"GREEN EYESHADE" SOBERON: CUBA'S SENIOR ECON GUY

S E C R E T SECTION 01 OF 03 HAVANA 010104 SIPDIS SIPDIS INR/IAA FOR BOB CARHART E.O. 12958: DNG: CO 05/03/2016 TAGS: PGOV EFIN ECON PINR CU SUBJECT: "GREEN EYESHADE" SOBERON: CUBA'S SENIOR ECON GUY Classified By: MICHAEL E. PARMLY FOR REASONS 1.4 b/d ¶1. (C) Summary: Unhindered by his modest background in accounting, Central Bank President Francisco Soberon has become one of Castro's key advisors. The architect of GOC efforts to recentralize the economy, Soberon has recently eclipsed most other ministers in influence and public profile (with the exception of Foreign Minister Felipe Perez Roque). Soberon can be rigid and doctrinaire, motivated by loyalty to Castro and firm marching orders to stamp out corruption. He leads an ascetic lifestyle supported in large part by his wife's earnings as a perfume representative. Described as savvy, charming and smart, foreign bankers nonetheless comment that Soberon lacks expertise in his field. Despite this shortcoming, Soberon knows how market economies work and may favor economic liberalization, potentially positioning him to play a role in a post-Castro transition economy. End summary. Architect of Dedollarization -------------- ¶2. (C) Francisco Soberon Valdes led an unexciting career in the shipping business before taking over as head of Cuba's National Bank in 1995 and the newly inaugurated Central Bank in 1997 (Cuba's version of the Federal Reserve). He took on the modernization of a banking sector that previously relied on pencils, paper and calculators. He introduced ATMs, debit cards, and interest payments on deposits. Soberon was a protege of Raul Castro's, and his support for moderate economic reforms in the '90s placed him in the "reformist camp" of GOC officials. He remained, however, outside Fidel's inner circle. ¶3. (C) Soberon's career took off in 2004 amidst Castro's campaign to recentralize the Cuban economy, rolling back the reforms of the '90s and reasserting state control. Soberon was the likely architect behind several resolutions of the campaign, most notably, the November 2004 "dedollarization," that replaced the USD with the Convertible Peso (CUC),and an April 2005 "revaluation" that arbitrarily increased the value of the CUC against all hard currencies. Soberon's one-two punch of "dedollarization and revaluation" vacuumed up millions of dollars in hard currency for the regime. ¶4. (C) Soberon not only liberated Castro from the "demeaning" circulation of "Yankee dollars," but safely stashed them in Central Bank coffers. The influx of hard currency reportedly bolstered the GOC's credit rating, and may have already been leveraged toward specific projects. Castro recently funded the purchase of a thousand Chinese buses, 400 Chinese cars and motorcycles (for use by the electric company),a dozen Chinese locomotives, seven Russian jets, the rehabilitation of a moribund oil refinery, and a spate of construction projects in preparation for the upcoming Non-Aligned Movement summit. The GOC is currently negotiating the purchase of 8000 additional Chinese vehicles. Aside from lucrative handouts from Venezuela's Hugo Chavez, Castro has Francisco Soberon to thank for his spending spree. Qualifications -------------- ¶5. (S) Soberon's modest background in accounting would not qualify him to act as Central Bank President in a modern country. On the other hand, he is one of very few GOC officials who understand modern economies and international markets. Japanese Ambassador Tatsuaki Iwata observed, "Soberon knows more about Cuba's foreign debt than anyone on or off the island." Iwata also said that Soberon needed no reference materials to cite the location of every "dollar, euro and yuan" in the Cuban banking system. (Note: Japan is one of Cuba's largest creditors and engages in regular debt negotiations with the Central Bank. End note.) ¶6. (S) Despite these accolades, Soberon did not require high-level technical skills to set himself apart in Cuba's isolated command economy. Another Japanese diplomat told us that a businessman who has known Soberon fifteen years described him as "an ordinary technician" whom he was HAVANA 00010104 002 OF 003 "surprised to see rise to Central Bank President." According to former Canadian Commercial Counselor Sylvain Fabi, a well-respected foreign banker claimed Soberon "didn't know what he was talking about" and would never have made it to a high position outside Cuba. British Ambassador John Dew described Soberon's tenure in London (where the banker spent six years with a Cuban shipping company) as "nondescript." ¶7. (S) Professional expertise aside, most observers agree Soberon is smart. In his dealings with the Canadian Embassy, Fabi described him as a "tricky guy," adept at blindsiding the Canadian ambassador with unexpected topics of discussion. Like other regime officials, Soberon has developed the ability to "monologue" his interlocutors into submission. Reuters journalist Marc Frank, whom the Central Bank president has granted personal interviews, said Soberon hadn't changed much in ten years but now "he lies a lot more." Pecking Order -------------- ¶8. (C) Soberon has effectively marginalized Minister of Economy and Planning Jose Luis Rodriguez, whom Frank described as "alive but insignificant." Minister of Foreign Trade Marta Lomas has also taken a back seat. Most significantly, Soberon increasingly overshadows his former supervisor: Vice President of the Council of State Carlos Lage. Last year, a rumor circulated that Lage knew nothing about Soberon's new foreign exchange controls until he read about it in the paper. ¶9. (C) Soberon regularly appears at Castro's side during public addresses and television appearances. He sat close to Castro during a 2004 visit by Chinese President Hu Jintao. In December 2005, Soberon joined Foreign Minister Felipe Perez Roque (a favored Castro lapdog) in outlining GOC goals before the National Assembly. A rumor recently circulated that Soberon would be promoted into the Politburo or Central Committee. Rumors have circulated since 2003 that Soberon is slotted for Rodriguez' job as Minister of Economy. Making Him Tick -------------- ¶10. (S) Soberon is likely motivated by a desire to improve Cuba's credit rating (downgraded by Moody's in 2002 to "speculative grade, very poor"). Soberon has also been on a decade-long campaign to stamp out corruption. A Resolution introduced in December 2004 ordered that all hard currency earnings be deposited directly into the Central Bank, and was clearly aimed at undercutting corrupt state managers. These motivations coincide with observations that Soberon is ideological, but far more technical than political. Marc Frank does not consider the banker a "hard-core communist," though his nationalism and leftist sentiments are unmistakable (exemplified by a dismissive attitude toward foreign investment). Sylvain Fabi described Soberon as "ideologically rigid and doctrinaire." All the same, Soberon's associations with reformers during the '90s indicate he may favor economic (if not political) liberalization. A Humble Lifestyle -------------- ¶11. (S) Observers describe Soberon as reserved, genteel and smart. He is well-dressed, cultured and charming with both men and women. He is an art-lover. According to one observer, "Soberon looks like he could step out of a Rolls Royce in downtown London." Maximo Lopez, a Cuban businessman working for a German company, has known Soberon since childhood. Lopez foots the bill when they dine out, explaining that Soberon and his deputy, Jorge Barrera, are such "militants" that they actually live off their state salaries (27 CUC per month). According to Lopez, Soberon owns one good suit as befits his office, but depends on his wife's earnings as a perfume representative for Yves Saint Laurent. (Note: Lopez told P/E officer that despite his marital status, Soberon is gay. Lopez also mentioned that Castro refers to Soberon in anger as "that little 'maricon'" -- a pejorative term for homosexuals. Of course, Castro's abuse may be nothing HAVANA 00010104 003 OF 003 more than a macho man's interpretation of Soberon's refined mannerisms. End Note.) Comment -------------- ¶12. (S) Soberon is not considered personally ambitious and has no following among the general public. His loyalty and non-threatening demeanor make him a useful tool of Castro's. His progress towards meeting payment commitments and boosting Cuba's hard currency reserves have improved Cuba's reputation with some foreign creditors. Corruption drives the Cuban economy and will continue to do so (despite Castro's clean-up campaign) but Soberon is as close as you get to the "face of fiscal responsibility." His departure from the scene could open the way for a GOC raid on its own reserves, with an ensuing devaluation or even a run on the bank. Soberon is therefore as relevant a figure in the Cuba of today as the Cuba of tomorrow. He may one day find himself in the position of guiding a slow and deliberate opening of the Cuban economy. End Comment. ¶13. (U) Bio Note: Soberon was a student leader and founder of the Union of Communist Youth (UJC). He served in the army during the Cuban missile crisis, and volunteered for several sugar cane harvests during the 60s. He holds an ambiguous degree in social sciences (probably granted by the GOC) and has a background in accounting. He began his professional career by working at the Ministry of Foreign Trade (MINCEX) as an office boy. Still in his early twenties, Soberon worked as a commercial representative at Cuba's Foreign Trade Office in Montreal. He joined the Communist Party in 1970. By his early thirties he was deputy director of a state shipping company, then lived six years in London as a managing director of the Anglo-Caribbean Shipping Company "ACEMEX" (he has written three books on shipping matters). Soberon headed ACEMEX for twelve years before he was tapped to head Cuba's National Bank in 1995 and the Central Bank in 1997. Soberon eventually became a delegate to the National Assembly, and was elected to the Council of State in 2003. He is married. End Bio Note. PARMLY