Cuba is making a big step toward capitalism

Cuba is making a big step toward capitalism
Michael Weissenstein, Associated Press

HAVANA (AP) — Cuba announced Tuesday that it will legalize small- and
medium-sized private businesses in a move that could significantly
expand private enterprise in one of the world's last communist countries.

Cuban business owners and economic experts said they were hopeful the
reform would allow private firms to import wholesale supplies and export
products to other countries for the first time, removing a major
obstacle to private business growth.

"This is a tremendously important step," said Alfonso Valentin Larrea
Barroso, director-general of Scenius, a cooperatively run economic
consulting firm in Havana. "They're creating, legally speaking, the
non-state sector of the economy. They're making that sector official."

While the government offered no immediate further details, the new
business categories appear to be the next stage in reforms initiated by
President Raul Castro after he took over from his brother Fidel Castro
in 2008. While those reforms have allowed about half a million Cubans to
start work in the private sector, the process has been slow and marked
by periodic reversals.

The government has regularly cracked down on private businesses that
flourish and compete with Cuba's chronically inefficient state
monopolies. The latest backlash came after President Barack Obama met
private business owners during his March 20-22 visit to Cuba, prompting
hard-line communists to warn that the U.S. wants to turn entrepreneurs
into a tool to overturn the island's socialist revolution.

The Communist Party documents, published in a special tabloid sold at
state newsstands Tuesday, said a category of small, mid-sized and
"micro" private business was being added to a master plan for social and
economic development approved by last month's Cuban Communist Party
Congress. The twice-a-decade meeting sets the direction for the
single-party state for the coming five years.

The 32-page party document published Tuesday is the first comprehensive
accounting of the decisions taken by the party congress, which was
closed to the public and international press. State media reported few
details of the debate or decisions taken at the meeting but featured
harsh rhetoric from leading officials about the continuing threat from
U.S. imperialism and the dangers of international capitalism.

That tough talk, it now appears, was accompanied by what could be a
major step in Cuba's ongoing reform of its centrally planned economy.

"Private property in certain means of production contributes to
employment, economic efficiency and well-being, in a context in which
socialist property relationships predominate," reads one section of the
"Conceptualization of the Cuban Economic and Social Model of Socialist
Development."

Vanessa Arocha, a 56-year-old architect who makes hand-made purses and
bags at home under a self-employed worker's license, said she dreamed of
forming a legally recognized small business that could import supplies
and machinery and hire neighbors looking for extra income.

"I could import fittings, zippers, vinyl," she said. "Being a small
business would be a new experience, one we know little about, but
something very positive."

The government currently allows private enterprise by self-employed
workers in several hundred job categories ranging from restaurant owner
to hairdresser. Many of those workers have become de-facto small
business owners employing other Cubans in enterprises providing vital
stimulus to Cuba's stagnant centrally planned economy.

The Cuban government blames the half-century-old U.S. trade embargo on
Cuba for strangling the island's economy. Cuba's new class of
entrepreneurs say the embargo is a major obstacle but also lodges
frequent, bitter complaints about the difficulties of running a business
in a system that does not officially recognize them.

Low-level officials often engage in crackdowns on successful businesses
for supposed violations of the arcane rules on self-employment. And the
government maintains a monopoly on imports and export that funnels badly
needed products exclusively to state-run enterprises.

Due to its dilapidated state-run economy, Cuba imports most of what it
consumes, from rice to air conditioners. Most private businesses are
forced to buy scarce supplies from state retail stores or on the black
market, increasing the scarcity of basic goods and driving up prices for
ordinary Cubans. Many entrepreneurs pay networks of "mules" to import
goods in checked airline baggage, adding huge costs and delays.

The latest change will almost certainly take months to become law. Such
reforms typically require formal approval by Cuba's National Assembly,
which meets only twice a year.

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Michael Weissenstein on Twitter: https://twitter.com/mweissenstein

Source: Cuba to legalize small and medium-sized private businesses -
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