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Unsafe Havens: Five Flights to Danger in Uncertain Economic Times

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We turn to the eighth annual Failed States Index for a few investment ideas that ought to keep you up at night.

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CUBA

Beautiful beaches, tropical breezes, and the constant fear of being arrested and locked away forever.

British businessmen Stephen Purvis and Amadou Fakhre have been sitting in Cuban prisons for months now, held without charges after being locked up for…well, see, no one really knows.

As we reported back in June, the founders of Havana-based Coral Capital had no qualms about doing business in Cuba – before they "disappeared."

"We're not virgins at this," Purvis told a reporter, regarding the Bellomonte Golf Club, a 650-acre property under development when he was treated by the Cuban government to a complimentary stay at Villa Marista, the state security torture facility that apparently also doubles as a guesthouse.

As Fakhre, Purvis, et al (over the past two years, Cuba has sent 52 foreigners, as well as hundreds of Cuban ministers and officials to jail, and has expelled more than 150 foreign business owners and operators) have now discovered, part of the reform process appears to include President Raul Castro making good on a 2008 vow to root out the rampant corruption that has been a part of daily life for decades.

A noble goal, hampered by the fact that no clear definition exists of what, exactly, constitutes "corruption."

A centrally-controlled command economy such as Cuba's, with a near-total lack of transparency, ensures that "every act is fraught for anybody trying to exist, from businesspeople to the average Joe," said a North American diplomatic official in Havana who agreed to speak anonymously.

It's likely why the State Department describes Cuba as having "a hostile investment climate, characterized by inefficient and overpriced labor, dense regulations, and an impenetrable bureaucracy."

And the NYSE doesn't?
No positions in stocks mentioned.

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