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SMALL BUSINESS Cuba allows private enterprise, but on a very restricted
By MARC LACEY
Published: September 18, 2010
For first-time visitors, one of the most striking things about Cuba is
the lack of advertising on the landscape. The Socialist government has
billboards bearing Fidel Castro's likeness and his most quotable
quotations. But one does not see roadside signs pitching much else.
That could change with the Cuban government's eye-popping announcement
last week that it will cut the government work force by 10 percent and
expects the hundreds of thousands of laid-off workers to find places in
a new system that has a resemblance to free enterprise.
Could the Cuba of the not-too-distant future feature signs touting
"Joel's Moving Company," "Dayana's Furniture Repair," "Julio's Boutique"?
Probably. And there will be other changes, bigger and more wrenching, if
harder to see. On a scale not known for half a century, Cubans will be
hiring other Cubans for small-scale enterprises, creating boss-employee
relationships without the direct involvement of the Communist Party. The
idea of receiving a paycheck whether one loafs, sleeps or shows up at
all will be under a new challenge. And it is possible that creating a
cadre of quasi-capitalists could unleash forces that the Castros or
their successors will prove unable to control.
But is Cuba approaching a transformation of the kind that swept Russia
and China? It is tempting to imagine so, if only because the news about
a move to private employment seems so startling.
Nevertheless, experts on Cuba warn against reading any such far-reaching
expectations into last week's announcement, no matter how ambitious a
task it seems to recondition Cubans for a system that will require some
to sink or swim.
Yes, the Castro government is acknowledging a deep problem. But it has
also always linked its core ideology to its fear and disdain of the
United States and the American economic system. So its ferocious pursuit
of independence from American economic influence — even as it denounces
Washington's embargo on trade — would make a radical shift to joining
the global free-trade system that the United States dominates
particularly difficult to explain.
A Cuban sociologist, Haroldo Dilla, predicts that in the end the new
system will not enable Cubans to rise too far out of poverty, and that
the government will resist a true economic opening with the world.
Which is not to say that the leadership wants no change at all. Over the
two decades since Communism collapsed in the Soviet Union, Cuban
officials have visited Russia, Vietnam and China and undoubtedly have
taken some lessons from each. President Raúl Castro has made it plain
that he views Mikhail Gorbachev's efforts to reinvigorate the Soviet
political system, which led to Communism's collapse, as a cautionary
tale. The mix of consumerism and authoritarianism that one finds in
Vietnam and China is presumably a more palatable model — privatization,
but with the state in firm control.
Still, the plan announced so far is much more modest than what the Asian
countries have done. Instead, it seems designed simply to boost Cuba's
economic productivity in small-scale enterprises and thus loosen up a
state-run economy and work force that have been sputtering for more than
a decade. That goal is in line with what Raúl Castro himself said last
month: "We have to erase forever the notion that Cuba is the only
country in the world where one can live without working."
The announcement of layoffs also does not represent the first time that
Cuba has experimented with privatization. A host of small-scale
occupations is already allowed on the island, including pizza
deliverymen and party clowns. And Cubans can, if they jump through
enough bureaucratic hoops, open restaurants in their homes or house
guests in spare bedrooms.
It would be far more difficult for either Fidel or Raúl Castro to
emulate their neighbors in the Caribbean, without challenging the basic
precepts of the Cuban revolution. For decades now, many of those
countries have been taking advantage of their ties to the West and the
United States to diversify their economies. Cuba, instead, continued to
rely on one export commodity — sugar — which the Soviet Union bought at
subsidized prices. Only relatively recently has it invited some European
partners for joint ventures; for example, in tourism.
But a broad opening to new manufacturing, for example, would be
different. That would presumably mean welcoming an influx of private
capital from abroad to produce export goods on Cuban soil. It would also
probably require normalizing trade and diplomatic relations with the
world's biggest consumer market, the United States. And it might even
invite efforts to return to Cuba by exiles who still have claims on
industrial enterprises they left — or were forced to leave — as enemies
of the revolution.
What's more, in China and Vietnam the path toward a modern economy was
carefully coordinated with a series of steps toward normalization of
relations with the United States. Could Cuba's new economic strategy be
a signal of readiness for such a package? That would be difficult to say
this early. Some Cuba-watchers suggest that a mass release of political
prisoners from Cuban jails in recent months is such a signal. But the
history of Cuban-American communication since 1958 is rife with the
misreading of oblique signals, even if the prisoner release qualifies as
Of course, Cuba and the United States are more linked than government
officials in both capitals like to admit — through family bonds, for
"If fully carried out, a major expansion of Cuba's private sector will
benefit many thousands of Cuban families and give Cuban-Americans
opportunities through remittances to help relatives in Cuba who will be
working on their own," Philip Peters, who follows economic matters in
Cuba for the security- and free-market-oriented Lexington Institute in
Arlington, Va., wrote in a post on his blog, the Cuban Triangle, on
Ted Henken, a professor at Baruch College who studies private enterprise
in Cuba, epitomizes the ambivalence with which prudent Cuba-watchers are
assessing the latest news. He said he was thrilled by it, but was
hedging his bets on how transformative the change would be.
"This is the beginning of what we've all been waiting for," he said.
"It's a major change in the way the Cuban economic system will work. It
will be felt by every Cuban." But, he added, "they still want to
maintain state control. We'll see how this plays out."
The real test of Cuba's latest experiment will be in how it is
implemented and whether work will have a correlation with wealth,
Professor Henken and other experts said. Under previous privatization
campaigns, he said, "people were so hobbled by regulations that
self-employment was rife with illegality and corruption because that's
the only way people could make their businesses float."
They also had to keep wary, as all Cubans do, of the secret police,
given the regime's attitude toward private property and enterprise in
general. Yoani Sánchez, a dissident Cuban blogger, cited this when she
wrote the other day: "Under the strict canons of the socialist economy —
planned, centralized and subsidized — self-employment has always been
seen as an undesirable species of pest that periodically needs to be
abated and occasionally even exterminated."
The result has been the development of a singularly Cuban style of being
enterprising — somewhere between furtive and legitimate, with the real
object being to simply get along. Ms. Sánchez described one man who runs
a restaurant in his house and had outlawed items on his menu. He tried
to persuade his daughter to marry a top chef, the blogger wrote, to get
around a rule that employees must be family members.
Earlier this month, when Jeffrey Goldberg interviewed Fidel Castro for
The Atlantic magazine, one comment — hinting that the Cuban system
wasn't working for Cubans any more — drew the most attention. The former
president later said that he had been misinterpreted, but within days
came the announcement of the layoffs and the opening toward private
Still, none of the power brokers in Cuba were calling this capitalism,
and most close observers don't expect them to use that word, whatever
other changes unfold. "Overhauling their model does not necessarily mean
they are importing ours," was the way Julia Sweig, a Cuba expert at the
Council on Foreign Relations who was at the interview, interpreted Mr.
Which brings us back to the matter of public relations, and those
billboards: Even their presence could raise issues that Cuba's economic
planners probably have not fully thought through: Is a billboard company
legal in the new Cuba? Would residents living along highways be able to
rent out the land alongside their home for such advertising?
And, above all, could a privately run restaurant advertise that its rice
and beans were better than those offered down the street by the