Tag Archives: Small Enterprise

REFORMANDO EL MODELO ECONÓMICO CUBANO

Mauricio A. Font y Mario González-Corzo, Editores, Con la asistencia de Rosalina López

New York: Bildner Center for Western Hemisphere Studies, The Graduate Center, The City University of New York, 2015

Documento Completo: Reformando el Modelo Economico Cubano

 New Picture (12)

CONTENIDO

Introducción, Mario González-Corzo

Del ajuste externo a una nueva concepción del socialism Cubano, Juan Triana Cordoví

La estructura de las exportaciones de bienes en Cuba 29, Ricardo Torres

Relanzamiento del cuentapropismo en medio del ajuste structural, Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva

Las cooperativas en Cuba, Camila Piñeiro Harnecker

La apertura a las microfinanzas en Cuba, Pavel Vidal Alejandro

Hacia una nueva fiscalidad en Cuba, Saira Pons

Bibliografía

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CUBA’S ECONOMY: PICTURESQUE, BUT DOING POORLY

Despite the thaw with the United States, politics is paralysing the economy.

The Economist, May 16th 2015 | HAVANA

Original here: ECONOMIC REFORMS AND POLITICS

 BY DAY grey-haired Americans trundle through the streets of Havana in pink 1957 Chevy convertibles, klaxons blaring. By night they recline over rum and cigars, tipping generously, listening to hotel salsa and reminiscing about the cold war. Many of the new American visitors to Cuba, whose numbers have surged since a diplomatic detente in December, are old enough to remember life before the internet and relish a few days in one of the world’s last Facebook-unfriendly bastions. What tourists find quaint seems stifling to many Cubans themselves.

For a lucky minority life has improved since “D17” (December 17th), the day Barack Obama and his Cuban counterpart, Raúl Castro, announced that they would seek to end five decades of hostility. Mr Obama’s decision to relax some restrictions on American visitors is expected to push tourism to Cuba up by 17% this year, bolstering foreign exchange by around $500m, or 1% of GDP, estimates Emily Morris, an economist at the Inter-American Development Bank. Visitors spend CUCs (Cuba’s dollar-equivalent hard currency) at a few swanky private restaurants where the quality (and prices) have reached fashionable Florida standards. Cubans are borrowing whatever they can to spruce up accommodation in a city where hotels are now booked up weeks in advance. According to Omar Everleny, a Cuban economist, 18,000 private rooms have become available. That is the equivalent of 31 new hotels the size of the 25-storey Habana Libre.

This activity is expected to boost economic growth from last year’s meagre 1.3%. But there is little sign as yet of the $2.5 billion a year in investment that the government hoped to woo with a new foreign-investment law last year, mostly because it sends mixed signals. It has authorised at most two manufacturing projects at its Mariel port and special economic zone, despite hundreds of applications. It continues to view private business with distaste, and believes socialist state enterprise will remain the core of the Cuban economy. As one economist puts it, “the government wants to create prosperity, but it doesn’t want to create prosperous citizens.”

As a result, it risks creating neither. Some of the 500,000-odd people self-employed in private enterprise—about 10% of the labour force—benefit from earning hard currency, and represent a nascent middle class. Unlike the rest of the labour force, their productivity is improving.

But the majority who work in the state sector earn Cuban pesos, live on ration books and can barely make ends meet unless they receive remittances from abroad or do informal jobs illegally. This produces stark inequality, which is exacerbated by shortages, especially of food. Some of the new restaurateurs admit that they face wrath in Cuban supermarkets when they pull out wads of notes to stock up on scarce beer, milk and cheese, leaving shelves empty and pushing prices higher. They insist it is not their fault; the government has failed to open up well-supplied wholesale markets or allow them to import goods. But that argument counts for little with a hungry public.

What’s more, it exacerbates a vicious circle in which disgruntled government employees slow down at work, further sapping output and causing more shortages. In a bid to counter inequality, the government has raised salaries of favoured state workers such as doctors. It has authorised public entities such as the sugar monopoly to raise pay if productivity improves (this year, sugar production is up 22%). But partly as a result of higher wages, the budget deficit is expected at least to double to above 6% of GDP this year.

All this creates a headache for Mr Castro. He has less than a year before a Communist Party congress next April. There he will have to defend reforms launched at the previous congress in 2011, including a planned unification of Cuba’s two currencies (see article), despite their disappointing results so far. Mr Castro must also worry that a Republican will succeed Mr Obama, who will leave office in early 2017. To forestall a renewed tightening of the American embargo, he will want to show that Cuba is making economic progress.

Next April’s congress could also mark the start of a generational change in Cuba’s leadership. Mr Castro, who took over from his brother, Fidel, in 2008, is expected to step down as president in 2018. He has said that he is keen to promote younger leaders, replacing the “historic generation” of octogenarians who fought under Fidel in the 1959 revolution.

He is grooming Miguel Diáz-Canel, the 55-year-old first vice-president, to replace him. There is a possibility that Mr Castro could step down as head of the party next year. Economists working for the government say some of Mr Diáz-Canel’s peers are receptive to reformist ideas. They are often seen carrying PCs or tablets, suggesting an interest in bringing more internet to Cuba. But they are also reluctant to defend reform publicly, so it is hard to know what they stand for.

Many in the establishment are terrified that change will jeopardise what they see as the main gains of the revolution, such as free education, health care and welfare. “The economy has to become more efficient, but you can’t ignore our principles or you’ll get a tsunami of capitalism washing over the whole island,” says Luis René Fernández of the University of Havana.

Mr Castro may be preparing to take on Communist Party conservatives. The party’s central committee said in February that it would discuss a new electoral law at next year’s congress. It gave no details; no one expects anything like political freedom. The aim may be to pressure mid-level bureaucrats to stop paralysing reform. “Change starts from the top and those at the bottom want it, but it gets stuck in the middle,” says Rafael Hernández, editor of Temas, a social-sciences journal.

Mr Hernández believes that a priority for the government will be a stronger National Assembly that can approve laws to underpin economic liberalisation, such as the right to own a business (currently, private firms, however prosperous, are considered “self-employment”). He also argues that professionals such as lawyers, teachers and doctors should be able to moonlight from their state jobs in private consultancies, consolidating a “socialist middle class” that pushes for further reform. However, he frets that hardship has made ordinary Cubans apathetic about greater political representation. For them “the glass is always half empty.”

Among intellectuals, though, resistance is growing. Dagoberto Valdés, editor of Convivencia, a Catholic journal, says the American thaw has robbed the regime of its ability to cast its neighbour as an “external enemy”, so its own shortcomings have moved into the spotlight.

El Capitolio, a marble landmark in central Havana, modelled on (and with a bigger dome than) America’s Capitol, points to a brighter future. It is being refurbished and is supposed to become the seat of the National Assembly for the first time since 1959. Alberto Pagés, a wiry old man who for 30 years has been operating a homemade box camera for small change on the building’s steps, thinks it will attract more tourists and could become “a symbol of how Cuba and the United States can look more like each other”. But ask him whether it could also become a harbinger of democracy and he clams up. “I know absolutely nothing about politics,” he mutters.

Cuba Mar 2014 002

The Capitolio, Under Repairs.

After 56 years. the prospective home of the National Assembly once again,

Cuba April 2015 212

A rationed food outlet on Calle Jovellar

Cuba April 2015 110.jpg qqqqThe Art and Crafts Retailing Center in a Converted Warehouse, a showcase of Cuban ingenuity and creativity.

 

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Book Launch in New York: ENTREPRENEURIAL CUBA: A DISCUSSION ON CUBA’S EMERGING NON-STATE SECTOR

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Americas Society / Council of the Americas

 

April 2, 2015

AS/COA; 680 Park Avenue; New York, NY    View map

Registration: 12:00 p.m. to 12:30 p.m., April 2, 2015
Lunch and Discussion: 12:30 p.m. to 2:00 p.m.

In 2011, Cuban President Raúl Castro began the process of reforming policies toward entrepreneurs and small, private enterprises. Join Ted Henken and Archibald Ritter as they present their book Entrepreneurial Cuba: The Changing Policy Landscape,* which analyzes the evolution of Cuban policy since 1959. Henken and Ritter will discuss Cuba’s fledgling non-state sector, the underground economy, the new cooperative sector, Cuban entrepreneurs’ responses to the new business environment, and how Obama’s new policy of entrepreneurial engagement might impact Cuba’s “cuentapropistas.”

*Copies of the book will be available for purchase.

Speakers:

  • Ted A. Henken, Professor of Sociology and Latin American Studies, Baruch College, CUNY
  • Archibald R.M. Ritter, Distinguished Research Professor, Department of Economics, Norman Paterson School of International Affairs, Carleton University, Ottawa, Canada
  • Alana Tummino, Policy Director, Americas Society/Council of the Americas; Senior Editor, Americas Quarterly (Moderator)

Registration Fee:   This event is complimentary for all registrants. Prior registration is required.

Event Information: Sarah Bons | sbons@as-coa.org | 212-277-8363
Press: Adriana La Rotta | alarotta@as-coa.org | 212-277-8384
Cancellation: Contact Juan Serrano-Badrena at jserrano@counciloftheamericas.org before 3:00 p.m. on Wednesday, April 1, 2015

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Recent US-Cuba Policy Changes: Potential Impact on Self-Employment

Mario A. González-Corzo*   Cuba Transition Project, Institute for Cuban and Cuban-American Studies, University of Miami, Issue 239,  March 11, 2015

Washington’s “new course on Cuba” presents a new set of challenges, opportunities and new prospects for the Island’s emerging self-employed workers. There are several reasons for this:

1. Despite existing constraints and limitations, policy contradictions, and the predominance of bureaucratic economic coordination mechanisms and centralized planning, the expansion of self-employment is one of the principal elements of Cuba’s efforts to “update” its economic model.

2.The implementation of a series of reform policy changes in Cuba since 2007, and particularly after 2010, have contributed to the rapid expansion of self-employment and its growing share of total employment (Figure 1). 

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Source: Oficina Nacional de Estadísticas e Información [ONEI], 2014; author’s calculations.

  •  While limited openings to allow the expansion of self-employment are not a new phenomenon in the Cuban economy, the number of legally-registered self-employed workers has grown significantly since 2007.
  • Self-employment has grown at an even faster rate since 2010, when the Cuban government announced its plan to reduce its bloated State payrolls by 20% and after 2011 when the number of authorized self-employment categories was increased to 201.
  • The number of self-employed workers grew 206.6% from 138,400 in 2007 to 424,300 in 2013. By contrast, employment in the State sector fell 10.1% between 2007 and 2013, and employment in cooperatives declined 6.2% during the same period.
  • While the State sector accounted for 82.9% of total employment in 2007, this figure fell to 73.7% in 2013. Self-employed workers represented 2.8% of total employment in 2007, but their share of total employment grew to 8.6% in 2013.
  • Most self-employed workers in Cuba, however, are presently employed in relatively low-skilled (service-oriented) activities. They also face a wide range of legal prohibitions that limit their ability to grow and achieve economies of scale and their potential contributions to the country’s development and economic growth.

3. Despite facing strict State-imposed controls and limitations, self-employment has contributed to job creation, the provision of goods and services that were insufficiently produced by the State, and increases in the State’s tax revenues; it has also contributed to changes in attitudes, perceptions, and relationships between a growing segment of the Cuban population and the State, leaving a lasting “footprint” on the Cuban economy.

4. Since the limited liberalization of self-employment and the legalization of the U.S. dollar in 1993, self-employed workers have been among the principal recipients of remittances from abroad, particularly from the Cuban community in the United States, directly serving as one of the principal mechanisms to strengthen transnational ties between both countries.

While self-employment expanded significantly (206.6%), and its share of total employment increased notably during the 2007-2013 period, it has grown at a much slower rate, following the initial spurt experienced in 2011. This can be primarily attributed to existing restrictions on the types of self-employment activities that are currently authorized, excessive State regulation and intervention, the inexistence of input markets where self-employed workers and micro-entrepreneurs can obtain essential inputs at competitive prices in Cuban pesos (CUP), onerous taxation, and the remaining ambivalence of the State’s policies and attitudes towards the self-employed.

Cuba’s self-employed workers also have to contend with a dilapidated infrastructure, excessive bureaucratic constraints, insufficient sources of funding (excluding remittances), logistical difficulties do to the existence of primitive (quasi-formal) supply chains, government restrictions regarding the accumulation of capital (or concentration of wealth), and limited property rights. In addition, they lack access to mobile payment platforms, advanced (computerized) accounting and transactions (or sales) recording systems, and modern procurement and purchasing systems.

In terms of market segment concentration, it is worth noting that a notable share of self-employed workers is engaged in tourist-oriented activities such as food services (servicios de gastronomía), lodging or hospitality (alquileres), and transportation. Many of these depend on remittances from abroad as a primary source of working capital, and the majority of their client base consists of tourists and foreign visitors. Primarily catering to a limited (albeit affluent) market segment, rather than to a wider strata of the Cuban population, limits their market share and opportunities for growth and expansion.

Despite facing these challenges and limitations, the number self-employed workers in Cuba continues to expand (albeit at a slower pace in recent years), demonstrating the resilience of the entrepreneurial spirit that has historically characterized a significant portion of the Island’s population.

Given the growing importance of self-employment in the Cuban economy in recent years, the strong transnational linkages between a significant portion of self-employed workers and their friends and relatives in the United States, new U.S. policies towards Cuba are likely to impact this key sector of the Cuban economy in several ways:

  1. Continued expansion of self-employment activities, including new more value-added categories.
  2. Improved access to credit and equity capital to finance small-scale private business ventures.
  3. Opening to foreign investment, including partnerships with Cubans residing abroad.
  4. Future expansion of firm size, scope, and areas of operations.
  5. Greater share of total employment and contribution to Gross Domestic Product (GDP), tax payments, and social security system contributions.
  6. Adoption of modern point of sales (POS) systems, accounting systems, and inventory anagement systems to track sales and report business operations (and thereby improve the State’s ability to collect taxes from microenterprises and self-employed workers).

Despite all the potential (positive) effects of the new US policy approach with regards to self-employment, their real impact “on the front lines” depends on whether or not the Cuban government has the political will to implement deeper reform measures that will reduce the monopoly of the State, while permitting the expansion of the private sector by eliminating the “internal embargo.” On the economic front, this can be accomplished by lifting the internal restrictions, excessive regulations, onerous taxation, and bureaucratic limitations imposed by the State on the self-employed. On the political front, this process would require a radical shift in the State’s perceptions and attitudes towards the self-employed, recognizing Cuba’s emerging entrepreneurial class not only as a source of tax revenue for the State, but as primarily as a an engine of job creation, wealth formation, and the economic growth and development.

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*Mario A. González-Corzo, Associate Professor, Department of Economics and Business, LEHMAN COLLEGE, City University of New York (CUNY), and is a Research Associate, Institute for Cuban and Cuban-American Studies (ICCAS), University of Miami

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CUBA EMPRESARIAL: LA REALIDAD AHOGA A LOS BUENOS DESEOS

Nora Gámez Torres;  El Nuevo Herald, 02/21/2015

Original here: http://www.elnuevoherald.com/noticias/mundo/america-latina/cuba-es/article10895450.html#storylink=cp

En los parques de pueblos en el interior de Cuba y en algunos barrios de la capital, los niños se entretienen montando carretones tirados por caballos y cabras. No es una actividad lucrativa que se asociaría inmediatamente con el término “pequeño empresario”, pero el “servicio de coche de uso infantil tirado por animales” es una de las 201 actividades que el gobierno cubano ha autorizado a ejercer “por cuenta propia”.

No es, por supuesto, lo que tienen en mente funcionarios del gobierno y congresistas estadounidenses que han visitado recientemente la isla cuando hablan de ayudar al florecimiento de los negocios en Cuba, pero quienes pasean a los niños en coches forman parte, junto a dueños de “paladares”, taxistas, fotógrafos, reparadores de todo tipo de objetos y “arrendadores de vivienda”, entre otros, de un emergente sector privado, al que la nueva política exterior de Estados Unidos ha colocado en el centro de atención.

El objetivo declarado es estimular a este sector para la mejoría económica del pueblo cubano y la promoción de una sociedad civil independiente que, eventualmente, podría promover un cambio político en la isla. Pero ¿qué dimensiones reales tiene ese sector y qué potencialidades tiene para expandirse bajo el control del gobierno de Raúl Castro?

Según las últimas cifras oficiales publicadas en el periódico estatal Trabajadores en enero, 483,396 personas laboraban “por cuenta propia” en Cuba. Una pequeña cifra todavía, en comparación con los más de cuatro millones empleados en la economía estatal.

Estos trabajadores necesitan una “licencia” u autorización gubernamental para operar en una de las 201 actividades permitidas y deben pagar mensualmente las cuotas fijadas por el Estado. En su mayoría son oficios o servicios que requieren poca capacitación e infraestructura tecnológica, como “forrador de botones”, “rellenador de fosforeras” y “cuidadores de baños públicos”. Entre los que arrojan más beneficio se encuentran la gestión de restaurantes o “paladares” y los servicios de taxi.

“Aunque Raúl ha hecho cambios significativos en cuanto a la economía y la microempresa en Cuba, no son cambios suficientes para lograr las metas del gobierno de crecimiento y de transferir a los trabajadores estatales al sector no estatal, privado o cooperativo”, explica el profesor de Baruch College, Ted Henken, autor junto al también profesor y economista Archibald Ritter, del libro Cuba empresarial: un contexto de políticas cambiantes, del cual este reporte tomó prestado el título.

“Hay un grupo de obstáculos burocráticos y de regulaciones. Por ejemplo, muchos profesionales no pueden trabajar en su profesión en el mercado laboral privado. La mayoría de los 201 oficios no son productivos, son de sobrevivencia”, apuntó.

Si las remesas son la principal fuente de inversión en los negocios privados en Cuba, como argumenta Henken, la nueva disposición anunciada por el gobierno de EEUU de eliminar restricciones a envíos destinados a “actividades de personas particulares y organizaciones no gubernamentales que promueven la actividad independiente para reforzar la sociedad civil en Cuba y el desarrollo de empresas privadas”, puede estimular la expansión de los negocios ya existentes o el surgimiento de otros. Pero la casi total ausencia de créditos nacionales es un obstáculo importante para aquellos que no tienen familiares o contactos en el extranjero.

Existe, además, “un obstáculo mayor del que todos se quejan: que no hay un mercado mayorista”, observa Henken.

Los altos impuestos es otra de las críticas a las regulaciones actuales, que establecen un impuesto progresivo sobre las utilidades hasta del 50%, más otros tributos por ventas, servicios, utilización de fuerza de trabajo, contribuciones a la Seguridad Social así como tasas por anuncios y publicidad comercial.

Los impuestos por utilidades comienzan en un 15% y llegan al 50% por ganancias superiores a $2,000 al año, lo que unido a las tasas arbitrarias de gastos deducibles, pueden generar impuestos reales que superan el 100 por ciento de lo generado en un año. “Obviamente esto podría matar a la empresa o promover el fraude”, argumentan los autores de Cuba empresarial.

En plena temporada de declaración de impuestos, algunos cuentapropistas han hecho pública su insatisfacción en cartas a medios oficiales como Granma o comentarios dejados en las páginas en internet de estas publicaciones.

La lectora Elizabeth González Aznar se quejó en Cubahora del bajo índice de deducción de gastos (hasta un 40% en dependencia del tipo de actividad) en el régimen de contribución de los cuentapropistas en condiciones en que “no existe mercado mayorista”, “los productos se adquieren en mercados minoristas y a precios muy altos”; “las tarifas eléctricas suben cada vez más” y “se abrió el cuentapropismo sin crear mecanismos elementales que mantuvieran una oferta de productos acorde a la demanda”.

González Aznar dijo verse obligada a comprar productos más caros en las tiendas de recaudación de divisas solo para poder obtener comprobantes que luego puede presentar al hacer su declaración.

Pero este no es el peor escenario. Históricamente, cada vez que el gobierno cubano ha permitido pequeños espacios para la iniciativa individual, ha perseguido duramente a quienes considera acumulan capital o se convierten en una competencia para el estado, como sucedió con la prohibición de comercializar ropa importada en 2013 o el cierre de paladares como El Hurón Azul.

La clausura de las salas de cine privadas en noviembre del 2013 ilustra, además, que el gobierno no está dispuesto a ceder en el control de espacios que considera esenciales, como la distribución de información y productos culturales, zonas que, por ahora, están vedadas a los negocios privados, al menos legalmente.

Que los emprendedores hayan reaccionado con la creación de “los paquetes”, un compendio de programas extranjeros distribuido informalmente en dispositivos portátiles de almacenamiento, ilustra que las autoridades solo pueden desplazar—pero ya no controlar—estas actividades hacia el mercado informal, que sigue interesado en este tipo de oferta.

Una última limitación impide la expansión de capital nacional en inversiones de mediano y gran alcance. La Ley 188, de inversión extranjera aprobada por el parlamento en marzo del 2014, regula las inversiones en Cuba de “personas naturales” y “jurídicas extranjeras”, así como las llamadas empresas “mixtas” con capital del estado cubano, pero no menciona que los cubanos, residentes o no en la isla, tengan el derecho de invertir en Cuba.

Para estimular las inversiones, el gobierno otorgó una excepción de ocho años a las empresas extranjeras que abran negocios en Cuba, entre otras facilidades, a las que no tienen derechos los pequeños empresarios cubanos, lo que constituye “un tipo sorprendente de discriminación en contra de los ciudadanos cubanos”, según escriben Henken y Ritter.

Cuba Mar 2014 040 Cuba Mar 2014 056 Cuba Mar 2014 059 Cuba Mar 2014 096

 

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LAS TRD MAL ADMINISTRADAS POR LOS MILITARES

PRIMAVERA DIGITAL, febrero 18, 2015

Ensayo original aquí: Las TRD Mal Administradas por los Militares,

Por Osmar Laffita

Cuba actualidad, Capdevila, La Habana, (PD)

 A los dos años de ejercer Raúl Castro como presidente, enviaba señales de que su política económica se desmarcaba del estatismo que aplicaba su predecesor, Fidel Castro, quien prácticamente había liquidado la actividad privada a pesar de que por ley estaba autorizada.

Como muestra de que su gobierno no iba en esa dirección, la primera medida del gobierno de Raúl Castro dirigida a reactivar los pequeños negocios privados fue la puesta en vigor de la Resolución No. 32 de 7 de octubre de 2010 del Ministerio de Trabajo y Seguridad Social (MTSS), en la que se autorizaba nuevamente el ejercicio de178 actividades para ejercer las cuales se podía sacar licencias. Entre ellas estaba la no. 71, de modista y sastre.

El gobierno de Raúl Castro vio inicialmente la ampliación de la actividad privada como una vía para generar empleo para los casi 1 200 000 trabajadores que sobraban en las plantillas de las empresas estatales, resultado de la política voluntarista e irresponsable de pleno empleo que aplicó Fidel Castro.

El 6 de septiembre de 2012 el MTSS puso en vigor la Resolución No. 33, la cual ampliaba a 181 las actividades que se autorizaban a ejercer. En dicha Resolución se mantuvo la no. 71 de modista y sastre.

Tal fue el crecimiento de los pequeños negocios privados, que prácticamente en todas las ciudades y pueblos de la isla, comenzaron a funcionar cafeterías, pequeños restaurantes, pizzerías, casas destinadas al alquiler de habitaciones. En los portales de las casas, así como áreas y locales especialmente habilitados, había pequeños negocios en los que vendían ropa, calzados y bisuterías para el hogar y de uso personal. La mayor parte de estas mercancías eran traída de los Estados Unidos, Ecuador, Panamá y México. Pasaban por la aduana, eran declaradas como artículos sin carácter comercial, hasta un límite de 100 libras, y sus propietarios pagaban los impuestos correspondientes.

Tal fue el incremento de las ventas de productos importados que al finalizar el año 2012 estaban dedicados a este negocio, amparados en la licencia de sastre y modisto, cerca de 90 000 personas. Tal fue la aceptación por el pueblo de estas mercancías, principalmente por mujeres y jóvenes, que dejaron de ir a comprar en las Tiendas de Recuperación de Divisas (TRD). En estos pequeños negocios privados se encontraban mercancías variadas, más modernas y bien confeccionadas. Si bien los precios eran altos, se podía regatear con el dueño.

En las TRD muchas de esas mercancías no se ofertaban, y si tenían la suerte de encontrarlas, estaba pasada de moda, mal confeccionada y con precios muy elevados, que no se correspondían con su mala calidad. Como el dueño es el Estado, en las TRD no se puede regatear: lo tomas o lo dejas.

En el primer trimestre de 2012, con miras a ampliar el control de los militares sobre la economía, el gobierno tomó la decisión de traspasar al Grupo de Administración Empresarial(GAE), perteneciente a las Fuerzas Armadas Revolucionarias, la dirección de los diferentes grupos empresariales que se ocupaban de la venta minorista en dólares, léase CIMEX y su red de más de 2000 tiendas, gasolineras, cafeterías, servicios navales, bancarios, inmobiliarias, y CUBALSE, hoy desaparecida, que además de a las actividades que realizaba el CIMEX, también se ocupaba de los servicios al cuerpo diplomáticos y las empresas extranjeras radicadas en Cuba. Esta última actividad se la asignaron al Grupo Palco, junto con todas sus tiendas, hoteles, restaurantes, dulcerías, casas de modas y cafeterías, ahora bajo la dirección del GAE.

El grupo Palco fue liberado de la dirección del Palacio de Convenciones, PABEXPO, EXPOCUBA, el centro de reuniones “El Laguito” y las casas de protocolo, que pasaron a ser dirigidos directamente por el Consejo de Estado.

La Cadena Caracol, que era dirigida y administrada por el Ministerio de Turismo, también pasó a manos de los militares. Todas las tiendas que funcionan en los hoteles y en las diferentes instalaciones de veraneo, las agencias de renta de autos y las bases de ómnibus destinadas al servicio de los turistas nacionales y extranjeros, pasaron al GAE.

Por decisión del director ejecutivo del GAE, el general de brigada Luis Alberto Rodríguez López-Callejas, los trabajadores de todas las TRD pasaron a ser trabajadores civiles de las FAR y los obligaron a integrarse al sindicato de la Defensa. En una de las tanta reuniones del GAE celebradas en los primeros meses de 2012, su dirección pudo conocer de la caída en las ventas en las TRD y del alarmante crecimiento de los inventarios de los almacenes. Al analizar las causas, detectaron que las pérdidas eran originadas por la proliferación de miles de pequeños negocios privados debidamente autorizados que vendían disimiles artículos importados.

13 23  72Para parar esto de raíz, el gobierno dio instrucciones a la titular del MTSS, Margarita González Fernández, para que sobre la base de argumentos legales, demostrara que la licencia de sastre y modista no facultaba a sus poseedores para importar y comercializar ropa, calzado, bisuterías y otros enseres, porque representaba una violación de lo establecido.

Para aniquilar el floreciente negocio de las ropas y enseres importados que habían sumido en la quiebra a las TRD, el MTSS puso en vigor la Resolución No 42 de 2013, en la que se fijaba el alcance de cada actividad autorizada. A los poseedores de mercancías importadas les dieron un plazo para liquidarlas antes del 31 de diciembre de 2013.

Ahora el GAE tiene el monopolio del mercado minorista de venta en dólares. La vicepresidenta de su principal conglomerado comercial, la corporación CIMEX, anunció que la facturación por las ventas realizadas en 2014 ascendió a una cifra muy cercana al monto total de lo recibido por el país por concepto de remesas recibidas desde el extranjero. Esto da una idea del enorme poder económico del GAE.

Un reportaje realizado por las periodistas Juanita Perdomo Larezada y Betty Beatón Ruiz, del semanario Trabajadores, bajo el título “Hay, pero no me gusta”, publicado el 9 de febrero, se refiere al desastroso estado de desabastecimiento de las TRD de Santiago de Cuba y Matanzas.

No es solo en esas ciudades. En el resto del país se repite similar situación. Cuando la población va a hacer sus compras en las TRD, chocan con un pésimo servicio y productos de la mala calidad. Pero ahora no tienen otra opción estos establecimientos, porque desaparecieron los vendedores particulares. Y los militares son administradores ineficaces e incompetentes. Para Cuba actualidad: origenesmadiba@gmail.com Foto: Osmar Laffita

osmarlaffita-150x150Osmar Laffita

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PERSPECTIVE: OVERCOMING CUBA’S INTERNAL EMBARGO

Published in Current History, February 2015, here: INTERNAL EMBARGO 

See original essay here: Overcoming Cuba’s Internal Embargo

By Ted A. Henken and Archibald R.M. Ritter

In scores of interviews conducted over the past 15 years with Cuban entrepreneurs for our new book, “Entrepreneurial Cuba,” Arch Ritter and I often heard the following two very pregnant Cuban sayings:

El ojo del amo engorda el caballo” (The eye of the owner fattens the horse) and “El que tenga tienda que la atienda, o si no que la venda” (Whoever has a store should tend to it, and if not then sell it”).

The first adage indicates that the quality of a good or service improves when the person performing it enjoys autonomy and has a financial stake in the outcome. The second saying suggests that if the Cuban government is unable to “tend its own stores,” then it should let others take them over.

In essence, this popular wisdom demands that the state turn over to the private sector the economic activities it cannot operate effectively itself—many of which are already widely practiced in Cuba’s ubiquitous underground economy.

In other words, the U.S. embargo – recently dealt a near fatal blow by the joint decision by Presidents Barack Obama and Raúl Castro to reestablish diplomatic relations after almost 54 years – is hardly the principal “blockade” standing in the way of Cuba’s economic revitalization. Though the American “bloqueo” has long been the target of withering and well-deserved international condemnation, on the island Cubans themselves are much more likely to criticize what they bitterly refer to as the “auto-bloqueo” (internal embargo) imposed by the Cuban government itself on the entrepreneurial ingenuity, access to uncensored information and open communications, as well as basic civil and political rights of the Cuban people.

President Barack Obama has opened a door to potential U.S. investment in (and import/export to and from) Cuba’s entrepreneurial and telecom sectors. But is Raúl Castro willing to allow U.S. companies to operate on the island? More important still, is his government ready to open up to the Cuban people by beginning to relinquish its tight control over private enterprise and the Internet?

While we believe that it is both good and necessary for the United States to open up to Cuba and vice versa (to paraphrase the late Pope John Paul II), our book argues that little economic progress or political freedom will be enjoyed by Cubans themselves until the Cuban government opens up to its own people, ceases to demand their acquiescence as subjects, and begins to respect them as citizens, consumers, and entrepreneurs with defensible and inalienable economic and political rights of their own.

In fact, two weeks following the historic mid-December Obama-Castro announcement, the Cuban government received its first public test of whether its internal embargo would now be relaxed in light of the sea-change in U.S. policy. On December 30, the internationally renown Cuban artist Tania Bruguera organized a public act of performance art in Havana’s iconic Revolutionary Plaza. Dubbed “#YoTambienExijo,” Bruguera invited Cuban citizens to “share their own demands” on the government and visions for the island’s future for one minute each at an open-mic set up in the Plaza. Predictably, the government responded by arresting and detaining scores of artists, activists, and independent journalists, which amounted to an even more public “performance” of its own typically repressive tactics, as news of the event echoed in the international media on the final day of the year.

Thus, while we can celebrate the fact that the U.S. and Cuban governments have finally agreed to begin respectful, diplomatic engagement, the Cuban government’s failure to respectfully engage with the diverse and often dissenting voices of its own citizens makes us wonder with Bruguera whether “it’s the Cuban people who will benefit from this new historic moment,” as she put it in her previously circulated open letter to Raúl Castro.

Between 1996 and 2006, President Fidel Castro pursued an economic policy retrenchment that gradually phased out the pro-market reforms of the early 1990s, indicating that he was more aware of the political risks that popular entrepreneurship would pose to his centralized political control than of the economic benefits it could provide. Therefore, he was unwilling to transfer more than a token portion of the state “store” to private entrepreneurs.

His brother, Raúl Castro, whose presidency began in 2006, has significantly eased this resistance. While the underlying goal of economic reform is still to “preserve and perfect socialism,” he has started to deliberatively shrink the state “store” and transfer the production of many goods and services to the more than half-a-million new small enterprises, including both private and cooperative ventures.

However, much more remains to be done in reforming policies toward microenterprise so that it can contribute fully to productive employment, innovation, and economic growth. For example, 70 percent of the newly self-employed were previously unemployed, meaning that they likely converted previously existing underground enterprises into legal ones, doing little to absorb the 1.8 million workers slated for state-sector layoffs. Moreover, only 7 percent of self-employed are university graduates, and most of them work in “low tech” activities because almost all professional self-employment is prohibited. This acts a “blockade” on the effective use of Cuba’s well-educated labor force, obstructing innovation and productivity.

A further goal of the tentative reforms to date has been to facilitate the emergence of cooperative and small enterprise sectors so that they can generate sustained improvements in material standards of living. This can only be achieved with additional reforms that effectively “end the embargo” against Cuban entrepreneurs.

Among the necessary changes would be:

1. Opening the professions to private enterprise,

2. Implementing affordable wholesale markets,

3. Providing access to foreign exchange and imports (a fiercely guarded state monopoly),

4. Establishing effective credit facilities,

5. Permitting the establishment of retailing enterprises, and

6. Relaxing the tax burden on small enterprise, which now discriminates against domestic enterprise in favor of foreign investors.

Progress in all these areas would be greatly facilitated by access to U.S. investors and markets (both as a source of desperately needed wholesale inputs and as a place to sell their products), something now possible following the implementation of Obama’s historic policy changes during the coming year.

However, it remains to be seen whether Raúl has the political will to intensify the internal reform process. The outright prohibition of activities the government prefers to keep under state monopoly allows it to exercise control over Cuban citizens and impose an apparent order over society. However, this comes at the cost of pushing all targeted economic activity (along with potential tax revenue) back into the black market – where much of it lurked prior to 2010.

On the other hand, the inclusion and regulation of the many private activities dreamed up and market-tested by Cuba’s always inventive entrepreneurial sector would create more jobs, a higher quality and variety of goods and services at lower prices, while also increasing tax revenue. However, these benefits come at the political cost of allowing greater citizen autonomy, wealth and property in private hands, and open competition against state monopolies.

The viability of Cuba’s reforms also depends on the recently announced changes in U.S. policy toward Cuba and on Cuba’s changing policy toward its émigrés, who already play a major role in the Cuban economy as suppliers of start-up capital via the billions of dollars they provide annually in remittances. Such investment could be expanded if the Cuban government were to deepen its recent migration reforms by granting greater economic rights to its extensive émigré community.

Obama’s relaxation of U.S. policy will inevitably shift the political calculus that underlies economic reform on the island. As external obstacles to Cuba’s economic revitalization are removed, the onus will fall with increased pressure on the Cuban government to broaden and deepen its initial reforms, since it alone will be to blame for poor performance.

For example, organizations like Catholic Church-affiliated CubaEmprende have already begun to offer entrepreneurship workshops to small business owners with the financial backing of Cuban-Americans. Now that they needn’t worry about the threat of U.S. sanctions, will this and other similar projects be provided the legal and institutional space to flourish by the Cuban government?

Despite a continued state monopoly on the mass media and one of the Western Hemisphere’s lowest Internet penetration rates, in recent years Cuba has seen a number of significant developments in information and communication technology (ICT) capabilities, access to uncensored news, and the availability of new dissemination channels for digital data.

These developments include:

1. The spread of the worldwide blogging and citizen journalism phenomena to Cuba;

2. The connection of a fiber-optic Internet cable to the island from Venezuela in 2013, followed by the opening of 118 Internet cafés in June 2013 and access to e-mail via cell phone for the first time in 2014;

3. The appearance of a small number of independent, island-based news outlets – including the news and opinion websites Havana Times, On Cuba, and 14ymedio (launched by pioneering blogger Yoani Sánchez in May 2014);

4. The creation of a number of unauthorized “mesh” networks that use private Wi-Fi networks to communicate and share information, and

5. The emergence of an underground digital data distribution system known as “el paquete” (the packet).

Each of these developments could be accelerated by the new U.S. policy that allows American telecom providers to do business in Cuba, but only if the Cuban government is willing to allow diversification and freer competition in its centralized, monopolistic ICT system.

For example, the so-called “packet” phenomenon currently acts as an alternate, off-line Internet on the island making huge amounts of electronic data (CDs, DVDs, video games, books, “apps,” computer programs, news, and so forth) readily available for purchase in Cuba’s digital “black market.” While much data continues to circulate via thumb-drives, there is also a market for entire external hard drives of data bought and sold not in megabytes or gigabytes, but in terabytes – and all outside the rigid control of the state media production and distribution system – amounting to an indirect but very serious and effective challenge to the so-called “política cultural de la Revolución.”

This digital black market arises from the fact that many products—especially the latest electronic gadgets—are either priced far out of reach for most Cubans in “las tiendas estatales,” not sold at all, or even banned outright. More recently, the small but rapidly growing number of Cubans who have joined the smart phone revolution (often purchasing their Androids or iPhones via the blocked site Revolico.com, a Cuban version of Craig’s List) have benefitted from the proliferation of “apps” especially configured for Cuba’s peculiar off-line environment.

Undoubtedly, such a peculiar digital media environment will be fundamentally transformed if American data, service, and hardware providers were given access to the Cuban market. At the very least, prices are bound to fall, speed increase, and access expand, with the quality and quantity of digital ICT equipment improving.

A key recent development was the June 2014 trip of top Google executives to the island, including company co-founder Eric Schmidt, with the purpose of “promoting a free and open Internet.” To that end, they met both with leading cyber-activist Yoani Sánchez and government officials, while also interacting with students at Cuba’s University of Computer Science. Upon returning to the U.S., Schmidt declared that Cuba was trapped in the Internet of the 1990s and heavily censored, with American-engineered hardware and software losing out to Chinese ICT infrastructure.

He also reasoned that the U.S. embargo “makes absolutely no sense” if Washington’s aim is to open the island up to the freer flow of information. “If you wish the country to modernize,” Schmidt argued, “the best way to do this is to empower the citizens with smart phones and encourage freedom of expression and put information tools into the hands of Cubans directly.”

The greatly expanded telecom opportunities for U.S. companies and the decision to review the designation of Cuba as a state sponsor of terrorism, both included in December’s announcement to normalize relations, indicate that the Obama administration was convinced by Schmidt’s logic.

The slow pace and (so far) only marginally successful results of Cuba’s economic reforms to date has put the Cuban government under rising internal pressure to expand Internet services and from abroad to meet the needs of the new foreign investors it hopes to attract. This eventuality – now with the help of U.S. investment and technology – could positively impact the population’s access to the web.

At the same time, the government is clearly looking to the Chinese example as it contemplates ramping up its own Internet capabilities, hoping to remake the web in its authoritarian image and forestall any of its democratizing impacts.

Still, in the months following the Google visit, the company announced that it was unblocking island access to its free cloud-based Chrome search engine as well as popular applications such as Google Play and Google Analytics – a decision that could not have been made without tacit approval from the Obama administration. Events in 2015 will reveal how much further the Cuban government is willing to allow Google and other Internet and telecom companies to go.

While these digital developments are significant, it remains difficult to determine to what extent they will affect ordinary Cubans, given that the government itself estimates the Internet access rate at an extremely low 26 percent. Even this figure conflates access to the Internet with the island’s limited internal “intranet,” and counts sporadic access to e-mail in the same category as full access to the World Wide Web.

Moreover, while 118 new cyber-cafes opened across the island in June 2013, the service is a state monopoly available only to those able to pay in hard currency. Full access for one hour costs the equivalent of the average weekly salary. Thus, expanded access to ICT in Cuba takes place in a context of a connectivity that can be described as slow, expensive, and censored, with certain sites – such as 14ymedio – blocked outright.

Devices such as computers, tablets, and smartphones are scarce and costly; the purchase and importation of key equipment such as routers and other Wi-Fi technology are highly controlled. Indeed, it is still not legally possible for the vast majority of Cuban citizens to obtain a household Internet connection, and there is virtually no legal access on the island to wireless networks and fully functional mobile technology or smart phones with data plans, outside of international hotels and certain government institutions, and select educational facilities.

The government has recognized these limitations and made commitments to remedy them, but there is no clear timeline or way to hold the government or its telecom monopoly Etecsa accountable to citizens, consumers, or Cuba’s emerging class of private entrepreneurs.

Cuban citizens of all stripes are working to overcome the substantial obstacles to entrepreneurship and free expression. This effort, however, takes place in an asphyxiating climate of political polarization, where Cubans have been doubly blockaded by the U.S. embargo on one side and by the ongoing internal embargo on the other.

This is why the recent growth of domestic entrepreneurship and innovative engagement by Internet companies like Google is so significant. This new approach seeks to engage and empower the Cuban people directly while accepting some collateral benefit for the Cuban government, instead of aiming to undermine the government with a ham-handed embargo while accepting the collateral damage that such a policy inevitably has on the people.

Now that this approach has been reinforced by the Obama administration’s momentous decision to diplomatically engage Cuba as a way to further empower the Cuban people (making their lives, in the words of the president, a bit more fácil), the ball is clearly in Castro’s court.

Will he transform his initial economic reforms and marginal expansion of the Internet into change Cubans can believe (and even invest) in?

 

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CUENTAPROPISMO EN CUBA Y LAS IMPORTACIONES DESDE EEUU PARA CUBA

By Nora Gámez Torre

elnuevoherald.com, 22 January 2015

Original here: Cuentapropismo, Importaciones, Normalizacóin

La lista que el Departamento de Estado está confeccionando con bienes y servicios ofrecidos por empresarios cubanos privados que podrán ser importados en los Estados Unidos será amplia para estimular la creatividad de los “cuentapropistas” y el interés del gobierno de la isla por ampliar sus exportaciones, dijo una fuente que ha tenido acceso al borrador del documento.

Las nuevas regulaciones que comenzaron a regir el 16 de enero prevén el apoyo a los pequeños negocios, pero el Departamento de Estado debe decidir quiénes estarán comprendidos dentro de este sector privado y cuáles serían los productos a importarse desde la isla.

Una de las mayores limitaciones de la política económica actual respecto al “cuentapropismo”, como se designa el trabajo privado en la isla, es que de las 201 actividades ahora permitidas por el gobierno de Raúl Castro, la mayoría son oficios que requieren poca capacitación e infraestructura tecnológica —“vendedor ambulante de alimentos”, “rellenador de fosforeras” y “barberos” son algunos ejemplos— y el espacio para el empleo de profesionales es mínimo.

Por eso la fuente consultada por el Nuevo Herald cree que el Departamento de Estado no confeccionará la lista a partir de la legislación vigente, sino que intentará “abrir la puerta lo más amplia posible, para que sea el gobierno cubano el que decida si va a eliminar los obstáculos a los empresarios y, si esto no sucede, que ellos sepan que es por culpa del bloqueo interno”.

En la lista, que iría cambiando a partir de las dinámicas en Cuba, estarían incluidos servicios profesionales de traducción, programación o de construcción que no están autorizados actualmente en Cuba, por lo que se trata de “anticiparse un poco al futuro”, agrega.

Consultado al respecto, el profesor de Sociología de Baruch College, Ted Henken, cree que este enfoque es positivo pero “la gran pregunta es si esto tendrá impacto o si el gobierno cubano permitirá este intercambio”.

El profesor de Economía de la Universidad de Carleton en Canadá, Archibald Ritter, comentó a el Nuevo Herald que uno de los principales obstáculos para que Estados Unidos pueda apoyar a la empresa privada es el monopolio que tiene el estado sobre las importaciones y las exportaciones.

En las nuevas regulaciones, también se autoriza la exportación a Cuba de materiales de la construcción, herramientas y maquinaria agrícola a los cuentapropistas, pero según Ritter “esto requiere cambios en el monopolio del estado sobre el comercio exterior”, pues actualmente no existe un mecanismo que permita que los empresarios privados puedan importar o exportar. Tampoco existe un mercado mayorista donde ellos puedan adquirir sus insumos.

En la nota de la Agencia de Información Nacional sobre las nuevas regulaciones, el único reporte que fue publicado en todos los medios nacionales, no se hace referencia a la posibilidad de exportación de productos cubanos hacia Estados Unidos, provenientes del sector privado.

También se hace notar que “se mantienen las restricciones a las exportaciones de Estados Unidos a Cuba, especialmente de productos de alta tecnología, con excepción de limitadas ventas de materiales de construcción, equipos e implementos agrícolas que se permitirán realizar a particulares, al parecer a través de empresas cubanas”.

Y según la fuente consultada por el Nuevo Herald, el Departamento de Estado estaría considerando utilizar a una empresa estatal cubana como intermediaria, si se ofrecen garantías de que los productos y materias primas llegarán a manos de los cuentapropistas.

Presentación de libro sobre cuentapropismo en Cuba

Ritter y Henken son expertos en el tema y publicaron una investigación sobre el cuentapropismo titulada Cuba empresarial: un contexto de políticas cambiantes, que será presentada el viernes en la libraría Books and Books a las 6:30 pm, un evento auspiciado por el Cuban Research Institute de la Universidad Internacional de la Florida.

En el libro, en el que realizan una comparación entre las políticas de Fidel y Raúl Castro sobre la empresa privada, Ritter y Henken hacen un balance del estado de esa actividad en la isla y advierten de los altos impuestos, y la “discriminación” en términos fiscales que favorece a empresas mixtas con capital extranjero.

Si la liberalización del cuentapropismo tenía como objetivo absorber el millón de trabajadores de la economía estatal que Raúl Castro consideró como “redundantes”, a los que se les llama eufemísticamente como “disponibles”, los autores del libro concluyen que esta meta no ha sido alcanzada. Más bien, argumentan, el cuentapropismo ha venido a legalizar muchas actividades que trascurrían en el mercado informal.

Aunque según estadísticas del Ministerio de Trabajo y Seguridad Social hasta septiembre del 2014, el número de empleados en estas actividades aumentó a 471,085 en todo el país, cifras de la capital hasta marzo de ese mismo año indicaban que solo 63 de los cuentapropistas registrados habían perdido sus empleos (“disponibles”). El 15 por ciento de los cuentrapropistas habaneros eran también trabajadores estatales mientras que el 63 por ciento, cerca de 80,000, no tenían “vínculo laboral previo”, según publicó el portal oficial Cubadebate.

Los autores señalan que aunque en la prensa se ha comenzado a eliminar el estigma en torno a la empresa privada, el cierre de negocios exitosos, sobre todo paladares, apunta a que la acumulación de capital todavía no es bien vista por las autoridades.

Ritter y Henken concluyen que aunque la reforma de Raúl Castro ha sido significativa, “no es suficiente” para promover el desarrollo económico a gran escala y que medidas que permitan un mayor protagonismo de la diáspora así como mayores garantías y beneficios a la pequeña y mediana empresa son indispensables.

 More Cuenta Propistas

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NOW THAT WASHINGTON HAS BEGUN TO DISMANTLE ITS TRADE EMBARGO, HAVANA MUST END ITS INTERNAL EMBARGO AGAINST ISLAND ENTREPRENEURS

Ted A. Henken, Associate Professor of Sociology and Latin American Studies at Baruch College, New York City, and, Archibald R.M. Ritter, Economics and international Affairs,  Carleton University,  Ottawa

Huffington Post, January 20, 2015

Original Article here: INTERNAL EMBARGO

In scores of interviews conducted over the past 15 years with Cuban entrepreneurs, we often heard the following saying: “El que tenga tienda que la atienda, o si no que la venda” (Whoever has a store should tend to it, and if not then sell it). This pungent adage demands that the government turn over to Cuba’s burgeoning private sector those economic activities it cannot operate effectively itself — many of which are already widely practiced in Cuba’s ubiquitous underground economy.

In other words, the U.S. embargo — recently dealt a near-fatal blow by the joint decision by Presidents Barack Obama and Raúl Castro to reestablish diplomatic relations after almost 54 years — is hardly the principal “blockade” standing in the way of Cuba’s economic revitalization. Though the American “bloqueo” has long been the target of withering and well-deserved international condemnation, on the island Cubans themselves are much more likely to criticize what they bitterly refer to as the “auto-bloqueo” (internal embargo) imposed by the Cuban government itself on the entrepreneurial ingenuity and basic civil and political rights of the Cuban people.

While it is good and necessary for the United States to open up to Cuba and vice versa (to paraphrase the late Pope John Paul II), little economic progress or political freedom will be enjoyed by Cubans themselves until the Cuban government opens up to its own people, ceases to demand their acquiescence as subjects, and begins to respect them as citizens, consumers and entrepreneurs with defensible and inalienable economic and political rights of their own.

In fact, two weeks following the historic mid-December Obama-Castro announcement, the Cuban government received its first public test of whether its internal embargo would now be relaxed in light of the sea-change in U.S. policy. On December 30, 2014, the internationally renowned Cuban artist Tania Bruguera organized a public act of performance art in Havana’s iconic Revolutionary Plaza. Dubbed “#YoTambienExijo,” Bruguera invited Cuban citizens to “share their own demands” on the government for one minute each at an open-mic set up in the Plaza.

Predictably, the government responded by arresting and detaining scores of artists, activists and independent journalists, which amounted to an even more public “performance” of its own typically repressive tactics, as news of the event echoed in the international media on the final day of the year. Thus, while we can celebrate the fact that the U.S. and Cuban governments have finally agreed to begin respectful, diplomatic engagement, the Cuban government’s failure to respectfully engage with the diverse and often dissenting voices of its own citizens makes us wonder with Bruguera whether “it’s the Cuban people who will benefit from this new historic moment,” as she put it in her open letter to Raúl Castro.

Before 2006, President Fidel Castro pursued an economic policy retrenchment that gradually phased out the pro-market reforms of the early-1990s, indicating that he was more aware of the political risks that popular entrepreneurship would pose to his centralized political control than of the economic benefits it could provide. Therefore, he was unwilling to transfer more than a token portion of the state “tienda” to private entrepreneurs. However, his brother Raúl Castro, whose presidency began in 2006, has begun to heed the popular wisdom cited above and deliberatively shrink the state “store,” transferring the production of many goods and services to small private and cooperative enterprises. In fact, the number of Cuba’s licensed self-employed has grown from less than 150,000 in 2010 to half-a-million today.

Still, much more needs to be done so that Cuban entrepreneurs can contribute fully to economic growth. For example, 70 percent of the newly self-employed were previously unemployed, meaning that they simply likely converted their clandestine enterprises into legal ones doing little to absorb the 1.8 million workers slated for layoff from the state sector. Moreover, only seven percent of self-employed are college graduates and most them work in low-tech activities because almost all professional self-employment is prohibited. This acts as an effective “blockade” on the productive use of Cuba’s well-educated labor force.

Effectively “ending the embargo” against Cuban entrepreneurs and facilitating the emergence of cooperative and small-enterprise sectors will require deeper, more audacious reforms. Among these changes is

  • opening the professions to private enterprise;
  • implementing affordable wholesale and credit markets;
  • ending the fiercely guarded state monopoly on imports, exports and investment;
  •  permitting the establishment of retailing enterprises; and
  • relaxing the tax burden on small enterprise, which currently discriminates against domestic enterprises in favor of foreign firms.

 Progress in all these areas would be greatly facilitated by access to U.S. investors and markets, which will soon become possible as Obama’s historic policy changes are implemented during 2015.

However, does Raúl have the political will to double-down on his reforms? The prohibition of activities the government prefers to monopolize allows it to exercise control over Cuban citizens and impose an apparent order over society. However, this comes at the cost of pushing all targeted economic activity (along with potential tax revenue) back into the black market — where much of it lived prior to 2010. On the other hand, the legalization and regulation of the many private activities dreamed up and market-tested by Cuba’s inventive entrepreneurial sector would create more jobs, a higher quality and variety of goods and services at lower prices, while increasing tax revenue. However, these benefits would come at the cost of allowing greater autonomy, the concentration of wealth and property in private hands, and open competition against long-protected state monopolies.

This post is part of a Huffington Post blog series called “90 Miles: Rethinking the Future of U.S.-Cuba Relations.” The series puts the spotlight on the emerging relations between two long-standing Western Hemisphere foes and will feature pre-eminent thought leaders from the public and private sectors, academia, the NGO community, and prominent observers from both countries. Read all the other posts in the series here.

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Photographer with museum quality camera at the front of the Capitolio

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Restaurant Metropolis, 19 y “L”, Vedado,  with its menu on display  (below)

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Bicytaxis

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Vegetable and Fruit Vendor, Central Havana

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CUBA’S LATEST REVOLUTIONARY TREND: FINE DINING

By Tim Johnson

McClatchy Foreign Staff, January 13, 2015

Original here: Cuba’s Culinary Revolution

Cuba Mar 2011 038The “Dona Eutimia” Paladar, by the Plaza de la Catedral (photo by A. Ritter)

HAVANA — Private restaurants in Havana are exploding in number and soaring in quality, providing a treat for visitors and a surprising bright spot in a nation better known for monotonous food and spotty service.

Havana now boasts nearly 2,000 private restaurants offering a range of cuisine from traditional Cuban to Russian, Spanish, Vietnamese and other ethnicities. From caviar to lobster bisque and on to pizza, everything seems to be available. Usually set in private homes, some of the restaurants offer Old World charm with starched white tablecloths and real silverware. Heirlooms fill shelves. Other restaurants hunker in basements or peer from walk-up seafront buildings, sometimes with funky or retro décor.

“Gastronomy is on the rise in our country,” said Jorge Luis Trejo, son of the proprietors of La Moraleja, a restaurant in Havana’s Vedado district with wild rabbit flambé and chicken confit on the menu. His family’s restaurant opened in January 2012. Donning the chef’s apron is a cook who once worked in France, the Netherlands, Greece and England, Trejo said.

“We try to make traditionally Cuban dishes with fusion sauces to entertain our clients,” he said.

At the end of each meal, waitresses carry a humidor to diners and offer them a choice of complimentary hand-rolled cigars.

Private restaurants first arose in Cuba in 1993 amid the collapse of the Soviet Union, Cuba’s longtime patron, only to be reined in as authorities worried that small eateries were relying on pilfered supplies and surpassing the legal limit of 12 chairs, essentially three tables. The restaurants were known as paladares, a Spanish and Portuguese word that means palates, a moniker taken from the establishment of a food vendor in a popular Brazilian soap opera. For periods in the 1990s, small restaurants could offer neither seafood nor beef, which were needed for the official tourist industry. Owners were ordered to buy at retail prices in official stores. Most employees had to be family members.

Those rules drove most restaurants out of business, choking them with a web of taxes and arbitrary enforcement that underscored how wary Cuba’s communist officials were of private enterprise. By 2010, state media reported that as few as 74 private restaurants were operating in Havana.

Then things began to change. Fidel Castro’s brother, Raúl, who’d taken control of the government, ordered more flexible rules for restaurants at the end of 2011, raising the limit on chairs to 50 and issuing new licenses. There are still rules to be skirted, and supplies can be hard to come by, but a rebirth is taking place.

“There’s undeniably a boom, a significant increase in both the numbers of people who have licenses in the food service area and the emergence of a haute cuisine, or as they say in Cuba cocina de autor,” or creative nouvelle cuisine, said Ted Henken, a Cuba expert at Baruch College in New York who’s written about the phenomenon.

Today, Havana is dotted with private restaurants with elaborate menus, identifiable only by single small signs on the outsides of buildings.

In Cuba’s moribund economy, bad service is the norm in most offices, hotels and state-run businesses, but not in the private restaurants, which often have the cozy feeling of private dining since they occupy what once were people’s homes.

“You feel like, ‘Oh, I’m in someone’s old living room, and sipping a mojito,’ ” Henken said.

It’s a feeling that more Americans may experience. On Dec. 17, President Barack Obama and Raúl Castro announced the re-establishment of diplomatic relations, broken in 1961. Obama also said he’d further relax restrictions on U.S. citizens’ travel to Cuba without lifting the long-standing trade embargo, which only Congress can do.

The easing of U.S. rules will include permitting U.S. banks to accept credit card transactions conducted in Cuba. Many Cuban restaurateurs await a growing flow of American visitors.

At Paladar Los Mercaderes, which sits on a bustling pedestrian street in renovated Old Havana, handsome waiters in crisp black uniforms buttoned to the neck take orders in a multitude of languages. Modern Cuban art adorns the walls. Musicians croon Cuban ballads as breezes waft through the high-ceilinged rooms. Among the entrees, one could pick from smoked pork loin in plum sauce ($15.75), filet mignon in mushroom sauce ($18), shrimp risotto ($17) or a grilled seafood platter with lobster tail (variable price), among other dishes.

“We built a restaurant like one we’d like to go to,” said Yamil Alvarez, one of three owners of the business, which opened in December 2012. “We bet on hiring young people who are well educated but without any experience.” “We’ve got boats fishing for us, so we always have fresh fish. We’ve got a contract with a farm for fresh produce,” said Alvarez, an engineer who was once a guide at a cigar factory.

While Alvarez aims for a bit of glam, or what he labels a “unique experience,” other restaurants shoot for different diners, mostly foreign but also some Cubans with access to hard currency.

El Litoral, a trendy spot on the seaside boulevard in Vedado, is filled nightly with diplomats, artists, well-heeled tourists and a smattering of Cubans. Opened a year ago, the restaurant offers a high-end menu that includes a soupçon of molecular cooking (foams), puff pastry entrees, a roasted seafood platter, and a kebab of shrimp and bacon in the fresh split-pea soup, among other offerings.

A different clientele comes to Nazdarovie, mainly those with connections to the former Soviet bloc but also those drawn by Soviet kitsch. The name is a toast to one’s health.  “This restaurant is inspired by the memories and nostalgia felt by the thousands of Cubans who spent many years of their youth studying in the USSR,” the menu notes.

A bust of Lenin peers out from the bar. Copies of Sputnik, a magazine, and matryoshka dolls fill shelves. In a decidedly modern touch, big red art deco lamps shine above deep black tables. A terrace looks out on the sea. The food, far from bland, includes borscht, stroganoffs, chicken tabaca and the shashlik kebabs popular in Eastern Europe.

“The chef is Cuban but he studied at the Cordon Bleu school in Miami,” said Yansel Sergienko, a 22-year-old bartender sporting a visorless Soviet naval cap.

There still is a Wild West feel to Havana’s private dining scene. Many restaurateurs must skirt the rules to keep their larders filled, employing “mules” who travel to Mexico, Spain and Florida to bring back supplies and more exotic ingredients. Until the Castro government gets out of the way of the growth and clarifies regulations, the Havana restaurant scene won’t truly take off, experts say.

“You have to be partly a wily rule bender” to keep restaurants in business, Henken said, “and that needs to be solved before Havana becomes a tourist draw for people on the culinary circuit. . …….. . Now it’s more of a curiosity than an eater’s paradise.”

Cuba Mar 2011 066

Quasi-Paladar Restaurant in the Barrio Chino

Cuba Mar 2011 030Hotel Inglaterra Bar: Great State Sector Restaurant Decor (Photos by A. Ritter)

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