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Cuba details brave new world of private enterprise

By Associated Press
Friday, September 24, 2010 11:43 EDT
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Cuba details new world of private enterprise, including accountants and business loans

Cuba’s communist leaders began laying out the details of their drive to create more free enterprise on the island on Friday, mapping out a brave new world of bosses and employees, personal accountants and a dizzying number of small-time businesses.

The plans — laid out in a three-page spread in the Communist Party-daily Granma — follow last week’s announcement that the government will lay off 500,000 workers by the end of March, the biggest change in this country’s economic system since the early 1990s.

For the first time, Cubans in 83 private activities will be allowed to employ people other than their relatives. The Central Bank is even studying ways to get small loans into the hands of the country’s new entrepreneurs, according to the newspaper, which cited Economy Minister Marino Murillo Jorge and a vice-minister of labor and social security, Admi Valhuerdi Cepero.

“The decision to loosen the rules on private employment is one of the steps the country has taken in the redesign of its economic policies to increase production levels and efficiency,” Granma reported.

Cubans authorized to live overseas — though apparently not exiles — will be able to take part in the economic changes by naming a representative on the island who can help them rent the cars they left behind.

It also loosens rules on Cubans who want to rent their homes out to travelers, saying they no longer have to live there themselves and can hire staff. That creates the possibility of posh bed and breakfasts, instead of the threadbare boarding houses that exist now.

Granma is the voice of the Communist Party and one of the principal ways the government communicates plans with the people. The paper promised more details in coming days, saying that the expanded private enterprise would be “another opportunity, under the watchful eye of the state” to “improve the quality of life of Cubans.”

The new openings are sure to be welcome in a country where young people have been clamoring for more opportunities for years, but they will also create tension and upheaval.

Marley Martinez, 22, is one of those who says she is already weighing her options. She’s a state-trained accountant but is studying to become a hair dresser and hopes to open her own shop. Barber is No. 77 on Granma’s list of self-employment jobs.

“It’s not really a dream, but it’s something I want to do and feel I need to do,” said Martinez, who was strolling through a crowded Havana shopping center. “What the people need are more economic freedoms, the ability to work for themselves.”

Currently, the state dominates nearly every aspect of the Cuban economy, employing at least 84 percent of the work force and paying an average of $20 a month. In return, islanders are guaranteed free education and health care, as well as nearly free housing, transportation and basic food.

President Raul Castro has said the cash-strapped government can no longer afford such generous subsidies and that he wants to modernize Cuba’s economy, without abandoning socialism. The goal of the reforms is to lower the government payroll while simultaneously boosting state revenue by charging private enterprise taxes.

Granma said those taking advantage of the new opportunities would have to not only pay personal income tax, but also sales and payroll taxes — as well as contribute to social security. Analysts say the success of the program depends largely on the government’s ability to collect those revenues, no small feat in an economy that is overwhelmingly cash based.

A vibrant black market already exists in Cuba offering many of the services the government hopes to legitimize, and nobody involved pays income or sales tax.

The article tries to allay any fears that the country is embracing free-market capitalism, saying that the changes will always be “faithful to the socialist principles our constitution demands.”

Still the changes outlined over the past two weeks are sure to expand the breach between haves and have-nots in a land that has spent 50 years striving for an egalitarian utopia.

In all, some 178 private activities will be allowed and expanded, though only seven of those are entirely new — including accountants, bathroom attendants, tutors and fruit vendors. One entire page of the newspaper was devoted to listing jobs that will qualify for self-employment. The list has everything from floral wreath arrangers to animal trainers to interior decorators.

The rules, which are set to go into effect next month, will also allow for a great expansion of private restaurants — called paladares — which will be able to serve up to 20 people and expand their menus to include higher-priced items like beef and lobster.

Previously, government rules limited them to 12 seats and placed restrictions on what their menus could offer, though most establishments blatantly violated the rules.

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Editor’s Note: Associated Press reporter Will Weissert contributed to this report.

Source: AP News

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