Cuba libre - Entrepreneurs make most of new freedom

Cuba libre: Entrepreneurs make most of new freedom
Published: Friday, 12 Jul 2013 | 12:53 PM ET
By: Michelle Caruso-Cabrera | CNBC Chief International Correspondent

In just one block of Montes Street in Havana—among the dilapidated
sidewalks, cracked windows and rusting window bars—nearly a dozen
entrepreneurs are making a go at building their own small businesses.

Nancy Rodriquez and Llaumara Rey, both in their 40s, beamed in front of
their offerings—religious statues and amulets that they say are selling
like gangbusters. They didn't want to discuss their business's finances,
but when asked if they are making more money now than when they worked
for the state, they gave very certain, self-assured nods.

Next door, 55-year-old Maria Del Carmen is having a tougher go of it.
She just opened shop two months ago, selling plumbing pipes, but she's
already thinking of quitting. "It's much harder than I thought it was
going to be," she said.

Passers-by stopped constantly to inquire about prices for the small
pipes and elbows they so desperately need to fix up the millions of
run-down homes on the island. Some even bought from Del Carmen's
inventory, but apparently not enough of them. After she paid the monthly
tax to the state to have the shop, along with her social security taxes,
she said it isn't much better than her previous job in a state-run
restaurant.

That isn't stopping her neighbor, 26-year-old Luis Enrique, who was
setting up shop next door. He feverishly painted a new shop where he
plans to sell pizza. Enrique said he is certain he is going to make a
lot more money than working for the state, because he's seen his friends
do it. Right now, he makes $15 a month working in a state-run warehouse,
but he's seen his friends make double that. "I can't wait to open," he said.

To an American, the scene would probably look like a giant flea market,
but in Cuba, it's the seed of something perhaps much bigger: a society
less dependent on the state. The shops are the result of a new law
passed in Cuba just a few years ago allowing individuals to be
self-employed for the very first time. Until then, workers were
permitted to work only for the state, and all businesses were owned by
the government.

In 1959, Fidel Castro ran a successful guerrilla war that took over the
country. Originally he said he wasn't a communist, but Castro almost
immediately began seizing private business, nationalizing companies and
eventually putting every sphere of the economy under government control.

For roughly 50 years, every company sent all of its revenue to the
state, and nearly every worker made the same amount of money, regardless
of their job.

Now the economy is in shambles, the island a dilapidated backwater of
decaying buildings that are still standing only because their original
construction was of such high quality.

The Cuban government, now under the control of Fidel's brother, Raul,
appears to have finally cried uncle. Marino Murillo Jorge, the former
minister of the economy, told reporters this week that "Life has taught
us the state cannot occupy all the space in the economy."

Skeptics and critics, including dissidents living on the island, say the
economic changes are too small to be meaningful and have been carried
out for only one reason: for the socialist regime to remain in power.
Critics say the charges are more about letting air out of a growing
balloon of discontent.

Murillo himself told reporters this week that the biggest and most
important companies in the country would always be controlled by the
state. Rather than privatizing them, he said, "the government will
create the conditions in which those companies can be more efficient."
That means letting them keep up to 50 percent of their revenue, to be
used for higher salaries or reinvestment.

Murillo is almost dismissive of the small businesses, saying they will
play a small part in the future of the Cuban economy.

On Montes Street, toiling amid the smell of fresh paint, those small
entrepreneurs are clearly thinking much bigger.

—By CNBC's Michelle Caruso-Cabrera. Follow her on Twitter @MCaruso_Cabrera.

Source: "Cuba libre: Entrepreneurs make most of new freedom" -
http://www.cnbc.com/id/100882646