Monday, May 29, 2017

Mesa-Lago: 'I cannot see the Government acquiring another strategic partner like the Soviet Union or Venezuela'

Mesa-Lago: 'I cannot see the Government acquiring another strategic
partner like the Soviet Union or Venezuela'
DDC | Madrid | 25 de Mayo de 2017 - 19:05 CEST.

"What alternative does the economy of Cuba have if it is not the
non-State sector? Unless there appears another subsidy-distributing
savior, like the Soviet Union or Venezuela were. But I cannot see there
being another strategic partner," stated the economist and academic
Carmelo Mesa-Lago during the presentation of his latest book in Madrid.

He explained that he found implausible the prospect of China being this
deliverer, although Beijing has increased trade with Havana: in 2014 it
was 9% and the most recent numbers, from 2015, indicated 16%.

The book Voces de cambio en el sector no estatal cubano.
Cuentapropistas, usufructuarios, socios de cooperativas y compraventa de
viviendas (Voices of Change in the Cuban Non-State Sector. The
Self-Employed, Usufruct Workers, Partners of Cooperatives and Property
Sales), coordinated by Mesa-Lago, was presented this Tuesday afternoon
in Madrid's Casa de América.

"Many people have told me, inside and outside Cuba, that Raúl Castro is
weary, that he can´t take it any more, that he wants out of this. Miguel
Díaz-Canel is the designated first vice-president, the man who would be
the successor to the general on 24 February next year. Díaz-Canel does
not have widespread support, but rather only those who also back Castro:
the Party and the Armed Forces. If Raúl Castro retires completely, what
is Díaz-Canel going to do? He cannot do anything. Raúl Castro has been
attempting reform for 10 years. Is Díaz-Canel going to achieve what the
general could not in an entire decade? This is one of the fundamental
questions, and I don't have an answer for that," explained the Cuban

At the event on Tuesday, Mesa-Lago also talked about Economy Minister
Marino Murillo.

"We haven't heard a thing from Murillo for the past eight or nine
months. He has disappeared. He was the person responsible for the report
on the process of economic reforms, and for implementing them. This
worries me very much, because he was the man who was in charge of all
this," he expressed.

The academic also spoke about another aspect of the national economy:
the sale of professional services.

"The purchase of Cuban professional services by Venezuela and Brazil has
diminished, and revenue has dipped. In 2016 it may have dropped to 5
billion dollars or less," he said.

With regards to the book presented this Tuesday, he explained that it
was a joint work, produced in collaboration with Roberto Veiga González
and Lenier González Mederos, both Cubans residing on the Island, who
conducted the interviews; Sofía Vera Rojas, a doctoral candidate in
Political Science at the University of Pittsburgh; and Aníbal
Perez-Liñán, a professor of Political Science at the same institution,
who did the tabulations and their analysis.

"There were 80 interviews, of people in four sectors (the self employed,
usufruct workers, partners of cooperatives, and peopled involved in
property sales). We did not provide answers to choose from. Rather, they
were open-ended interviews, with nothing to mark. They took between an
hour and a half and two hours. They were very intensive," he stressed.

Regarding the number of people interviewed, he expressed regret: "We do
not claim that this was a scientific survey. Unfortunately, that would
have been impossible. We would have had to request permission from the
authorities in Cuba, and they were not going to give it to us. I have
colleagues who were able to conduct interviews in Cuba, but with a
10-year moratorium on their release, such that when the results finally
come out, they're already out-of-date."

Regarding the data featured in this volume, he stated that, with
reference to satisfaction with what they do, and what they earn, 80% of
the self-employed reported that they were very satisfied (with scores of
8, 9 and 10), and only 5% gave scores of 1 to 3.

Other data obtained in this study indicated that 57% of workers in the
non-State sector have between 1 and 5 employees. Only 2% reported having
more than 15.

"Another surprise for us was that 93% reported having net profits after
the payment of taxes. And two thirds of them said that they reinvested
all their profits. There is, therefore, a process of business growth,
but with limits placed on it by the State. The owner of a paladar
(restaurant) cannot have a chain. He cannot have several," explained

He indicated that there are five taxes levied on the self employed and,
in this regard, observed that the most absurd of all is the one on their
staffs: "The more employees a self-employed businessperson hires, the
higher the taxes he must pay. This is absurd, because it is in the
State's interest for there to be more employees. In statements some
years ago, the Government announced that 1.8 million State employees are
unnecessary. Hence, the State has to reduce their numbers, and, for
this, needs for non-State jobs to be created. They are penalizing
someone who actually helps to solve a problem that is fundamental."

The interviews also found that 92% of workers in the non-State sector
would like to expand their businesses, and even sell abroad.

"The book has more than statistics. One can see what people are saying.
One of the people interviewed said that he saw a container with his
products, to be sold in Bahamas and Barbados. It is impressive, because
there are so many restrictions, but the self-employed still have an
enterprising spirit, one that could really be magnificent if they did
not face so many hurdles."

As for advertising, he defined it as very rudimentary. 67% is comprised
of calling cards, flyers, and signs placed at the front of the business.
Just 19% of entrepreneurs have access to the Internet.

The fundamental problems cited by the self-employed and usufruct workers
were the difficulty of obtaining raw materials, State bureaucracy and
interference, red tape and taxes. In response to the question "What
would you like to see improve?" two thirds of those interviewed
indicated the State bureaucracy, and the issue of raw materials.

With reference to remittances, only 24% of those interviewed reported
receiving economic remittances: "Here there was fear. I think that
people were wary. Later 68% responded recognized that they received help
from relatives on and off the Island."

Mesa-Lago also lamented the fact that many qualified professionals
engage in unskilled labor activities.

"What the State must do is allow professionals to practice their trades:
of 201 activities approved by the Government for self-employed labor,
most are unskilled. There are not even 10 that constitute skilled
labor," he complained.

"My conclusion is that if there were more flexibility, and the non-State
sector were bolstered, there would be growth in the Cuban economy, and
an improvement in social welfare. Unfortunately, reform is very slow.
And, of course, there is the question of the decentralization of the
State sector," concluded the academic.

Participating in the function on Tuesday were Consuelo Naranjo, director
of the History Institute, Advanced Scientific Research Council; José
Antonio Alonso, Professor of Applied Economics at the Universidad
Complutense de Madrid; and Carlos Malamud, a principal research
historian with the Elcano Institute of International Studies.

A distinguished professor of Economics and Latin American Studies at the
University of Pittsburgh, Mesa-Lago is the author of a range of books
and articles on the Cuban economy and comparative economic systems,
among other topics. He has received several prizes, among them the
Alexander von Humboldt Stiftung (1991, 2002), and recognition by the
International Labour Organization (WLO) for his research on decent work,
jointly with Nelson Mandela (2007). In 2015 he was named one of the 50
most influential intellectuals in Ibero-America.

Source: Mesa-Lago: 'I cannot see the Government acquiring another
strategic partner like the Soviet Union or Venezuela' | Diario de Cuba -

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