Sunday, January 1, 2012

Repression still the rule, but Cuba sees year of change

Posted on Saturday, 12.31.11

Repression still the rule, but Cuba sees year of change

Now you can get a loan, buy a house and — maybe soon — travel abroad
more easily. But the Castro government has no desire to ease its
authoritarian ways.
By Juan O. Tamayo

Joe Garcia, a former executive director of the Cuban American National
Foundation, likes to joke about the chat he might have today with the
late Jorge Mas Canosa, founder of the powerfully anti-Castro exile lobby.

Garcia says he would tell Mas Canosa that Cuba's rulers have abandoned
their dream of an egalitarian utopia, and that even Fidel Castro had
confessed that his model of sub-tropical communism "does not work."

He would add that Raúl Castro is now allowing Cubans to start more small
businesses, recognizing their right to sell homes and vehicles and even
embracing foreign investments in those icons of capitalism — golf resorts.

"Jorge would immediately say, 'It's over. We won!'" said the smiling
Garcia, a South Florida Democrat who keeps tabs on developments in Cuba
and has made two unsuccessful bids for the U.S. House of Representatives.

Castro critics would disagree strongly and portray the changes as
nothing more than lipstick on the rotting corpse of a Soviet-styled
economy. Raúl Castro himself timidly calls the changes not "reforms" but
"updates" and has vowed to keep central planning as the backbone of the
island's economy and prevent any accumulation of private wealth.

Yet the changes clearly reflect an ambitious effort to address the
structural flaws of Cuba's communist system, abandon its culture of
paternalism and attack its parasitic bureaucracy — without risking the
government's power to repress dissent.

In a nutshell, Castro's goal is to slash a bloated state sector that
controls an estimated 80 percent of the economy, and to allow more space
for small-scale enterprises that can produce more efficiently, pay taxes
to the government and often can count on financial support from
relatives or friends abroad.

It's not been easy. Pushback from entrenched ideologues and bureaucrats
appears to have undercut some of the changes, and cuts in the ration
cards that provide basic food items at highly subsidized prices have
pummeled Cuba's neediest.

A Catholic church in Havana reported a hefty increase in the number of
people at its free lunches in recent months. And the government
reportedly stopped disability and other aid payments to about 3,000
people in the city of Santa Clara this year.

But many reforms are under way, and the pace of change increased after a
congress of the ruling Communist Party of Cuba in April gave a broad
endorsement to Castro's 300-plus proposals for change.


Perhaps the most important reform for the average Cuban was the decision
in 2010 to permit an expansion of private economic activity in a country
that nationalized every single business in 1968, down to push carts that
sold hamburgers.

Today, 357,000 people have licenses for "self-employment" — in tightly
controlled categories such as party clowns and street vendors of music
CDs — and most have incomes well above the official average salary of
$20 a month.

For the first time this year, private entrepreneurs were allowed to hire
employees — previously "the exploitation of man by man" — rent some
state-owned storefronts and even list their services in the island's
phone book, which once rejected them as too "consumerist."

Many state-owned businesses, such as locksmiths, carpentry shops and
repair centers for electrical appliances such as rice cookers, will be
turned into private businesses, according to an official announcement a
month ago.

The government also postponed some taxes and fees and reduced others
when it became clear they would drown the new businesses, and promised
bank loans to the enterprises and to hire some of them to work in areas
like construction.

But the initial rush to obtain self-employment licenses appeared to be
slowing down, and official figures indicate that nearly 20 percent of
those who recently received licenses in Havana surrendered them later,
apparently because they could not make a profit.

Cubans complain that the permitted activities are too limited, that
there are no legal wholesalers for the raw materials they require —
lumber for carpenters, for instance, — and that some taxes and fees
remain unfair. Those who rent rooms to tourists pay the same fees
regardless of their occupancy.


Changes in the government's banking monopoly, which has never offered
credit cards, never mind a toaster, also mean that Cubans can now obtain
loans to build or renovate homes and pay for materials as well as labor.

Private farmers can open previously unavailable bank accounts to handle
their money, and loans can rise above the old limits — and go even
higher if the borrower has a co-signer or collateral.

Some of the new entrepreneurs are eager to apply for those loans but
less eager to put their money in government banks, amid fears that the
government could seize their accounts in case of a financial crisis.


Castro also stepped up his attack on Cuba's second most vexing problem:
the myriad failures in agriculture that forced the island to import $1.5
billion in food last year — estimated at 60 to 80 percent of its total

As of November, 3.4 million acres of fallow state lands had been leased
to 170,000 private farmers. Farmers also were permitted to sell directly
to consumers and tourist centers, which pay better prices and therefore
help to increase production.

Another change coming soon will increase the limits on the leases from
33 to 165 acres and from 10 to 25 years, and will allow relatives and in
some cases laborers to inherit the leases, according to news media reports.

The upcoming change also for the first time would allow the farmers to
build homes on the leased land, and promises the government will
reimburse the farmers for any improvements should they lose their
leases, added the reports.

Yet nearly two million acres still remain fallow and farmers must do
most of their business through Acopio, the notoriously inefficient state
agency in charge of buying their products and getting them to market —
but which regularly allows them to rot on the way to market and fails to
pay the producers.

Communist Party officials in some provinces are alleged to be grabbing
the best leased acres for themselves and getting all the supplies they
need, like seeds and fertilizers, while other farmers get only part of
their needs.


Also generating a buzz has been Castro's easing of the restrictions on
the sale of homes and vehicles — at times hailed as an unprecedented
recognition of private property rights, at times dismissed as merely
legalizing what had been going on illegally for years.

The permission to buy and sell homes immediately turned the properties
into potential cash and erased the unwieldy requirements for the
previously allowed permutas — swaps of homes of roughly equal size or value.

More than 4,000 "for sale" signs had gone up as of late December and the
government lifted most restrictions on the sale of construction
materials to private buyers, cut prices and made a deal with Brazil's
version of Home Depot to import supplies.

The government reported last week that since the change went into effect
it had registered 360 homes sales and nearly 1,600 "donations" — most
likely efforts to legalize previous sales that did not fulfill all
government requirements.

Cuba faces a critical housing shortage, officially put at 600,000 units
in a country of 11.2 million people. Many properties have been
subdivided many times over the decades to accommodate more families,
making for a messy trail of ownership rights.

The government also announced that it registered 3,310 sales of vehicles
and 994 "donations" in just the first month of the new regulations
allowing the sale of all used cars and trucks.

Previously, only pre-1959 vehicles could be bought and sold without
restrictions. Today, all used vehicles can be sold. But new vehicles are
sold only to Cubans who are approved by the government and earned their
money working for the benefit of the country — like doctors who work in


Less clear is the impact of Castro's campaign to reduce the direct
controls that the government exercises over the economy, and to give the
managers of state-run enterprises more autonomy to run their business
more efficiently.

The Ministry of Sugar, for example, which ran Cuba's once-premier
industry as it plunged into disaster over the past decade — the 2006
harvest was the worst since 1905 — was turned into a state enterprise.
So was the island's postal service.

But the new "enterprises" apparently will still depend on the same
central government planning system that proved inefficient in the past —
in the case of the sugar harvest, failing to ensure the timely delivery
of supplies like fuel and spare parts.

Government officials have raised the possibility of allowing foreign
investments in the sugar sector, and already have approved foreign
financing for half-a-dozen golf resorts to be built on state lands
leased out for 99 years.


Castro also has said that he's working on the one reform unquestionably
and most urgently desired by Cubans — the right to travel abroad without
an exit permit that is expensive and must be approved by State Security

Most Cubans also want to ease the restrictions on the return of
relatives and friends living abroad, and an abolition of the "definitive
exit" category, which punishes those who leave the island to settle
permanently in another country.

Castro told Cuban lawmakers on Dec. 23 that he understood the calls for
reforms of the migration policy, but said that changes will have to come
slowly because of the continued hostility of the U.S. government. Any
Cuban who sets foot on U.S. territory is allowed to remain and receives
U.S. residency.


Raúl Castro's reforms have come at a price.

As he slashed government subsidies, he had to cut spending on some of
the sectors the revolution still holds out as its iconic "victories" —
health, education and welfare — greatly damaged since the end of the
Soviet Union's massive subsidies in 1991.

Several neighborhood clinics are being closed in favor of more regional
facilities, universities are cutting enrollment in some study areas and
a dozen or so food items once sold through the ration cards are now
available only at much higher prices.

What's more, some of the reforms announced by Castro, now in his sixth
year in power after succeeding ailing brother Fidel, were postponed or
dropped amid reports of stiff opposition from within the ruling hierarchy.

A plan to lay off 500,000 state employees — a whopping 10 percent of the
public payroll — between October of 2010 and April 1 of 2011 was
postponed without a new deadline. And a scheme to tie wages to a
worker's individual productivity, announced with much fanfare in 2008,
has not been mentioned for nearly two years.

Meanwhile, the basic outline of Cuba's political system has not changed:
one-party rule, tight controls on of the mass media and varying levels
of repression for those who actively oppose the government.


To Castro's critics, all the changes amount to worthless cosmetic
surgery, a confession of failure in 53 years of what the Castros call
"building socialism." After all, they say, private enterprise existed
and houses could be bought and sold under the Batista dictatorship,
before the Castros' 1959 revolution.

To supporters, they are part of a slow but sure-footed campaign to
eliminate a number of senseless economic constraints, move toward a more
productive brand of socialism and keep the Cuban Communist Party in power.

The only certainties are that Cuba is in the midst of complex changes —
which may or may not lead to a more productive brand of socialism — and
that the Castro government has no intention of easing its authoritarian
and coercive political system.

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