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realclearworld

Cuba’s ‘reforms’ hit the proverbial wall

When "democratic" and "capitalist" reforms are solely predicated on saving and maintaining a brutally repressive totalitarian dictatorship run by a gang of octogenarian tyrants and murderers, such as the despots found in Cuba, sooner, rather than later, they are going to hit the proverbial wall.

Via the New York Times:

Cuba Hits Walls in 2-Year Effort at Privatization

http://graphics8.nytimes.com/images/2012/07/17/world/JP-CUBA-1/JP-CUBA-1-articleLarge.jpg

HAVANA — Nearly two years into the Cuban government’s economic overhaul aimed at slashing public payrolls and bolstering private enterprise, the reforms have slowed so much that many Cuban entrepreneurs and intellectuals are questioning the aging leadership’s ability — or will — to reshape one of the world’s last Communist systems and shift nearly half of the island’s output to private hands.

Those awaiting measures to create even more opportunity for private business got the opposite last week, when news spread of a little-advertised government decision to charge steep customs duties on the informal imports, from Miami and elsewhere, that are the lifeblood of many young businesses.

“This could have a huge impact,” said Emilio Morales, president of the Miami-based Havana Consulting Group, who said state-owned shops in Cuba were losing business to street vendors. “It shows the state isn’t ready to compete with the private sector.”

After the Cuban government began allowing people to open businesses in late 2010, nearly a quarter of a million of them have opted to work for themselves over the past 20 months, opening restaurants, snack bars and makeshift shops, driving taxis and fixing cellphones. Together with those who took advantage of an earlier experiment with privatization in the 1990s, about 387,000 Cubans, out of a population of about 11 million, are now self-employed; Cubans are also buying and selling homes and cars among themselves for the first time in 50 years.

As the private sector has grown, so has the deluge of goods brought to Cuba each day in suitcases and duffel bags, principally from Panama, Ecuador, the United States and Spain. With no access to a wholesale market, Cubans turn to friends, relatives and so-called mules for everything from food to trinkets to iPhones. This parallel trade has ballooned to more than $1 billion per year, Mr. Morales estimates, since the Obama administration began loosening of restrictions on travel and remittances in 2009.

Yunilka Barrios, who sells sunglasses, hairbands, nail polish and glittery bra straps from a grimy, narrow doorway, was alarmed by the prospect of a 100 percent tax on informal imports that the government indicated would go into effect in September. “Things seem to be tightening up,” she said.

Economists, businesspeople and diplomats believe President Raúl Castro is treading carefully because of resistance from midlevel functionaries reluctant to lose their perks, and from conservative officials nervous about the social and political impact of economic enfranchisement.

The Cuban leader, who has sworn off the “shock therapies” that ruptured the Soviet Union, said in a speech in December that the government would proceed “without hurry or improvisation, working to overcome the old dogmatic mind-set and correcting any mistakes in a timely fashion.”

But the pace of change has been too slow for people like Yelena López de la Paz, who went bust because of competition, lack of experience and low margins. She opened a snack bar on her block last July, and made about $100 profit the first month, selling pizzas, juice from her mother’s homegrown mangos and chewing gum sent by her grandmother in Miami. Then three snack bars opened nearby, and by the time she closed in November, Ms. de la Paz was taking home a dollar a day.

“I was investing a lot of money and time and earning nothing,” she said in frustration.

Continue reading HERE.

2 comments to Cuba’s ‘reforms’ hit the proverbial wall

  • asombra

    Somebody alert Claude Rains. Again. This is like a broken record.

  • Economists, businesspeople and diplomats believe President Raúl Castro is treading carefully because of resistance from midlevel functionaries reluctant to lose their perks, and from conservative officials nervous about the social and political impact of economic enfranchisement.

    There you have in an eloquent NYT nutshell why raul castro, despite the claims that he is an admirer of the "Chinese model" will NEVER implement a true Chinese model economy. In Cuba, because of a variety of factors, economic enfranchisement will lead to demands for political enfranchisement with a much a greater intensity than in China.