To make ends meet, black-market capitalism flourishes in Cuba
Communist leaders find few solutions in tackling systemic economic problems
By Gary Marx
Tribune foreign correspondent
January 19, 2007
HAVANA — The 41-year-old Havana resident earns the equivalent of $14 a
month managing a state-run food store. His living expenses run about $60
How does he make up the difference?
"I sell stolen food on the black market," said the man, who asked not to
be identified out of fear of government reprisal. "All the store
managers I know do the same thing."
With state salaries averaging about $15 a month and the cost of
everything from a pair of jeans ($25) to a beer ($1) out of reach, many
Cubans resort to cheating government enterprises and other illegal
activities to make ends meet, even though the government provides many
Known here as working por la izquierda, or literally "for the left," the
corruption ranges from a butcher who doubles his $8 monthly salary by
skimming pork, chicken and other meat from government supplies to a
state vehicle inspector who refuses to approve a car in tip-top shape
without a $12 bribe.
In a country plagued by shortages, black marketeers hawk air
conditioners, computers, DVD players, lobster tails, dog food, light
bulbs, smoked salmon, satellite dishes, toilet seat covers, chain-link
fencing, cement and countless other items, much of it stolen from the
workplace or government stockpiles.
Over the years, Cuban leader Fidel Castro has tried to crack down on
such graft, which he warned was undermining the socialist system. In
2005, he sent thousands of young social workers into state-run service
stations to stem the massive theft of gasoline by employees.
But the campaign has taken on a new urgency in recent months as Castro
remains out of public view after undergoing major surgery and his
brother and designated successor, Raul, tries to solidify his control.
Like his brother, Raul Castro has urged workers to show more discipline
and ideological commitment to combat theft, absenteeism and shoddy
services that plague state enterprises. He has stepped up enforcement,
completing a series of checkpoints along major highways to counter the
transport and sale of black-market goods.
`Raul is different from Fidel'
But Raul Castro also appears to recognize that rampant corruption is
caused more by desperation than avarice in a nation where state salaries
don't cover basic needs, the transport system is near collapse, housing
stocks are crumbling, and food production is faltering.
"Raul is different from Fidel," said Philip Peters, a Cuba expert at the
Lexington Institute think tank. "The way Fidel framed the corruption
issue, it was a matter of personal greed. Raul is discussing it as a
more systemic problem."
Peters said the first sign of a new approach came last October when
Juventud Rebelde, a communist youth daily, published a three-part series
titled "The Big Old Swindle."
The newspaper sent reporters to government enterprises and described
employees cheating customers in cafeterias, beauty salons, appliance
repair shops and other businesses.
Beer mugs weren't filled to the brim. Sandwiches were short on meat. A
taxi driver and cobbler overcharged customers.
"Some state services are being used for personal enrichment by
insensitive people who change the prices and norms of the products," the
The newspaper reported that more than half the state-run businesses
inspected by Havana authorities in the first eight months of 2006
overcharged or skimped on products.
Juventud Rebelde also found the state could not provide even the most
basic tools for employees to do their jobs. The shoe repairman
complained he had to purchase glue and thread out of his own pocket,
even though he works for the government.
"What Raul is exposing in these articles is that the state enterprises
are dysfunctional," Peters said. "There is no supply chain. What these
articles are screaming is that the system doesn't work."
A steely pragmatist who a decade ago championed limited free-market
reforms, Raul Castro last month ordered officials to conduct a study of
Cuba's economic problems and recommend solutions.
"In this Revolution we are tired of excuses," an angry Castro said at
the year-end meeting of the National Assembly.
Analysts say it is unlikely Raul Castro will adopt Chinese-style reforms.
Tackling the problem
But one prominent Cuban economist said top officials are considering
several measures to boost productivity and growth, including
decentralizing control over state enterprises and increasing investment
A European diplomat in Havana warned that Raul Castro, who turns 76 in
June, must act quickly to improve living standards and win public
support before he hands over power to a new generation of leaders.
"Raul needs to solve these issues before he is out of the leadership,
before he dies," said the diplomat, who asked not to be named. "The real
question is not what happens after Fidel dies. It's what happens after
The Soviet Union's collapse ended billions of dollars in subsidies and
sent Cuba's economy into a free fall in the early 1990s. Fidel Castro
reacted to the crisis by opening the country to tourism, legalizing the
dollar, allowing limited private enterprise and other reforms.
But he reversed course in recent years as the economy rebounded, thanks
to the high price of nickel, a key Cuban export, and the support of
Venezuela, which provides an estimated $2 billion a year in discounted
oil, financial credits and other assistance.
Nonetheless, while Cuba's macro-economic numbers have improved, many
Cubans say their lives remain difficult.
One Havana resident who earns about $11 a month at a state-run facility
that prepares school lunches said he skims rice, beans, eggs and other
food to feed his family and sell on the black market. He has a wife and
"They can't call me a thief," he said. "This is survival."