Girish Gupta

HOME

BY COUNTRY

Brazil
Colombia
Cuba
Ecuador
Egypt
Guyana
Iraq
Jordan
Lebanon
Mexico
United Kingdom
Venezuela

BY MEDIUM

Text
Photo
Radio
TV/Video

BY PUBLISHER

Al Jazeera
BBC
BuzzFeed
CBC
Christian Science Monitor
CNN
Daily Mail
Datum
Ecologist
Economist Intelligence Unit
Emerging Markets
Financial Times
Foreign Policy
France 24
Fusion
GlobalPost
Guardian
Independent
La Prensa (Panama)
LatinFinance
Mancunion
Monocle
National (Abu Dhabi)
New Internationalist
New Statesman
New York Times
New Yorker
NPR
PBS
PRI
Radio France Internationale
Reuters
RTE
Sky News
Sun
Sunday Times
Telegraph
TIME
Times of London
USA Today
Vice
WLRN

ABOUT

About
CV
Contact (PGP Key)

Twitter
Facebook
LinkedIn
Cuba cautiously dips toe into capitalism
Jun. 08, 2012 — Bay of Pigs, Cuba

Published by USA Today [PDF]

Sitting at a wooden table at his 3-week-old restaurant, Saturnino Morrejon Ramos surveyed the turquoise water of this inlet on the Caribbean off Cuba's southern coast.

"I still remember the gunfire," Ramos, 64, said, referring to the failed, CIA-backed invasion by Cuban exiles to depose the regime of Fidel Castro in 1961.

Ramos and others like him are taking part in a decidedly capitalistic change in Cuba in which the communist rulers have relaxed state control of the economy to generate wealth. Results appear mixed because of high taxes on profits and restrictions on economic freedoms that could lead to demands for political liberties.

Ramos is happy about the changes. The tables, chairs and kitchen of the restaurant atop his house were bought using $5,000 worth of remittances, or cash that the family gets from relatives in the USA.

"It's definitely worth paying the taxes to the government because we're earning more money," he said, admiring both the view and the fish caught yards away that lay grilled on the plates of diners. "Everyone's pleased the government has allowed this."

Private restaurants such as this are known as paladares. They first appeared in the early 1990s soon after the Soviet Union collapsed, taking with it the financial aid and subsidized fuel that propped up the Cuban economy.

The private restaurants in people's homes were permitted grudgingly by the Castro government to help Cubans contend with the poor economy, which has for decades been subjected to a rigid socialist state that forbids private enterprise.

After an ailing Fidel stepped back from power in 2006, his brother and now president, Raúl Castro, slowly began to relax state controls on commerce. Political repression and denial of rights of speech remain intact, but in an attempt at a China-style system, Raúl has tried to encourage a private sector. Cuba began by cutting more than 20% of the government-employed workforce, which was largely relegated to phantom jobs to make the claim that Cuba's social model created 100% employment. Castro allowed for an increased number of cuentapropista, or self-employment licenses, to spur more small businesses.

The licenses come with fixed amounts of taxes, regardless of the profits made, and restrictions on how many people can be hired.

Only enterprises that hire unskilled workers, such as restaurants and street vendors, are eligible for the licenses. Professionals such as doctors and architects are banned from expanding their practices.

Raúl Castro defended the pace of the changes, saying, "It is proceeding without haste, so that we don't make new mistakes."

There have been some noticeable changes. Farmers have been able to lease government land, and Cubans can buy and sell cars and property. Private guesthouses, normally a spare room in someone's house that tourists can rent for the night, are found all over Havana.

One license-holder who was popping and bagging popcorn for sale on the street said the changes are not without problems. He said he rents out a room in his home, but more than half of the $20-a-night he charges must go to the government even if the room is vacant.

"The state earns more money from my business than I do," he said, asking that his name not be published for fear of reprisal from the government.

The Cuban government says the level of taxation is necessary to subsidize health care, education and telephone, electricity and water services. Cuban economist Oscar Espinosa Chepe said the taxes are so high that only the tiniest of enterprises can form.

"The reforms are not sufficient; they could be done much quicker," he said. "This government is trying to give the impression that it's changing, but the country is on the edge of a cliff."

Few newer-model cars are seen on the streets of Havana, shelves of stores are bereft of goods and shortages of food are common. Still, driving a taxi or running a guesthouse can be lucrative compared with surviving on state salaries alone.

Payments to private enterprises are made not with the low-value Cuban peso that public employees receive but the Cuban convertible peso, a currency roughly equivalent to the U.S. dollar. Given that the average wage in Cuba is $18 a month, the Cubans who are licensed to run a business are creating an inversion of social norms in the country, Espinosa says.

"A porter in a hotel or a taxi driver can earn more than a Cuban doctor," he said. "And they have a grandiose view of themselves. It's a joke."

Espinosa worries that none of the economic changes will survive should Cuba lose the patronage of Venezuelan President Hugo Chávez, who has used his nation's oil wealth to replace the Soviet Union as Cuba's benefactor.

Espinosa says even the catastrophic loss of welfare from Venezuela would not prompt the Castros to open the economy in full fashion.

"The problem is that the government is scared," said Espinosa, who was imprisoned in 2003 for 18 months for allegedly receiving money from abroad and possessing newspaper clippings about meetings between representatives of the United States and Cuban dissidents. "They know that economic freedom is linked to political freedom."

Filed from
Bay of Pigs, Cuba






More...

On Cuba's New Relationship with the US
Dec. 21, 2014


How Hugo Chavez helped bring the US and Cuba closer together
Dec. 19, 2014


How Venezuela’s Collapse Helped Thaw Cuban-American Relations
Dec. 18, 2014


Venezuela's role in warming Cuba - US relations
Dec. 17, 2014


Photos from Cuba
Sept. 03, 2013


Cuba's Journey on the Internet: There's a Long March Ahead
Aug. 14, 2013


On Cuba's Fledgling Real Estate Industry
Aug. 11, 2013


As Communist Cuba Reforms, Capitalism Slowly Takes Hold of Its Real Estate Market
Jul. 24, 2013


Cubans line up for the chance to leave
Jan. 14, 2013


Havana scraps exit visas, but most Cubans won't be going abroad
Jan. 14, 2013


Blogger gets whiff of Cuba libre as curbs on leaving island are eased
Jan. 13, 2013


Cubans can leave, but to where and with what?
Nov. 11, 2012


Outrage, disbelief over latest dissident arrests
Nov. 09, 2012


Cuban dissident blogger Yoani Sánchez talks US election
Nov. 06, 2012


Cuba cautiously dips toe into capitalism
Jun. 08, 2012








© Girish Gupta