Monday, February 25, 2008

In Cuba, Hopes for a New Capitalist Season

In Cuba, Hopes for a New Capitalist Season
Castro Resignation Could Open a Path For Small Businesses

By Manuel Roig-Franzia
Washington Post Foreign Service
Sunday, February 24, 2008; A15

COJIMAR, Cuba, Feb. 23 -- Idalberto Estrada really wanted to make a sale.

He slashed a slender blade through the barklike brown skin of a yuca
root, a staple of the meager Cuban diet. A woman with brightly dyed red
hair leaned in skeptically, examining the root's white flesh beneath
Estrada's sidewalk umbrella in this Havana suburb.

"Beautiful, isn't it?" Estrada, 37, said, smiling hopefully.

The woman handed over a faded peso, and Estrada sighed with relief,
knowing he was closer to breaking even for the day. In a country where
more than 97 percent of adults work for the government and most private
businesses are illegal, Estrada is an entrepreneur, opting for the risks
and rewards of a tiny business over working for the state.

Estrada's experience as a mini-capitalist in this socialist nation was
made possible by a mid-1990s reform that legalized about 150 types of
micro-businesses and was pushed for by Fidel Castro's brother, Raúl.
Fidel, 81, announced his retirement Tuesday after half a century of
dominance, and Raúl, 76, is expected to be named president when the
National Assembly meets Sunday.

Estrada and the 100,000 to 150,000 other self-employed Cubans provide a
glimpse of what the future might look like here, and help explain some
of the low-intensity excitement about the possibility of historic
change. Estrada sometimes earns three or four times what he made before
quitting the Cuban navy six years ago, when his pay was the equivalent
of $17 a month. He still struggles to make ends meet, but he is much
better off than the overwhelming majority of his neighbors who live in
rotting homes with spotty plumbing and have to feed themselves on state
salaries as low as $11 a month.

Raúl, who has been interim president in the 19 months since Fidel
underwent multiple intestinal surgeries, has stoked hopes of even more
dramatic change by hinting for months about "structural and conceptual"
shifts in Cuba's economy. Economists and many islanders see much in
Raúl's track record to suggest that he may expand private business
opportunities and perhaps even restore some of the vaunted mid-1990s
reforms that his all-powerful brother dismantled.

"I see it as a great possibility that Raúl will make changes to Cuba's
economy," Óscar Espinosa Chepe, a former Cuban government economist and
diplomat who was imprisoned in a 2003 crackdown on dissidents, said in
an interview. "He is much more pragmatic than his brother."

For all the expectations of a Raúl Castro presidency, there is still a
hint of suspense in the capital of Havana. Cubans, who love political
gossip, have speculated since Tuesday about possible alternative
scenarios, including the appointment of a puppet president from the
Council of State, the selection of Vice President Carlos Lage instead of
Raúl or a theatrically staged demand by the National Assembly for Fidel
to reverse his decision and make a triumphant return to the presidency.
But even in the unlikely event that Raúl is not named president, he
would still be expected to play a huge role in shaping Cuba's economy.

Raúlpushed to make some self-employment legal in the mid-1990s as Cuba's
economy was staggering and its populace starving after the Soviet Union
collapsed. Besides allowing produce vendors, the government also began
granting licenses for guesthouses, mechanic shops and small restaurants,
known as paladares.

But the biggest change Fidel let his brother talk him into was allowing
more tourism. About 270,000 tourists went to Cuba in 1989. By 2006, that
figure had jumped to 2.2 million, with nearly one in four tourists
coming from Canada, according to the Cuban government. Once a bargain,
Havana is now one of the most expensive cities to visit in Latin
America, with rooms at more than half a dozen top hotels going for $200
to $600 a night.

The influx of foreign money from tourism and joint ventures in mining,
tobacco and citrus stabilized Cuba's economy in the late 1990s and early
2000s. (The Cuban government keeps up to 30 percent of profits.) And
that's when Fidel Castro's government began taking back some of the
business liberties it had granted.

The longtime leader complained about "inequalities" that self-employment
was creating and railed against a "new rich class" that was paid by
tourists in U.S. dollars that had much more buying power than the Cuban
peso. In 2004, his government stopped granting self-employment licenses
for 40 types of businesses. Among those who could no longer work for
themselves were masseuses, magicians and clowns. Other businesses
remained technically legal but were effectively closed because licenses
weren't renewed.

The number of self-employed Cubans plummeted from 200,000 in the
mid-1990s to 100,000 now, according to Antonio Jorge, a recently retired
Florida International University economics professor who was a top
finance official in the first two years of Fidel's reign. The Cuban
government says 150,000 people are self-employed.

There was also a major crackdown on paladares, the small restaurants
that were thriving because their owners were preparing meals that were
far superior to the drab offerings in most state-run restaurants. In the
late 1990s, it was estimated that Havana had more than 1,000 paladares;
some of their owners were achieving worldwide fame. Now, there may be
fewer than 100, said a Cuban government economist who spoke on condition
of anonymity for fear of repercussions.

Privately, another Cuban official justified many of the closings, saying
paladares were shut down for sanitation violations. But the Cuban
government economist said the majority were forced out of business by
the state, which then clandestinely became the real owner of several
successful paladares that pretend to be privately owned. Other paladares
stayed in business by bribing government officials.

"They want to get rid of us all," said a paladar owner who asked that
his name not be revealed.

Raúl Castro hasn't focused on Cuban restaurants in his public speeches,
but he speaks frequently about the farmers who supply them. Jorge and
the government economist each predicted that Ra¿l might begin deeding
farmland to campesinos, or poor farmers. During a speech last July, Raúl
-- who is known for his wry, biting humor -- said he'd admired the
marabú growing on the roadsides. Marabú is a thorny bush that spreads
across untilled fields. The message was clear: Cuba's
government-controlled farmers were not doing their job well. Currently,
half of Cuba's arable land is not cultivated, but many here believe
private ownership of some farmland would free farmers to produce more in
a country that imports 80 percent of its food.

Estrada, the Cojimar produce vendor, often buys his squash and yuca from
José Francisco Anaya León, a 58-year-old Cuban. Unlike Estrada, Anaya
León is not self-employed. He farms government land, then sells three
squash at very low prices to the government for every one he sells to
vendors such as Estrada at a higher price.

Anaya León may have a guaranteed buyer for most of his crop, but he
doesn't make enough to live decently. Estrada said he has no guaranteed
buyers, but he flipped a cabbage in his hand and smiled anyway.

"Everybody in the world would want this, to be independent," he said.
"Human beings are ambitious."

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