In Cuba, seedlings of capitalism

In Cuba, seedlings of capitalism
Updated: AUGUST 11, 2016 — 12:53 PM EDT
by Michael Smerconish, Inquirer Columnist

Entrepreneurship might seem like an odd word to associate with Cuba, but
it seems increasingly apt, given the individuals I met during a week
traveling the island. From the tobacco fields three hours outside of
Havana to downtown restaurants that rival the finest Philadelphia has to
offer, one can find the seedlings of capitalism and businesses built for
profit sprouting everywhere.

Don't misunderstand. Cuba remains a nation of great disappointment and
contradiction. Friendly people live amid spectacular scenery but are
nevertheless trapped in a socialist system that never delivered on the
promises of the revolution. So often, on the same residential block, I
was transfixed by both natural and architectural beauty, while
distressed by the sight of squalor and blight.

And yet, amid the decay, there are unmistakable signs of initiative and
optimism, people who represent hope and the prospect of freedom to come.
Or, to put it in our current election parlance, you could say that where
I expected to see shades of Bernie Sanders, I instead found Gary Johnson.

Have a cigar

For 30 years, I've nursed a cigar-a-day habit that made me keenly
interested to visit farms in the legendary Pinar del Rio province, which
generates the world's finest smoking tobacco. The three-hour drive from
Havana offered the most picturesque scenery I have ever witnessed,
reflective of an artist's palette. Richly colored brown earth, lush
green vegetation, gray-tinted mountains, and an azure sky provided a
spectacular backdrop for primitive housing in a countryside dotted with
roosters, pigs, horses, chickens, goats, cows, bulls, peacocks, dogs,
and cats.

Here, Alejandro Robaina was cigar royalty until his passing in 2010 at
age 91. His family name still appears on the label of a famed Cuban
brand. The man known as the Godfather of Cuban Tobacco was succeeded by
son Carlos, who today is the public relations manager of La Casa del
Habano, the preeminent cigar emporium in Havana. Meanwhile, Alejandro's
grandson Hirochi oversees the family farm.

So imagine my surprise when Hirochi Robaina greeted me at his home by
handing me a cigar with a label bearing his initials - made not in Cuba,
but in Nicaragua.

The 40-year-old heir to his family's dynasty told me that his chief
priority is the future he can provide for his four daughters. And so,
while 90 percent of what he grows on his Cuban farm near San Luis
automatically goes to the Cuban government for the state-run cigar
monopoly - some of which presumably ends up in the Cuban cigars that the
government brands with his family name - he himself is eager to promote
cigars in which he can share the profits, hence those made in Nicaragua
under his personal HR Cigars label.

Handmade cars

One of Hirochi's Cuban contemporaries is Luis Gonzalez Saez, who is
self-employed as a mechanic, but seems better described as a magician.

We met inside what he described as his "man cave," a sub-rosa garage in
the Vedado section of Havana surrounded by old motorbikes. The
49-year-old lover of all things motorized told me he's been interested
in tinkering since his rural childhood. After completing his mandatory
state education and military service, Gonzalez turned his attention to
keeping Harley-Davidson motorcycles and prerevolution 1950s American
automobiles running in the absence of company-manufactured parts.

His own 1953 Buick Roadmaster is testament to his improvisational skill
set. The body of the car is all original Buick, but its current
suspension came from parts he procured from a Russian jeep. The motor is
from a boat (a Perkins 90 hp). He rebuilt the steering with help from a
Kia. The transmission came from a Hyundai; the housers from a Chevy; the
shocks from a Renault truck; the disc brakes from a Mercedes. No wonder
he calls it his "small Frankenstein."

Standing near an operable 1936 Harley, he showed me a long chain he
reuses on a variety of motorcycles. It was once part of an assembly line
at a now-defunct Cuban Coca-Cola plant.

And to what does Gonzalez aspire? To open a Harley dealership in Havana,
of course.

Art and food

Entrepreneurial spirit is also alive and well among many Cuban artists,
including Lester Campa and Henry Aloma, both of whom reside at Las
Terrazas, Cuba's first biosphere reserve and home to roughly 1,000
residents.

Aloma paints in a small home he shares with his family. He sells
colorful, nature-inspired sketches from an easel that stands a few feet
from where his young daughter, with an angelic voice, practices her
singing with a group of kids from the community.

Campa has already established a reputation that extends far beyond Cuba.
He has exhibited in the United States and will soon visit again. In his
lakefront home, he proudly displays an acrylic he painted of John Lennon
in a pose wearing a hat made famous by Che Guevara.

Campa told me he soon hopes to show this piece to the actor Benicio Del
Toro, a potential purchaser, who, I suspect, had better be ready to pay
six figures should he be interested.

There is another revolution in Havana today - this one involving
restaurants, not government overthrow. Or, more specifically, paladares,
which are privately owned.

Among them is the gold standard for fine dining in Havana, La Guarida -
a third-floor masterpiece with roof deck set in an otherwise crumbling
apartment building. Enrique Nunez is the Stephen Starr of Havana, and
his food and ambience would earn him four bells from Craig LaBan. The
restaurant was the setting for the critically acclaimed movie Fresa y
Chocolate (Strawberry and Chocolate). Foodies in Havana can now access
an app called Cuba Paladar offering information and critiques of 50 or
so paladares in the city. Of course, that assumes WiFi is available,
which is usually not the case unless you are in a hotel or have spent $2
purchasing an access card for an hour of internet in public spaces.

Massimo Carocci and his wife, Lien, have just opened one of Havana's
hottest new restaurants, Versus 1900, a paladar on Calle Linea, one of
Vedado's main commercial thoroughfares. They serve exceptional fusion
cuisine for roughly $20 per meal.

Carocci is a 45-year-old Italian who previously worked in Europe as a
corporate financier, and whose only prior restaurant experience was as
an investor in Italy and Spain.

Five years ago, after government regulations changed to allow the
purchase of private property, he and his wife acquired a grand home
built in 1895, featuring high ceilings with full-length windows and
doors. The property was in serious disrepair while still in the family
of its original Spanish owners, the descendants of whom endured the
tumult of 1958 to 1962 but chose to stay while so many other people of
means evacuated the island. Their reward for remaining came when they
were able to sell to Carocci and acquire a smaller, more manageable home
for themselves.

"Not long ago, this was not the situation," he told me. "It's now much
easier to start up a business like this."

As we sat in his private office on the second floor, which houses his
50-seat restaurant (he built a plush "chill" deck on the roof), I asked
whether the restaurant was really privately owned, or more accurately
described as a joint venture with the government.

"Yes, we own it," he assured. "The government is not my partner. The tax
rate is similar to other businesses. It's progressive, so it depends on
how much you make. It can be as much as 50 percent of profits."

Carocci said the Cuban government is keen to have his type of business
established, both for the employment it provides the locals and the
attraction it offers for tourists.

"If I compare this restaurant to this same type of food business
elsewhere, the margins are potentially better," he said. "The concept is
different. Normally here, you own the real estate, and not a lot of
people are renting. So this is both a real estate investment and an
ongoing business. The rental market is not developed, so that could be
another step in the future."

Day to day, his biggest problem is the lack of wholesale purchasing. "We
have to go to normal supermarkets, and there is no continuance of
supply," he said. "To go and to find is very time-consuming. We spend
lots of time looking and buying."

Old and new

Of course, this is still Cuba, and so contradictions abound. Not far
from the ambience of La Guarida and Versus 1900, I watched a
thirty-something woman obtain her monthly rations at a corner bodega in
Old Havana surrounded by slums. Regardless of income, all Cubans are
assured of the basic necessities every month. While the Cuba that Fidel
Castro conquered was the wealthiest tropical nation in the world, that
bounty came with a parallel world of huge impoverishment that sadly
remains. And with Fidel's "reforms" came the libreta, or ration book.

When the Soviet Union was subsidizing Cuba, that book meant not only
necessities, but also free gas and even free cigarettes. Today, it
equates to rice, sugar, cooking oil, coffee, black beans, and salt.
President Raul Castro has suggested needs-testing, but that is being met
with resistance.

Best positioned among the new business-seekers are those in the travel
industry. Sonya Laguna founded Just90Miles.com as soon as she realized
that the Obama administration would chart a different path with the land
of her birth. Laguna told me that at age 9, she was aboard the last Pan
Am flight from Havana to Miami (on May 12, 1972), together with her
parents and 7-year-old sister. Her parents have never been back.

"My mom comes from the old generation that doesn't want anything to
happen to Cuba unless the entire political system changes," she said.
But Laguna, who lives in Miami, is now busy booking passage for
Americans who want to visit. She operates so-called people-to-people
interactions, one of 12 categories of license for people to visit legally.

"It requires an agenda to see the country and talk to people," she told
me while planning my trip. "You can't just sit on the beach."

I can attest to that. I'd previously been to Cuba in January 2002,
accompanying U.S. Sen. Arlen Specter to a meeting with Fidel Castro. I
was eager to get back and show it to our four children before McDonald's
and Starbucks arrive. Months ago, when I shared with my wife an
itinerary Laguna proposed, she responded that "it sounds more like a
trip than a vacation." It ended up being both.

'There are cracks forming'

We didn't see many Americans during our stay, but one we did meet was
Jonathan Matusky, who was raised on the Main Line and is now the
27-year-old director of the Innovadores Foundation, a nonprofit that is
based in the U.S. but promotes technology and design in Cuba. Matusky's
mantra is that "Cuban problems can best be solved by the Cuban people."

"We provide resources, education, internet, and workspaces to Cuban
innovators and designers looking to solve Cuban problems, primarily tech
and design, apps, websites, video game developers, clothing designers
and manufacturers, and graphic designers," he said.

Long-term, Matusky seeks to provide investment to Cuban entrepreneurs.
He enjoys the backing of American entrepreneur Miles Spencer, a
Norristown native who cocreated the reality television show MoneyHunt,
and John Caulfield, the former chief of the U.S. Interests Section in
Cuba - who was essentially a de facto ambassador at a time when we had none.

"There are cracks forming. We're kind of the water getting into cracks
and waiting for it to freeze," Matusky told me as we sat in a cigar
lounge in the Miramar neighborhood of Havana.

"There is no shortage of small problems to be solved, so there is
tremendous opportunity for entrepreneurs, especially because it's such a
unique place. Many things you can't solve from outside. You need to live
here or be here regularly, or are yourself Cuban and understand the
problem. There is tremendous opportunity for Cuban entrepreneurship," he
said.

Matusky repeated for me words he ascribed to the CEO of a Cuban app
developer, who told him: "Our technique is to beg for forgiveness rather
than ask for permission." By that he means that right now, everything is
in a regulatory gray area; entrepreneurs are getting away with more than
is explicitly permitted by law.

"The only way to get anything done is by trying things out and hoping
you don't get in trouble or are held back by government," Matusky said.

No one I met in Cuba was more knowledgeable about the changes and the
island spirit than Christopher P. Baker. The swashbuckling travel
journalist possesses a bachelor's degree in geography and a master's in
Latin American studies, but his real education seems to have come from a
varied and deep circle of friends and acquaintances he's acquired in
Cuba during his many visits since 1992. He has authored six books on
Cuba alone, and such is the current interest in Cuba that the Moon
travel series guidebook he authored will publish its seventh edition in
2017.

"The pace of change is astonishing. It presents a real challenge of
keeping this material fresh when the world's attention is now on Cuba.
It is the new black of destinations," Baker said over mojitos in yet
another paladar, Santy Pescador, a hard-to-find Havana gem that offers
fresh sushi.

"The drive of creativity and entrepreneurial expression is being fueled
by the tourist boom," he said.

Hidden history

During my stay, and only after exacting a promise from me to never
reveal the location, he led me to a hidden garage on the outskirts of
Havana where he showed me the body of the last automobile owned by
Ernest Hemingway, a 1955 Chrysler New Yorker convertible that Baker is
working to restore, along with the actor David Soul (of Starsky & Hutch
fame). Among Baker's other passions is leading motorcycle tours all over
the island (Cubamotorcycletours.com). He is also is the go-to guide for
National Geographic island expeditions. The day we parted, he was
leading a dozen motorcyclists on Chilean and European bikes to the Bay
of Pigs.

"I've been coming here more or less 25 years. But the pace of change
I've seen in the last two years is mind-boggling. I've seen more change
in the last two, three years than the previous 20. Not only the tourism,
but also the domestically driven change - the money in the system is
multiplying, and you can feel it. The sense of commercialism is creeping
into the populations and the sense of values is beginning to shift."

Baker cited as an example a Cuban friend involved in tourism who is now
opening his fourth business. Already operating a bed and breakfast,
horseback excursions, and a photo workshop, he is adding a restaurant
while he contemplates introducing jet skis to a local bay.

Still, amid the excitement, Baker worries that history is poised to
repeat itself. He ticks off examples of urban deprivation, and notes
that where Cubans lack the money necessary to repair the island
infrastructure - something I saw while touring the countryside with
Baker - they are again dependent upon outsiders, akin to the
prerevolution era, when Fulgencio Batista was propped up by the American
mafia.

"They are relying on foreigners for investment but are looking for
return," he said.

"And the very real prospect is that many Cubans might be left behind -
again. There is the potential threat of the circle coming round, whereby
a white entrepreneurial upper class benefits while a black underclass is
not able to take full advantage. It's the urban underclass I worry
about," he said.

Ready to take off

That the now-deprived also want to work and participate in a
market-driven economy was evident from the woman in Old Havana who sang
a cappella in full costume while selling me peanuts, the roadside
purveyors of cheese standing along the main highway from Havana in
90-degree heat, and hitchhikers of all ages and genders in the city and
countryside with hands in the air and fingers clutching currency as an
enticement for passing motorists to stop.

Baker reminded me that often in the last 50 years, it's been said that
Cuba is ready to take off., But this time it feels for real.

Speaking of taking off, prior to departing Havana's José Martí airport,
my eldest son dropped into what was billed as the Cyber Cafe. The logo
on the glass was of a computer mouse. But inside there was no WiFi, and
the clerk didn't seem to know why my son expected to find an internet
connection.

Whatever the outcome, the ride is going to be bumpy. That is the only
Cuban guarantee.

Michael Smerconish can be heard from 9 a.m. to noon on SiriusXM's POTUS
Channel 124 and seen hosting "Smerconish" at 9 a.m. Saturdays on CNN.

Source: In Cuba, seedlings of capitalism -
http://www.philly.com/philly/opinion/20160814_In_Cuba__seedlings_of_capitalism.html