Maggie Alarcón

Cuban Economic Reforms Speed Up as U.S. Policy Falls Further Behind the Times

In Cuba/US, Politics on August 1, 2011 at 3:50 pm

Falling behind the times...

Anya Landau French

While Washington has so far spent the better part of 2011 wrangling over how to contain a soaring deficit and set the federal budget on a more sustainable path, Cuban policymakers have continued their quest to reorganize the Cuban economy before government costs and citizens’ unmet needs finally break a system long recognized as unsustainable.

Small scale budding clothing manufacture.

“Updating” Cuba’s economy (“reform” is a word more often employed by outside observers to understand what’s at work in Cuba right now) has required harnessing productive energies of a newly emerging private sector to deliver goods and services best provided by it, so that the state can focus what resources it has on essential sectors such as education and healthcare.

One of the three main private owned furniture retail producers in the capitol.

This has entailed encouraging small private entrepreneurs – cuentapropistas – many of them in the service sector, to work in nearly 200 trades, and, it’s long been expected, turning over the retail sector to the private sector in the form of cooperatives. Much updating remains to be done to make these changes really work and work well – such as providing access to credits, creating wholesale markets for the new businesses, building a tax code to regulate the new businesses without stifling them, and, most elusive of all, creating conditions under which Cuban customers will have the purchasing power to help establish these businesses.

Prviate initiative expanding on the island. Lamps made of polyurethane.

But we haven’t seen much change in terms of retail sector cooperatives since the state first began experimenting two years ago with authorizing barbershop and salon employees to rent their spaces, buy their own materials, pay taxes and charge whatever the market will bear. Come October, Cuba’s government daily, Granma, reports more businesses, such as locksmiths, cafeterias and coffeeshops, will join the experiment, and begin leasing underutilized streetside shop space currently occupied by the state. Hopefully the list of newly cooperatized businesses will be substantial. And, hopefully, the salon experiment has taught government regulators what worked well and what didn’t.

Much remains to be done in Cuba’s economic restructuring process, and not surprisingly, Cubans grumble both at the slow pace of change and the pain of essential changes that hurt in the short run. Yet, considering the starting point (with the state running even the tiniest bodega), that the process continues is very encouraging. This week, Cuba’s parliament is expected to pass legislation to adopt many of the economic changes that have been under consideration for months.

With all of this change underway on the island, it’s starkly apparent that U.S. policy, and its most ardent backers of retrograde restrictions, are woefully behind the curve. Two proposals passed in the House in the last month, offered by hardline Cuban Americans, which seek to stop the flow of U.S. dollars they say only help the Castro government, would actually hamstring the budding private sector in Cuba. Opponents of travel to Cuba, particularly by Cuban Americans who can freely make multiple trips, complain that these travelers are gaming the system, by using their freedom to travel to carry merchandise to the island, and end up in the Castros’ coffers. But, where does this merchandise really end up? In newly authorized Cuban storefronts these days, where they compete with overpriced goods in state dollar stores.

Stopping the flow of Cuban Americans, then, not only interferes with the basic right to travel, but also would put a monkeywrench in the growth of smal private businesses on the island. What’s so amazing about this dynamic is that slowly, many Cuban Americans are “normalizing” relations with their brethren on the island, and with an emerging private sector they are helping to build. As one Miami resident who won’t return to Havana with the Castros still in power told the AP’s Laura Munoz-Wide of the new generation of Cuban Americans who do return to the island, “”These days, I’m the exception, [t]hey’re status quo.”

Originally published in THE HAVANA NOTE

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