Informacion economica sobre Cuba

Cuba's New Mantra: Viva Private Business

by Nick Miroff

Listen to the Story

Two self-employed florists prepare bunches of flowers in Havana last

year. The Cuban government is stepping up economic reforms and estimates

that in four or five years, nearly half the workforce will be employed

in the private sector.

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May 2, 2012

Socialism has been Cuba's official economic policy for more than a

half-century, and some 85 percent of the Cuban workforce is employed by

the state.

But that is changing fast. Communist authorities say that nearly half of

Cuba's economic activity will shift to the private or "non-state" sector

in the next four or five years.

Those plans signal a new urgency to Cuban President Raul Castro's

economic reforms, and one reason is that Venezuelan President Hugo

Chavez, the island's biggest benefactor, is battling cancer and facing

re-election in October.

The new approach was evident in this year's May Day parade in Havana,

which was a little different from the Soviet-style processions of the past.

Between the drumming and the dancing girls writhing around on floats in

tightfitting tops, it was hard to hear Cuban officials exhorting workers

to greater efficiency and more discipline.

The state workers, duty-bound to attend the parade, were making the most

of it, even if there wasn't a lot to celebrate. Average salaries in Cuba

remain stuck at about $20 a month, with officials saying wages can't

rise until productivity increases.

Still, there was a growing contingent of new Cuban workers on the march

this year: self-employed entrepreneurs and private business owners like

Lazaro Enciso. Carrying a banner with some of his 20 employees, he said

he'd come to show support for Raul Castro's liberalization moves.

"This is a new way to create jobs for our country," said Enciso, who

runs a snack bar, a clothing shop and another business selling religious

items. "As long as you're entrepreneurial, honest and revolutionary,

there's no obstacle to success here."

Venezuelan Lifeline In Jeopardy?

As Cubans marched and chanted "Long live the revolution," the island's

biggest financial backer, Venezuela's Chavez, was in a Havana hospital

for another round of cancer treatments.

Chavez provides the island with two-thirds of its oil on favorable

terms, along with more than $5 billion a year in exchange for the Cuban

doctors and other professionals working in Venezuela.

Now, with Chavez so ill he has prayed on national television for Jesus

to spare his life, Cuban economist Pavel Vidal says it's clear the

economic reforms must move faster.

"Cuba's economy is small, and from a political-economic standpoint, it's

closed, with a high level of dependency on access to hard currency for

growth," says Vidal. "A loss of support from Venezuela would send Cuba

into a recession."

Vidal and others say the damage to Cuba's economy wouldn't be as severe

as the sudden demise of the Soviet Union a generation ago. The island's

relationship with Venezuela is more interdependent, and even if Chavez

is no longer in power, it might take time for their two-way trade to


Despite Changes, More Openness Needed

Still, the possibility is putting pressure on Raul Castro to broaden the

reforms. Cuban entrepreneurs still can't contract directly with foreign

suppliers or wholesalers, and the government only grants licenses in

about 200 types of trades and businesses.

A Havana car wash is one example of Cuban entrepreneurs learning to

diversify beyond selling snacks or renting rooms to tourists. But the

driveway-sized business only has space to wash and vacuum one vehicle at

a time, and it's always full.

Hildelisa Cespedes says her family is waiting to see if local officials

will let them rent out a rundown garage around the corner that is owned

by the state, the kind of arrangement Cuban authorities say they're

still studying.

"If we had a bigger place, we could have more customers and hire more

workers," Cespedes says. "We're ready to make the investment."

Cuba's uncertain economic outlook may find a new lifeline even if

Venezuelan support dries up. A host of foreign companies are starting to

drill for oil in the deep water off Cuba's north coast. If sizable

deposits are found, the crude could take years to bring to market, but

economists say Cuba's government would get access to fresh lines of

credit right away.

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