that could end up worsening inflation.The World Cup: a bitter pill to swallowBut it is not so much Brazils

poorest residents who are in the street marching in protest against the cost of living. Studentsand the middle-class Brazilians are also participating in the protests, which makes this a slightly unusual social movement, Rifflart

observed.For the new middle c lass, the spending related to hosting the World Cup in 2014 is a hard pill

to swallow. They find it indecent to spend between 11 and 15 billion dollars to organise this

sporting event, while public services and infrastructure need money, the economist explained.hegovernment is therefore faced with middle-class citizens demanding public services that are up to the level of their new socialstatus. Its the price Brazil is paying for the growth that allowed 30 m illion Brazilians to lift themselves out of poverty and join themiddle class over the past several years, said Stphane Witkowski, chairman of the board at Pariss Institute of Latin American

Studies, in an interview with French daily Le Figaro.Moreover, the quality of education available to most

Brazilians remains very weak, noted Christine Rifflart, while the best schools are still largely attended by those whocan pay for them: the richest Brazilians.

Brazil Economy is diverse-Ag not key

BrazilSourcing6(BrazilSourcing.com 2006 Manufacturing Base,http://www.brazilsourcing.com/manufbase.php)Brazil has one of the most diverse industrial sectors in Latin America with industries of

textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and

parts, other machinery and equipment.It exports transport equipment, iron ore, soybeans,

footwear, coffee, autos and imports machinery, electrical and transport equipment, chemicalproducts, oil, automotive parts, electronics. The main commercial partners of Brazil are the USA, Colombia,Germany, Japan, Argentina, China, Canada and United Kingdom.CHIEF EXPORTS: Manufactures, iron ore, soybeans, footwear,coffee.CHIEF IMPORTS: Machinery and equipment, chemical products, oil, electricityManufacturingMajor products in themanufacturing sector are televisions, VCRs, telephones, and computer chips. There are a few national companies that aredomestically oriented, such as Consul and Brastemp. There are also companies that are primarily export oriented, such as Nokia,

Intel, and Compaq.State participation in manufacturing occurs in the production of textiles and

clothing, footwear, food, and beverages. These industries comprise a large proportion of the manufacturing sector,

but there are also new industries that have been developed in the last few decades with

government aid. Machinery and transport equipment, construction materials, sugar cane and wood derivatives, andchemicals are important manufacturing industries. Direct government participation is noticed in the oil processing industry andpassenger jet aircraft industry through partial ownership of such companies. Indirect government participation is noticed in the

textile industry and machinery industry through export subsidies and low interest loans.Transport VehiclesAutomobiles

are the most important manufactured items in Brazil. Brazil's passenger automotiveproduction was approximately 2.45 million passenger car units in 2005. Brazil has manufacturing plantsfor General Motors, Volkswagen, Ford, Fiat, Honda, and Toyota. Workers are highly unionized, receiving the highest salaries among

the manufacturing industriesTextilesThe national textile industry is responsible for 3 percent of world

production. Brazil has the largest textile operating facilities in Latin America. The textile

industry is also labor intensive, employing 1.65 million people in 2006. Fibers and leather are used toproduce clothing, shoes, and luggage. Brazilian shoes are exported mainly to Europe, where they are famous for their quality.

PaperThe Brazilian paper industry was responsible for the production of 8.8 million metric tons


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and the pulp industry produced 11 million metric tons in 2006. The industry consisted of

approximately 200 companies, employing approximately 80,000 people directly in their

processing operations and 60,000 people in forestry operations.MiningThe mining sector was protectedby the 1988 constitution against foreign majority participation of direct mining companies. This was a setback for the developmentof the mining sector because domestic investors lacked the capital for extensive mineral exploration. Private Brazilian investors andBrazilian corporations own the majority of the mineral industry. The participation of foreign capital is very limited due to Brazilianmining laws. However, in 1995 the Congress approved an amendment to the constitution allowing private companies (including

foreigners) to participate in the mining industry through joint ventures, deregulating investments, and the privatization of state-

owned mining plants. Shortly afterwards, the state-owned Companhia Vale do Rio Doce was privatized.The country is the

world's largest producer of bauxite, gemstones, columbium, gold, iron ore, kaolin,

manganese, tantalum, and tin. Major exports are iron ore, tin, and aluminum.The states of MinasGerais, Bahia, and Gois, located in the midwest of Brazil, have deposits of diamonds and other precious and semiprecious stones.

Financial ServicesThe government owns most of the financial sector, the largest component of the

services industry.The 3 largest banks of Brazil are the Bank of Brazil, Federal Economic Register, and National Bank ofEconomic and Social Development (BNDES).The Bank of Brazil is the largest bank in Brazil and the largest financial institution inLatin America. It has 12.9 million customers and agencies in 30 different countries, employing 90,378 people.The Brazilian Discount

Bank (BRADESCO) and Ita have the largest assets in the private sector.RetailThis sector is responsible for the

highest number of employed people in all sectors of the services industry.The bulk of employedpeople in this sector come from companies that employ less than 500 employees. Combined retail and wholesale sectors were made

up of 708,635 retail and wholesale outlets.There are few retail chains in the economy. Most of them are located in the capitals ofeach state but are not part of the retail context in the less developed economies in rural areas.Food, grocery, and other retail chainsare located in the coastal areas whereas small family-owned businesses compose the retail sector in smaller cities. The smaller retailbusinesses are responsible for employing a large number of people

No timeframeIt would take 17 years to repay its carbon debt

Fargione et al. 08 (Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, and Peter Hawthorne, Writers for ScienceMag, 2/7/8, Clearing and Biofuel Debt, http://www.sciencemag.org/content/319/5867/1235.full)Our results show that converting native ecosystems to biofuel production results in large carbon debts (Fig. 1A). We attribute 13, 61,and 17% of this carbon debt to coproducts for palm, soybeans, and corn, respectively (Fig. 1B) (5). The carbon debts attributed tobiofuels (quantities of Fig. 1A multiplied by the proportions of Fig. 1B) would not be repaid by the annual carbon repayments frombiofuel production (Fig. 1C and table S2) for decades or centuries (Fig. 1D). Converting lowland tropical rainforest in Indonesia andMalaysia to palm biodiesel would result in a biofuel carbon debt of 610 Mg of CO2 ha1 that would take86 years to repay (Fig.

1D). Until then, producing and using palm biodiesel from this land would cause greater GHG release than would refining and usingan energy-equivalent amount of petroleum diesel. Converting tropical peatland rainforest to palm production incurs a similar biofuel

carbon debt from vegetation, but the required drainage of peatland causes an additional sustained emission of55 Mg of CO2 ha1yr1 from oxidative peat decomposition (5) (87% attributed to biofuel; 13% to palm kernel oil and meal). After 50 years, theresulting biofuel carbon debt of 3000 Mg of CO2 ha1 would require420 years to repay. However, peatland of average depth (3m) could release peat-derived CO2 for about 120 years (7, 13). Total net carbon released would be6000 Mg of CO2 ha1 over thislonger time horizon, which would take over 840 years to repay. Soybean biodiesel produced on converted Amazonian rainforestwith a biofuel carbon debt of >280 Mg of CO2 ha1 would require 320 years to repay as compared with GHG emissions frompetroleum diesel. The biofuel carbon debt from biofuels produced on converted Cerrado is repaid in the least amount of time of the

scenarios that we examined. Sugarcane ethanolproduced on Cerrado sensu stricto (including Cerrado aberto, Cerrado

densu, and Cerrado), which is the wetter and more productive end of this woodland-savanna biome, would take 17 years

to repay the biofuel carbon debt.Soybean biodiesel from the drier, less productive grass-dominated end of theCerrado biome (Campo limpo and Campo sujo) would take37 years. Ethanol from corn produced on newly converted U.S. centralgrasslands results in a biofuel carbon debt repayment time of 93 years.

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