Sunday, September 26, 2010

Cuba unveils plan to overcome its economic crisis

Posted on Saturday, 09.25.10
Cuba unveils plan to overcome its economic crisis
Cubans will soon be allowed to work for themselves in 178 categories,
according to the official Granma newspaper.

From carpenters to fortune tellers, Cuba has unveiled the first details
of a vast expansion of free-market activity it hopes will help rescue
the communist system from the grips of an economic crisis.

Starting next month, Cubans will be allowed to work for themselves in
178 categories, and in 83 will be able for the first time to hire
non-family members, the official Granma newspaper reported Friday.

The Central Bank is also considering offering credits to the
self-employed, Granma added, signaling that the micro-enterprises may be
allowed to grow beyond small family-run shops. Expanding the free
enterprise activities represents Cuban ruler Raúl Castro's most
significant effort yet to ease an economic crisis by slashing massive
state subsidies in an island where the government controls 95 percent of
the economy.

Cuba announced last week it will cut 500,000 government workers by the
end of March and hoped most would shift to self-employment. Its anemic
private sector now accounts for 600,000 to 800,000 jobs.

In a report that took up three pages, Granma insisted the changes are
designed to ``defend, maintain and continue perfecting socialism, not
destroy it. That's the road that our Cuba continues on.''

But the reforms, it added, will allow the government to ``shake off a
good part of the weight of excessive subsidies, while passing to
non-state hands those services that it assumed for years despite the
difficult economic situation.''

The changes also ``move away from those ideas that condemned
self-employment to near extinction and stigmatized'' those workers,
Granma added, referring to the self-employment allowed during a crisis
in the 1990s and then harshly restricted after the emergency passed.

``That's a clear change in tone because the self-employed have been
legal and tolerated, but viewed as unimportant,'' said Phil Peters, a
Cuba analyst at the Lexington Institute in suburban Washington.

Cuba's communist-style economy is so flawed, however, that the reforms
``amount to a Band-Aid on a 12-inch cut,'' said Andy Gomez, a researcher
at the University of Miami's Institute for Cuban and Cuban-American studies.

``Until the government implements policies to . . . attract and protect
foreign investment, these measures could alleviate some of the immediate
issues but not the long-term economic problems,'' he added.

The report, the official voice of the Communist Party, noted that it was
based on consultations with officials at the ministries of Economy and
Planning, Finance and Prices and Labor and Social Security.

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