Tag Archives: Economic Reforms

Cuba to open state-run wholesaler for private companies

Posted on March 8, 2013 by Arch Ritter

Thursday Mar 7, 2013

By Marc Frank

HAVANA, March 7 (Reuters) – Cuba established on Thursday a state-run wholesale company to sell food products, industrial and other consumer goods to private companies and the state sector, a step aimed at meeting a key demand of local entrepreneurs.

The new company was just the latest indication that President Raul Castro plans to create a strong private sector in retail services and farming as part of a broader reform of the Soviet-styled economy.

Since taking over for his brother Fidel in 2008, he has been lifting some restrictions on civil liberties, such as travel and the sale and purchase of private property, as well as revamping the state-dominated economy into a more mixed and market friendly one.

More than 200,000 small businesses have opened since Cuba liberalized regulations on them in 2010 and the number of entrepreneurs and their employees was 370,000 at last count.

Cuentapropista: now with access to inputs at wholesale prices?

“This step is long overdue and promises to remove a serious disadvantage faced by small entrepreneurs,” said Phil Peters, a Cuba expert at the Virginia-based Lexington Institute who has closely followed the reforms.

“It is the latest sign that the government wants the private sector to grow and needs it to create jobs for its reform program to succeed,” he added.

At the close of 2012 there were 1,736 private restaurants, 5,000 bed and breakfasts, and thousands of cafeterias, pizzerias and snack shops, according to the government.

Business owners have long complained that they must purchase supplies at state retail shops, while their state competitors purchase at more competitive wholesale prices, a problem authorities have repeatedly promised to remedy.

Thursday’s official Gaceta published an internal trade ministry resolution bringing together a number of companies into a new state holding company, the “Food, Industrial and Other Consumer Goods Trading Company.”

The resolution, which when published became law, stated the company would attend to both the state and “non-state” sectors.

State-run companies control all foreign and wholesale trade in Cuba and have been prohibited from selling to the private sector.

It was not clear how long it would take to set up the new company.

On Tulipan Street in the New Vedado district of Havana, a busy area with many private food vendors, no one knew about the new company, but all agreed it would be welcome.

“This is what we have been waiting for and its good they are finally doing something,” said Ofelia Rodriguez, 45, who sells pastries.

“I guarantee you, that if the prices are reasonable I can lower those I put on my products,” she said.

One woman selling soda, sandwiches and snacks nearby, said she would pass judgment once the company was in operation.

“For me, the issue isn’t if they open a wholesale outlet, but what they are going to sell and at what price,” said Eneida, 50, asking that her last name not be published.

“We have to wait and see if this is to help us meet our needs or pick our pockets of the little we make.” (Editing by Jackie Frank)

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Five years later: Cuba under Raúl: He’s tinkered but it’s the same old machine

Posted on February 25, 2013 by Arch Ritter

By Juan O. Tamayo

Original Here:   Miami Herald, February 24, 2013 Cuba under Raúl

As Cuban ruler Raúl Castro marks his fifth official year in power on Sunday, some Cubans might well be asking, like the U.S. advertising campaign, “Got Milk?”

In his first major speech after succeeding ailing brother Fidel, Castro declared that the government’s highly centralized and inept system for collecting and distributing milk was “absurd” and vowed to fix it.

Today, some towns are indeed getting not just more milk but also butter and cheese, yet others are no better off — mirroring the sharply contrasting assessments of the economic reforms Castro launched to dig the island out of its communism-induced quagmire.

Some Cubans say the newly allowed private economic activity already has made daily life a bit easier for most of the island’s 11.2 million people, with more sellers offering more goods and more buyers finding more of the goods they seek.

“Look, I see a lot of people smiling because there are more ways to make a living and I have more pork to sell,” said Mori, the nickname of a salesman in a Havana butchers’ kiosk. “And people are buying, even though the prices are high.”

“You can’t say that Raúl’s Cuba is the same as Fidel’s Cuba. You just have to go on the streets to see that,” said dissident Havana economist Oscar Espinosa Chepe.

“I am surprised at how fast Raúl has moved, in the context of the previous half-century” added Archibald Ritter, an economist at Carleton University in Ottawa who runs the blog The Cuban Economy.

But Espinosa Chepe, Ritter and other knowledgeable Cuba-watchers say the reforms have been far too slow and too meek to reverse nearly half a century of brutally incompetent central government and its controls, Soviet Union-style, over virtually the entire economy.

Castro’s main reforms are “positive and well-oriented” and have accelerated in the past six months but remain “insufficient to solve the socio-economic problems accumulated in 50 years of centralized socialism … due to obstacles and disincentives,” said Carmelo Mesa-Lago, the dean of Cuba economists and author of the Spanish-language book Cuba en la Era de Raúl Castro.

Just updates

The list of reform initiatives launched since Castro officially succeeded Fidel on Feb. 24, 2008, is long and impressive and points to a strategy of allowing more capitalism but not democracy that looks like the China model —- though Havana insists it’s on its own path.

He has legalized non-agricultural cooperatives, allowed more private businesses and farming, offered them loans and permitted them to hire non-family employees. He has cut the bloated state payrolls, legalized the sale of homes and cars and allowed Cubans to stay in previously tourist-only hotels.

Most importantly, Cubans say, the removal of the much-hated “exit permit” last month for those who want to travel abroad has eased the sense of isolation and entrenchment that prevailed during Fidel Castro’s hardliner search for a socialist utopia.

But Raúl Castro has repeatedly said he’s proceeding apace to “update” the economy — never “reform” it — and his No. 2, José Ramón Machado Ventura, has dismissed those “who demand faster advances, naively thinking they will lead to capitalism.”

As a result, Cuba today teeters somewhere between the promise and realities of the reforms, between his on-the-mark diagnoses of what ails the country and a shortage of the appropriately strong medicine.

Licenses, taxes

Castro has thrown the doors open to more private enterprise but still limits licenses to 181 strictly defined jobs — among them, party clown — slapped steep taxes on them and vowed that central planning will remain the guiding force of the economy.

The decree allowing non-agricultural cooperatives — state-owned restaurants can become employee coops, for instance — is positive, said Ritter. But it requires the coops to accept as full members all employees of more than 90 days, such as a receptionist.

In one of the most critical reforms, Castro decreed in 2008 that nearly five million acres of idle state farmlands would be leased to private farmers to increase agricultural production and cut a food import bill estimated at $1.5 billion a year.

But only 3.7 million acres had been handed out at the end of 2012 and the government retained Acopio, the notoriously bumbling state system for gathering and distributing farm products. That’s what Castro attacked in that first major speech, in 2007, when he detailed the incompetent system for producing, processing and distributing milk.

It also took the government four years to reverse a section in the decree that banned the new farmers from building homes on the land — in effect forcing them to commute and leave their farm animals and machinery exposed to thieves every night.

Perhaps that’s why domestic food production dropped in 2011 to pre-2007 levels, and dropped again in 2012, with pork, a staple of the Cuban diet, down by 18.3 percent. Agricultural food prices spiked by about 20 percent while salaries barely ticked up, and food imports remained stable.

Cuban officials also announced 500,000 state employees would be dismissed by April 2011, and 800,000 more would follow by the end of that year in order to slash government spending. Yet by the end of 2012 the total layoffs reportedly stood at only 365,000.

Castro ordered an all-out attack on corruption, and put his son, Alejandro, in charge of the campaign. Yet bribery appears to be booming in the dark spaces between socialist and capitalist economic activities, and reports of fresh scandals filter out almost every week.

He has repeatedly called for a younger leadership and promoted Foreign Minister Bruno Rodriguez, 54, to the Politburo of the Communist Party and Higher Education Minister Miguel Diaz-Canel, about 52, to vice president of the Council of Ministers.

But Cuba’s leadership remains ancient. Castro is 81, Machado Ventura is 82 and Ramiro Valdes, another vice president of the Council of Ministers and sometimes considered No. 3, is 80. Overall, 10 of the 15 politburo members are in their 70s and 80s.

He has demanded that all state-owned enterprises improve their management and threatened to shutter those that do not turn a profit. Yet the General Comptroller’s report for 2012 said 34 percent of the 234 estate entities audited fell short of their goals.

Ritter noted that industrial output in 2011 stood at a shocking 47 percent of the levels in 1989, when post-communist Moscow halted its subsidies to Havana and the island plunged into economic ruin. The purchasing power of salaries in 2010 was 30 percent lower than in 1989, according to Espinosa Chepe.

Castro’s reforms “are useful and positive and I would applaud them, but in terms of reversing the situation in industry they are not going to go too far,” said Ritter. “The industrial sector is a disaster. Cuba is de-industrializing.”

Plans, illusions

Castro also improved daily life by halting the massive political marches and rallies that brother Fidel so loved, Espinosa Chepe added, and diversifying the programs on the state television monopoly — “though they remain boring and with a heavy political bias.”

But virtually every young Cuban still has “a plan or an illusion” to escape the island, said Michel Matos, executive director of the Rotilla Festival, a privately organized music fest held annually from 1998 until the government banned it in 2011.

Some Cubans paint a dark picture of their future, with more poverty, especially among retirees whose benefits seldom rise above $15 a month. The gap between haves and have-nots has risen as the government has cut back spending on public health and education. Crime and prices continue to rise.

A woman who visits Havana often said a well-off and pro-Castro friend there recently told her that “there is a tension you feel all the time, like it’s going to explode. We don’t know where we’re going.” The woman asked for anonymity to speak frankly.

The specter of Fidel

Castro’s half-measures and stop-and-go reforms have sparked speculation on exactly who or what is standing in his way. The “who” is presumed to be the 86-year-old Fidel, always a sworn enemy of capitalism.

“In general I believe that we have a duty to update and improve it [Cuba’s Soviet-style economic model], but this is a stage where it is essential that we march very carefully. We should not make mistakes,” Fidel said earlier this month when asked about the reforms.

Arturo Lopez-Levy, a former government analyst on intelligence issues and Cuba-U.S. relations now at the University of Denver, said Raúl Castro is “losing time” with the slow pace of reforms “not because of indolence but because there is no agreed-upon vision of the system toward which Cuba is moving.”

The “what” is widely believed to be an entrenched bureaucracy that fears the reforms will take away its benefits and perquisites. Jorge Dominguez, a Harvard University expert on Cuba, has described what Castro now faces as a tough “bureaucratic insurgency.”

Impediment to talks

As for U.S. relations, Castro has repeatedly offered talks with the Obama administration, yet held on to the one clear impediment to improved relations: U.S. government subcontractor Alan Gross, serving a 15-year sentence in Havana for giving sophisticated communications equipment to Cuban Jews in violation of Cuban laws.

“The government needs a less confrontational scenario in bilateral relations, but its survival is not dependent on a deal with the U.S.,” said Lopez-Levy. “The optimum scenario for [Castro] is not a sudden lifting of the embargo but a piecemeal dismantling.”

And on the human rights front, Castro freed 52 political prisoners jailed since a 2003 crackdown on dissent but at the same time stepped up repression, with a record 6,200 short-term detentions for political motives reported last year alone.

One bit of certainty

Castro is certain to be elected to a second five-year term as president of the Councils of Ministers and State when the parliamentary National Assembly of People’s Power opens its new session on Sunday. But the country’s future is less certain.

Lopez-Levy said he believes that during his first five years in power Castro carefully laid the institutional foundation for a more mixed state-private economy and a state withdrawal from daily life.

But Venezuelan President Hugo Chávez, whose subsidies to Cuba are pegged at more than $6 billion a year — higher than the aid that Moscow once provided — has cancer and it’s not clear whether a successor would keep the same level of aid.

Havana blogger Yoani Sánchez wrote last month that given Cuba’s myriad and profound problems, it’s difficult for her to believe that the system can “survive the new year, never mind guarantee its long-term viability.”

“But it merits mentioning that the Havana regime has been showing its ability to overcome, including even the most unfavorable predictions, for a long time,” she added. “After all, the Cuban economy has been in a permanent state of crisis for 20 years.”

“It will be much more likely to see our frustrations in the lines outside embassies [in Havana] waiting for a visa,” Sánchez noted, “than in any mass protests.”

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Cuba’s ‘resale’ economics: The island’s halfway capitalism has trapped Cubans between private business and the state economy.

Posted on January 23, 2013 by Arch Ritter

The island’s halfway capitalism has trapped Cubans between private business and the state economy.

Nick Miroff, January 23, 2013.

Original Article here:  Cuba’s ‘resale’ economics

HAVANA, Cuba — Cracker Man’s cry echoes down the streets of Havana’s Buena Vista neighborhood, trailed by the clatter of his shopping cart over potholes.

“Crackers! Crackers!” he barks. “Fresh from the oven!”

He’s one of roughly 400,000 Cubans now working as state-licensed entrepreneurs in the communist country’s small but growing private sector.

Cracker Man, as he’s known in the neighborhood (“el Galletero”), sells his product for about $1 a bag. He doesn’t make the crackers, but buys them from the state-owned bakery.

He’s what Cubans refer to as a “revendedor,” a reseller who buys scarce state-subsidized items from government stores to sell at a mark-up.

That’s made many people here angry. Complaints abound in the “letters to the editor” section of Cuba’s Communist Party newspaper Granma, where resellers are disparaged as parasites and good-for-nothing speculators whose main contribution to the economy is to make basic products more expensive for everyone.

They’re also entirely the creation of Cuba’s new halfway capitalism.

Raul Castro’s recent reforms — the government calls them “updates” — have provided a place for market forces to exist alongside the centrally planned, state-controlled economy. Cubans have been granted new opportunities to become tradesman, DVD vendors, pizza makers and licensed small-scale retailers whose tiny shops and stalls have bloomed along Cuba’s main streets and thoroughfares.

Other entrepreneurs navigate pushcarts through the streets as itinerant peddlers, hawking goods under the hot Caribbean sun.

The government wants the private commerce to stimulate Cuba’s moribund economy and substitute costly imports. But experts say the authorities have yet to take the next necessary step: allowing entrepreneurs to innovate and manufacture their own products.

Cracker Man, for instance, has nowhere to buy the kind of industrial ovens, bakery equipment and wholesale supplies he’d need to make crackers. Shipping those items from abroad would trigger steep import duties, never mind the logistical obstacles.

“We still haven’t created the mechanisms for a productive economy,” says economist Julio Diaz Vazquez, a Soviet-trained expert on China and Vietnam’s so-called market socialism. He criticizes the government for wanting to encourage entrepreneurship while tightly controlling it through an obtuse bureaucratic regulatory system.

He believes that’s a lost cause. “You can’t play games with the market,” he says.

The authorities say they want to sharply reduce the number of Cubans working in low-paid, unproductive government jobs by moving them into cooperatives and small-scale private businesses.

They’re setting up pilot programs to convert state-run enterprises into worker-managed cooperatives, and have expanded the range of occupations for which Cubans are allowed to obtain self-employment licenses.

But the list remains very small, with fewer than 200 officially sanctioned professions from which Cubans can choose, including obscure jobs such as “party planner” and “palm-tree pruner.”

Not the kind of thing to lift millions out of poverty or free Cuba from having to import soap, snack foods and other bare necessities on which the government spends billions of dollars abroad while its own state-run manufacturing sector withers.

Many of the newly licensed entrepreneurs sell hardware-store items and household essentials such as bleach and dishwashing detergent. As their stalls have proliferated, many of the items they sell are disappearing from state stores because private vendors are rushing to buy up supplies. The government says it’s working to set up wholesale markets to supply the new businesses, but it has yet to do so, with a few exceptions. The authorities seem nowhere close to allowing island residents to invest in the kind of infrastructure that could help give rise to private manufacturing and industry.

Until that happens, economists say, resale economics will continue to rule.

In one area of Havana known as the La Copa, private vendors offer plumbing supplies and other items not available in the state-owned hardware store next door.

Some of their goods are imported while others — such as crudely fashioned pipe fittings — are made on the island. Like most everywhere else, the rest are bought in government-owned stores.

The vendors respond to criticism about selling state-manufactured goods at higher prices saying that as long as they can show receipts proving they acquired the items legally, there’s nothing illegal about reselling them.

“I’m providing a service to my clients and to the government,” says Yormani Alayu, a plumbing-supply vendor who says he pays taxes and goes to great lengths to acquire scarce materials. He points to several rolls of flexible plastic tubing that would be nearly impossible to find in state-run stores.

“These are from Las Tunas,” he says of a city more than 400 miles from Havana.

One customer, Tania Alvarez, says she appreciates personal attention from private vendors, in contrast to the poorly paid clerks at government stores who are often indifferent toward shoppers, if not surly.

“I also appreciate the convenience,” she adds. “I don’t have to go all over town to look for these things.” She says she doesn’t mind paying slightly more.

Other resellers says they’re adding value to products they acquire from state stores.

A 21-year-old hardware vendor named Moises Amador points to colorful rum bottles on his table filled with different kinds of paint, each labeled with instructions. The paint is sold by the gallon in government stores, he explains, but often clients don’t need to buy that much. “And not everyone can afford a whole gallon,” he adds.

“I’m providing a service,” he says somewhat defensively. “I make my own labels and print them. I buy the bottles from a recycler. It’s an investment I make.”

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An Assessment of the Cuban Government’s Management Over the Last Six Years

Posted on January 10, 2013 by Arch Ritter

By Dimas Caseillano, from “Translating Cuba, Archive for the “Dimas Castellanos”

Complete  essay here: An Assessment of the Cuban Government’s Management Over the Last Six Years / Dimas Castellano

Four decades after taking power through revolution in 1959, the factors which made totalitarianism in Cuba possible have reached their limit. The populist measures imposed during the first years after the revolution were accompanied by the dismantling of civil society and a process of government takeover which began with foreign-owned companies and did not end until the last 56,000 small service-related and manufacturing businesses, which had managed to survive until 1968, were eliminated.

The efforts to subordinate individual and group interests to those of the state has led to disaster. The confluence of the breakdown of the current economic and political model, national stagnation, citizen discontent, external isolation and the absence of alternative forces capable of having an impact on these issueshave created conditions for change. On the one hand this has led to despair, apathy, endemic corruption and mass exodus, while on the other hand there has been an emergence of new social and political figures.

It was in this context that the provisional transfer of power from the Leader of the Revolution took place. The fact that this transfer was carried out by the same forces that led the country into crisis meant that the order, depth and pace of change were determined by the power structure itself, which explains the effort to change the appearance of the system while preserving its character – an unresolvable contradiction – doomed governmental efforts from the start. This process, now in-progress, has passed through three phases led by Army General Raúl Castro.

Phase One …………

Phase Two…………..

Phase Three

At the Sixth Party Congress and the First National Conference of the PCC, which took place in April 2011 and January 2012 respectively, were defining events for change.

In a report to the Sixth Party Congress,Raúl argued that self-employment should become a facilitating factor for the building socialism in Cuba by allowing the state to concentrate on raising the level of efficiency of the primary means of production, thus permitting the state to extricate itself from the administration of activities which were not of strategic importance to the country. At the session he explained that updating the current economic model would take place gradually over the course of five years. He acknowledged that, in spite of Law/Decree 259, there were still thousands and thousands of hectares of idle land. He called on the Communist party to change its way of thinking about certain dogmas and outdated views, which had constrained it for many years, and declared that his primary mission and purpose in life was to defend, preserve and continue perfecting socialism.

The outlines of a basic reform plan, approved by acclamation at the party conclave, were codified in the Political and Social Guidelines, but constrained by the socialist system of planning which viewed state-run enterprise as the primary driving force of the economy.

Several days after the Sixth Party Congress had agreed to separate political from administrative functions, Machado Ventura began reiterating the following ideas at the fifteen provincial conferences of the PCC: “The party does not administer. That is fine, but it cannot lose control over its activists, no matter what positions they may occupy… We have to know beforehand what each producer will sow and what he will harvest… We must demand this of those who work the land.” These were arguments intended to keep the economy under the control of the party and to hamper the interests of producers.

It was in this context that, in the thirty days between Thursday, May 10 and Saturday, June 9 of 2012, Fidel Castro published four essays. Between June 11 and June 18 he then published eight short pieces – each forty-three words on average – onErich Honecker, Teófilo Stevenson, Alberto Juantorena, Deng Xiaoping, poems about Che Guevaraby Nicolás Guillén, the moringa plant, yoga and the expansion of the universe. Nebulous messages with no relationship to each other and divorced from our everyday reality. Since then there have been no more such writings, and their disappearance seems to have marked the end of the period of power sharing. Only now and not before are we able to talk aboutRaúl’s administration.

At a meeting of the Ninth Regular Period of Sessions of the ANPP in July, 2012, after Fidel’s essays had already been published,Raúl Castro returned to proposals he discussed in his report to the Sixth Party Congress, such as the increase in the amount of idle land. On July 26 in Guantanamo he once again took up the theme of relations with the United States. And on July 30 he led the Martyr’s Day march in Santiago de Cuba, which seemed to confirm that he had entered the third phase of his administration.

Results of the Three Phases

In spite of efforts to achieve a strong and efficient agricultural sector capable of providing Cubans with enough to eat,agricultural production fell 4.2% in 2010. GDP in 2011 grew less than expected. Food imports rose from 1.5 billion in 2010 to 1.7 billion in 2011. Retail sales fell 19.4% in 2010 while prices rose 19.8%. On the other hand the median monthly salary rose only 2.2%, a factor which made things worse for the average Cuban just at the moment that changes began to be introduced. The 2011-2012 sugar harvest, officially slated to produce 1.45 million tons, had the same disappointing results as in the past in spite of being able to count on sufficient raw material, as well as 98% of the resources allocated to this effort. It neither met its target nor was completed on time.

The proposal to make people realize they need to work in order to survive, an issue closely associated with illegalities and other forms of corruption, has gone nowhere. On the contrary, criminal activity has increased to such a degree, as evidenced by the number of legal proceedings that have either been held or are ongoing, that corruption, along with economic inefficiency, now threaten national security. The government’s response, which has been limited to repression, vigilance and control, has not been successful. Even the official state media has reflected in recent years on the continual instances of price fixing, diversion of resources, theft and robbery carried out daily by thousands and thousands of Cubans, including high-ranking officials who are now being tried in court. Nevertheless, the problem persists.

In regards to shrinking the state’s labor force, the limitations imposed on self-employment have prevented this sector from absorbing the projected number of state workers. Of the 374,000 self-employed workers, more than 300,000 are people who were either already unemployed or retired. Besides being unconstitutional–the constitution stipulates that ownership of the means of production by individuals or families cannot be used to generate income through the exploitation of outside workers–self-employment has absorbed less than 20% of state workers. The assumption that this measure would absorb layoffs from the bloated state labor force byallowing the state to focus on raising the level of efficiency of the fundamental means of production and permitting the state to extricate itself from the administration of activities not of strategic importance to the country have not yielded the expected results.

The implementation of the new measures which have been announced–among them, an income tax exemption through 2012 for businesses with as many as five employees, an increase in tax exemption of up to 10,000 pesos of income, a 5% bonus for early filing of income tax returns, the creation of new cooperatives and a new law which will relieve the tax burden on the private sector of the economy–will not resolve the crisis either.

The Real Causes

To deal with a profound structural crisis like Cuba’s, changes must be structural in nature. With the passage of time it has been shown that small changes in some aspects of the economy must be extended to include coexistence of various forms of property, including private property, the formation of small and medium-sized businesses, and the establishment of rights and freedoms for citizens. Proposals which try to preserve the failed socialist system of planning as the principal route for the direction of the economy, and the refusal to accept that diverse forms of ownership should play their proper roles mean that the economy–the starting point for any initiative–will remain subject to party and ideological interests, while citizen participation will be notable by its absence.

The failure of the totalitarian model has forced the Cuban government to belatedly opt for reforms that have already been introduced by Cubans operating on the fringes of the law. Updating the model has been more an acknowledgement of the existing reality than an introduction of measures arising out of a real desire for change.

The First Cuban Communist Party Conferencedefinitivelydemonstrated the infeasibility of the current model and the inability of its leaders to sever the ideological attachments preventing it from moving forward. Their refusal to consider citizen’s rights shut off any possibility of change. The delays in relaxing restrictions on emigration, democratizing the internet and reincorporating into Cuban law the rights and freedoms outlined in the Universal Declaration of Human Rights, the Convention on Civil and Political Rights and the Convention on Economic, Social and Cultural Rights are the principal causes for this failure.

Additionally, it must be added that time is running out. Now, with little time left, there is talk of going slowly and steadily, which clearly suggests a decision to not change anything that might threaten the grip on power.

Independently of the obstacles that have hampered General Raul Castro in the three phases of his administration, the decisive factor has been the infeasibility of the current model. Even if his management of the government had been carried out under the best possible conditions for implementing reform, it still would have failed due to a lack of freedom – something which is a prerequisite for modernity – and the lack of a high degree of political will to forge a new national consensus. Without these it is impossible to wrest Cuba out of the profound crisis in which it is immersed. The abilities and intelligence of one man or of his governing team, no matter how high they might be, are not enough to overcome the current situation. That is both the reality and the challenge.

Dimas Castellano

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Cuba en el siglo xxi : Escenarios actuales, cambios inevitables, futuros posibles

Posted on January 4, 2013 by Arch Ritter

Juan Antonio Blanco has contributed a thought-provokinh analysis to the recent  Nueva Sociedad (No 242, noviembre-diciembre de 2012) special issue on Cuba entitled Cuba se Mueve.

The complete essay is here: Blanco, Juan Antonio, Cuba en el Siglo XXI

“El régimen de gobernanza que ha dirigido Cuba por medio siglo ha quedado  inmerso en un desequilibrio sistémico al perder su anterior hábitat internacional, que lo sustentó durante la Guerra Fría.

Los cambios introducidos hasta ahora no han sido suficientes para lograr un nuevo equilibrio. Si se comprende esa realidad y se rectifica el rumbo, hay una Cuba mejor esperando a sus ciudadanos en el futuro. Pero si se insiste en «actualizar» un sistema agotado y carente de mecenazgos de la magnitud de los que obtuvo del bloque soviético, también es posible que aguarde en el horizonte una Cuba peor.”

Juan Antonio Blanco: doctor en Ciencias Históricas. Actualmente es analista político y director ejecutivo del Centro para Iniciativas hacia América Latina y el Caribe del Miami Dade College.

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Nueva Sociedad: “Cuba Se Mueve”

Posted on January 2, 2013 by Arch Ritter

A special edition of Nueva Sociedad entitled, Cuba se mueve, has just appeared.  Nueva Sociedad is a project of the Frederich Ebert Foundation of Germany’s Social Democratic Movement. It is a pleasant surprise that the authors include contributors from inside Cuba such as Alzugaray, as well as outside Cuba including DBlanco, Dilla and Farber.

The Table of Contents is presented below with hyperlinks to the original essays.

NUEVA SOCIEDAD 242   Noviembre-Diciembre 2012

 Leonardo Padura Fuentes Eppur si muove en Cuba.

Elizabeth Dore Historia oral y vida cotidiana en Cuba.

Juan Antonio Blanco Cuba en el siglo XXI. Escenarios actuales, cambios inevitables, futuros posibles.

Haroldo Dilla Alfonso Las encrucijadas de la política migratoria cubana.

Juan Triana Cordoví Cuba: ¿de la «actualización» del modelo económico al desarrollo?

Alejandro de la Fuente «Tengo una raza oscura y discriminada». El movimiento afrocubano: hacia un programa consensuado.

Velia Cecilia Bobes Diáspora, ciudadanía y contactos transnacionales.

Samuel Farber La Iglesia y la izquierda crítica en Cuba.

Carlos Alzugaray Las (inexistentes) relaciones Cuba-Estados Unidos en tiempos de cambio.

 

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Havana market offers Cuba a taste of capitalism in the dark

Posted on January 2, 2013 by Arch Ritter

Nick Miroff /Global Post

Original Complete Article: http://www.voxxi.com/havana-market-offers-cuba-capitalism/#ixzz2GqP6zInJ

HAVANA, Cuba — Cuba has yet to grasp the invisible hand of Adam Smith, but it is giving some space to an invisible market. Invisible, at least, during the day.

At night, in an empty lot at the edge of Havana’s Mariano district, an extraordinary gathering of freewheeling commerce has been taking place in recent months. Every evening after sundown, trucks and tractors from all across the island arrive loaded with fresh produce, queuing up for hours just to secure a parking spot. Throwing open their tailgates, farmers and wholesale vendors shout out their wares and cut deals in cash under the faint glow of cellphone screens and lanterns. Young men lugging tomato crates and sacks of yams swarm between the rows of trucks, dodging pushcarts vendors on makeshift tricycle carts piled high with pineapples and cucumbers.

For now, it’s the closest thing Cuba has to the trading floor of the New York Stock Exchange, and a big development in a country where state bureaucrats have tried to set the price for produce for decades.

“What is this place called?” a visiting reporter asked a young vendor.

He shrugged. “I don’t know,” he said. “We call it ‘El Hueco’ [The Hole].”

“This is great because we can sell wholesale here. We don’t have to go out in the streets and try to find customers,” said Yulian Castillo, 28, who was offering banana bunches and 100-pound sacks of taro root for 260 pesos — about $12.

Castillo had to sell two-thirds of this year’s taro crop to the state, which only allowsfarmers to sell their harvest at market rates once they’ve met their production quotas. But Castillo said the government gave him a decent price this year, and he was free to sell the rest here.

Cuba has millions of acres of fertile farmland, but it imports some 70 percent of its food, costing the government $1.5 billion last year. Communist authorities’ perpetual struggle to get local farmers to produce more has forced them to concede a great role for private incentive in agriculture, a shift that is only beginning to extend to the rest of the economy.

And while in towns and cities across the country the government has long permitted retail produce markets that function largely on supply-and-demand market principles, there hasn’t been a central wholesale market where growers from all over the island can sell in bulk quantities. The market is a boon to farmers and fruit-and-vegetable middlemen, who said it allows the wheels of commerce to turn more efficiently by giving them a direct relationship to retail vendors. One group of farmers at the market last Wednesday had hauled their lemons all the way across the island from Santiago de Cuba — 500 miles away. There were onion growers from central Cuba’s Sancti Spiritus province in rumbling 1950s-era Ford farm trucks, and mongers from Matanzas selling squash at half the price of those at the city’s retail markets.

Alejandro Manzo had driven 200 miles from his farm in the Villa Clara province, his family’s 1957 Chevy Bel Air stuffed with garlic. In the past, the police would have tried to seize his produce on the highway, he said. “I used to have to sell on the black market,” said Manzo. “But now the state sees us farmers differently. It’s letting us get ahead. There’s nothing illegal about this anymore — it’s just supply and demand.” Manzo said he makes the trip to the capital every 10 days, selling braided ropes of garlic in 100-head strands for $12 — $3 more than he’d get back home.

Since taking over Cuba’s presidency in 2008, Raul Castro has made agriculture reform one of his signature policy moves, distributing some 3 million acres of under performing state land to private farmers and cooperatives. But his government still hasn’t taken basic steps to boost production and eliminate the farming bureaucracy that often ends up making Cuban produce more expensive for consumers. Cuban farmers still can’t buy new tractors or trucks, relying instead upon rusting Soviet machinery and 50-year-old American farm equipment.

While Havana residents say there’s more food than ever in their markets, prices have risen faster than Cubans’ meager pensions and government salaries, leaving many to complain that the state should intervene more, not less.

One reason for the market distortion, economists say, is the growing inequality in Havana between Cubans who work in low-paid government posts and those who have access to hard currency sent by relatives abroad or through jobs in tourism and private business. It’s one of several reasons that liberalization measures like the new wholesale market haven’t yet led to lower prices for Cuban consumers.

“The growth of all the new [private] restaurants and snack bars has also kept demand high,” said University of Havana economist Juan Triana.

As the government has loosened restrictions on private farmers’ ability to hire laborers, rural wages have risen, he said. “Before farmers could pay workers 15 or 20 pesos [80 cents] a day. Now it’s 40 pesos [$1.50].”

With more money to be made in farming, anecdotal evidence also suggests Cuba is slowing the trend of rural-to-urban migration that left farmers complaining of too few young people interested in growing crops.

Abel Ramos, 35, had arrived at the market at dusk, but with the line of trucks stretching down the road, he said he didn’t expect to get a spot in the market until after midnight. The wait would be worth it, he said. “Three or four years ago, I used to grow tomatoes and they would go bad while I waited for the state to buy them,” said Ramos. “Not anymore. Now I can come here.” “This is a beautiful thing,” he said.

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Cuba’s New Law on Cooperatives

Posted on December 20, 2012 by Arch Ritter

Below is Phil Peters fine summary and analysis of Cuba’s new law on cooperatives. Phil is first off the mark with this. I still have not been able to download the Gazeta Oficial to see the legislation first hand.

Peters’ essay can be seen on his Blog, “The Cuban Triangle” here:The new cooperatives law.

Here is his evaluation:

What does this all mean?

I think this is a major step, even though the full definition of the policy will only come with time as cooperatives are created and as the government moves beyond the experimental phase.

Certainly from a capitalist perspective, all we see are the restrictions – first and foremost in the requirement that these businesses organize as cooperatives. But from the perspective of the Cuba of five years ago, this new law was unimaginable.

It opens the door to a much larger private sector, one involved in more substantial activities than the small entrepreneurs.  It is a second option for Cubans interested in private business activity, and a new option for friends and relatives abroad who would support them with capital.  There is nothing stopping five software designers from applying to form a business under this law; we’ll see if there is anything stopping the government from approving it.  If the sector prospers it can create efficiencies in agriculture, construction, transportation, and other sectors that will benefit Cuba’s economy and people. And the government needs the cooperatives to prosper.  Without them, it cannot meet its own goals of cutting state payrolls and generating new private sector jobs.

The pace will satisfy no one, the process will be influenced by officials with more orthodox views, and it will surely have positive and negative notes.  But there’s no denying that this law breaks new ground, with potentially large consequences.

Phil Peters

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Raul Castro Says Economic Reforms Are Working

Posted on December 14, 2012 by Arch Ritter
By By PETER ORSI Associated Press
HAVANA December 13, 2012 (AP)

President Raul Castro, December 13, 2012

 President Raul Castro declared Thursday that Cuba’s two-year experiment with market reforms is working and has the wind at its back, but said much work remains to breathe life into the sputtering economy.

In a speech devoid of any new policy announcements, the military khaki-clad leader sounded a generally positive tone in discussing the Marxist country’s progress, though he conceded that the island faces a “colossal psychological barrier” in shedding old habits and “concepts of the past.”

“The updating of the Cuban economic model … marches with a sure step and is beginning to delve into questions of greater reach, complexity and depth,” Castro said, according to an official transcript of his remarks before lawmakers at the second of their twice-annual sessions.

The proceedings were closed to foreign journalists, but state television later broadcast tape-delayed highlights.

Cuban economy czar Marino Murillo told the assembly that the government is planning more measures to support and increase the ranks of independent workers and small business owners.

Real estate broker, delivery person, antiques dealer and produce vendor will all be newly legalized private jobs in a country where the government has long dominated the economy and employed nearly the entire workforce.

The self-employed “are gaining space,” Murillo was quoted as saying by the Cuban news agency Prensa Latina.

Economists have said Cuba needs to expand the number of allowable private enterprises, with an emphasis on white-collar work. Real estate has been a particular concern. Cuba legalized the buying and selling of property 12 months ago, but has yet to allow agents to facilitate transactions.

Some 400,000 people now work in the private sector in 180 legally approved job areas, Prensa Latina said. That’s up from 156,000 in late 2010, the onset of Castro’s five-year plan to reform the economy with a dash of free-market activity.

Cuba intends to keep control of key sectors, however, and Castro and other top officials insist the country is not abandoning a half-century of socialism for freewheeling capitalism.

Murillo also said that in the future, state-run businesses including tourism concerns will be paying independent contractors via bank transactions in hard currency.

Meanwhile, lawmakers passed a 2013 budget with a deficit of 3.6 percent of GDP and heard an update on the country’s economy.

The government announced recently that GDP rose 3.1 percent this year, below expectations of 3.4 percent. Growth of 3.7 percent is forecast for 2013, low for a small developing economy, but Castro called it “acceptable in a scenario of continuing global economic crisis.”

Economy Minister Adel Izquierdo said the construction sector is expected to expand 20 percent in the coming year, worker productivity should rise 2.6 percent and the country has a goal of topping 3 million tourist visits for the first time, according to Prensa Latina.

In its first order of business, the assembly unanimously passed a resolution of support for Venezuelan President Hugo Chavez, who earlier this week underwent his fourth cancer-related surgery in the Cuban capital.

Chavez is a key ally of Cuba, and during his presidency Venezuela has sent billions of dollars’ worth of oil to the island on preferential terms.

“At this crucial hour for Venezuela … we will be like always,” Castro said, “together with President Chavez and the Bolivarian Revolution he leads.”

The unicameral parliament will reconvene in February with a new membership following elections and is then expected to name Castro to another five-year term.

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New Co-op Laws In Cuba

Posted on December 12, 2012 by Arch Ritter

Co-op Laws In Cuba Are Seen As Progress (Cave, NYT)

Wednesday, December 12, 2012

New York Times

By Damien Cave

MEXICO CITY – The Cuban government authorized a wide range of co-ops on Tuesday, allowing workers to collectively open new businesses or take over existing state-run businesses in construction, transportation and other industries.

The new laws published Tuesday are the latest step in a slow, fitful process of opening Cuba’s economy to free-market ideas. The latest announcement calls for the creation of more than 200 co-ops as part of a pilot program. If it grows, analysts said, the experiment could do more for economic growth and productivity than earlier efforts to allow for self-employment, or to reform agriculture.

Co-ops that are run independent from the government could shift a large portion of the island’s economy to free-market competition from government-managed socialism, analysts contend, a change from earlier co-op efforts within state-run agriculture.

“The potential is large,” said Richard E. Feinberg, a professor of international political economy at the University of California, San Diego. “The Cubans are looking for something in between the old state-owned enterprise and a pure free market. Cooperatives are an answer, so looking forward, they could play a significant role.”

For some Cubans, the new laws will just legalize what is already going on in the black market. But the government also seemed interested in encouraging consolidation among small entrepreneurs. The new laws call for lower tax rates for co-ops than for self-employed workers. That means barbers or fishermen or carpenters who now work as individuals will have an incentive to join co-ops, companies in which each worker has a vote.

The new laws also say that co-ops can be formed with as few as three people, and that in addition to converting state businesses into co-ops – with first preference given to workers already there – co-ops will be able to bid for leases of idle government properties.

The co-ops “will not be administratively subordinated to any state entity,” the government said in a summary of the laws in Granma, the state-run newspaper. But the government will play a large role in determining who gets the chance to open businesses. Workers seeking to start co-ops must submit applications that go to local government offices that pass them up to the Council of Ministers, which includes President Raúl Castro, for approval.

It is not yet clear whether higher-skilled professionals, like architects or doctors, will be able to form co-ops. Philip Peters, a Cuba expert at the Lexington Institute, a nonpartisan policy group, said that initially the co-ops would probably fill a gap in basic services, like transportation for farm products. He predicted co-ops would most likely reduce the likelihood of theft.

“People pilfer from the state; they don’t from a business in which they have a stake,” he said. But to fully reach the co-ops’ potential, he and other experts said, questions about the government’s interaction with them will need to be answered.

“They have not been liberated overnight from operating in the Cuban context,” said Professor Feinberg, who was an adviser to the Clinton administration. “How do they get credit? How do they get inputs? How are workers going to be properly trained? How will management be properly trained? These are all outstanding issues.”

 

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