Raúl Castro’s unhurried reforms of Cuba economy falter

By John Paul Rathbone, Financial Times, January 17, 2014 11:48 am

Original Here: Raúl Castro’s unhurried reforms of Cuba economy falter

In a dusty Havana parking lot, a group of Cubans examine the prices of the modern cars they can now buy from the state for the first time: $263,000 for a 2013 Peugeot saloon that retails in Europe for $30,000, or $20,000 for a 2002 Fiat Uno with over 100,000km on the clock.

“Who are they kidding? At those prices, they have to give a lifetime supply of petrol too,” says taxi driver Antonyne Carrera as he peers through the lot’s wire fencing. “It’s a bad joke,” adds fellow bystander Mauricio, who works in the tourist trade.

The car sale is the latest in a series of reforms introduced by President Raúl Castro that are supposed to improve the country’s economic lot and bolster the government’s popularity but which, in this case, has made the authorities a laughing stock among Cubans who earn an average state wage of $18 a month.  It also illustrates the hesitancy and contradictions at the heart of the economic transition begun by Mr Castro and that Latin American heads of state will see when they visit Havana for a regional summit on January 28.

“I call it Raúl’s mambo – two steps forward, one step back,” says Ted Henken, a Cuba specialist at City University of New York. “Every measure Raúl announces has great potential, but there is always a dark cloud.”

Since he became president in 2008, Mr Castro has stressed the need to reduce the state’s role in Cuba’s sagging economy and boost growth forecasts of just 2.2 per cent this year. Foreign debts have been restructured and a unification of Cuba’s multiple exchange rates even mooted. Yet even as he introduces reforms, such as allowing small businesses and co-ops to set up, the ruling Communist party’s blocking habits of command and control remain.

 “Raúl is going as fast as he can, or he understands,” says Roberto Veiga, editor of Espacio Laical, an independent Cuban magazine funded by the church. “There is a tension between how slow things need to go given the government’s desire to retain control, and how fast they need to given the precariousness of the economy.”

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