Global Glance: February 22, 2016

A quick look at intriguing international stories

By John Bostwick, Managing Editor, Radius

Welcome back to Global Glance. This week we look at:

• Obama’s Cuba visit and prospects for US businesses in Cuba
• India’s fantastically cheap new smartphone
• Last week’s OECD report on global growth

Obama’s Cuba Trip and Prospects for US Businesses in Cuba

President Obama tweeted last Thursday that he’ll visit Cuba soon “to advance our progress and efforts that can improve the lives of the Cuban people.” He added: “We still have differences with the Cuban government that I will raise directly. America will always stand for human rights around the world.”

The Los Angeles Times put Obama’s visit in a historical context: “First Lady Michelle Obama will join him for the trip March 21-22, the first by a sitting president since Calvin Coolidge in 1928.” The Times remarked that — despite Obama’s Twitter nod to the differences between the two countries and the US’s stand on human rights — US Republican presidential candidates “condemned the announcement,” including Jeb Bush “who called it a ‘tragedy’ that Obama would legitimize the Castro regime.” (Bush has since dropped out of the race.)

Obama’s announcement came almost immediately following a recent agreement to resume US commercial airline flights to Cuba and, as BBC.com reported last Wednesday, the Obama administration’s approval of “the first US factory in Cuba in more than half a century.” BBC writes of the factory deal: “A small company based in Alabama will be allowed to build a tractor assembly plant. The company will focus its sales on private farmers in Cuba rather than the Cuban government.”

For a good look at the prospects in Cuba for other US businesses, check out Sarah Wheaton’s article in Politico. Wheaton cautions against assuming recent events necessarily signal widespread changes. She writes: “So far, loosened restrictions appear to be helping bring more visitors and cash to Cuba, with few benefits to US businesses and at best halting improvement on the human rights front. Without entrenched interests backing up the new policy, there’s not much to stop a Republican successor from rolling it back.” Wheaton adds: “While US companies have received approval to export more than $7 billion worth of goods and services to Cuba over the past two years, Commerce Secretary Penny Pritzker said Wednesday that it’s unclear how many of those sales will be made because of the slow and uncertain pace of reform in Cuba.”

Some Cuban citizens evidently don’t foresee significant near-term improvements. As BBC.com reported, just this month five women from the country’s water polo team defected to the US after training in Mexico, and two men’s baseball players did the same after playing a tournament in the Dominican Republic.

Is India’s Fantastically Cheap Smartphone Part of a Scam?

In a story that was widely reported last week, India-based company Ringing Bells has started taking orders for the world’s cheapest smartphone. That last fact hardly needs verification. The phone — called the Freedom 251 — costs according to BBC.com “just 251 rupees ($3.67; £2.56).” Here’s more from the article: “The smartphone went on sale on Thursday morning but, just hours later, the company had to stop accepting orders after its website crashed due to huge demand: 600,000 hits per second.”

There’s a short video embedded in the BBC piece in which India-based reporter Shilpa Kannan displays a prototype of the phone. She explains that Ringing Bells announced future versions of the device will be manufactured in India, though the company does not have a factory there now. Furthermore, her phone (along with others given to journalists at last week’s press event) “clearly carries the logo of Adcom, which is [a] Chinese handset maker. The [Adcom] logo was covered in white paint.”

If you’re skeptical at this point you’re not alone. Another article in BBC.com, also published last Thursday, indicates that “according to media reports, the Indian Cellular Association has written to telecoms minister Ravi Shankar Prasad saying it was not possible to sell a 3G phone below 2,700 rupees,” and that “a member of parliament … went further in his letter to the minister, saying this could be a ‘Ponzi scheme’ or other scam.” While the company indicates that it is not receiving financial help, BBC.com asserts that “at this price, the phone is clearly being subsidized.”

The Freedom 251 could also be infringing on intellectual property rights. An article last Thursday in the Hindustan Times boldly asserts that the phone “blatantly violates Apple copyright. All the icons of the built-in app are a pixel-to-pixel copy of Apple’s iOS icons.” When the Times questioned Ringing Bells’ technical lead about this, he responded: “We used Apple’s icons because Apple hasn’t copyrighted its designs.” The Times observes: “This, of course, is completely untrue. Apple has patents for everything.”

For hardware specifications on the phone, check out this article from Technology Personalized. The article claims the specs don’t “look bad.” However, the latest version of the article includes a postscript that’s considerably more skeptical than the initial language, including this passage: “This just doesn’t add up … without any government subsidy. …There are more questions than answers on Freedom 251.”

OECD Report on Global Growth Released

Last Thursday the Organization for Economic Cooperation and Development released its Interim Economic Outlook report, which has the rather alarming subtitle, “Stronger growth remains elusive: Urgent policy response is needed.” The related press release explains: “The OECD projects that the global economy will grow by 3 percent this year and 3.3 percent in 2017, which is well below long-run averages of around 3.75 percent. This is also lower than would be expected during a recovery phase for advanced economies, and given the pace of growth that could be achieved by emerging economies in convergence mode.”

The good news is there may be a remedy in the form of monetary support to emerging market economies and concerted policy reforms in advanced economies. OECD Chief Economist Catherine L. Mann is quoted in the press release as saying, “With governments in many countries currently able to borrow for long periods at very low interest rates, there is room for fiscal expansion to strengthen demand in a manner consistent with fiscal sustainability. …The focus should be on policies with strong short-run benefits and that also contribute to long-term growth. A commitment to raising public investment would boost demand and help support future growth.”

For summaries of last week’s OECD report, read this article in The Financial Times and this from Bloomberg.com. The Bloomberg piece notes: “With Group of 20 finance ministers and central bankers gathering in Shanghai next week to grapple with the slowdown, the OECD urged them to consider offering more fiscal stimulus to support monetary efforts already underway.”