Free-market Reforms Take Hold in Cuba

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Havana, Cuba

SANTA ISABEL DE LAS LAJAS, Cuba (AP) — On sleepy streets plied by rickety horse-drawn carts and rusting 1950s automobiles, the sounds of commerce are once again being heard in Cuba’s countryside.

A private sandwich shop has opened in a town previously served only by a grim state-run cafeteria. A woman sells trinkets from a small spot of shade. A weathered farmer in dusty jeans has rigged up an ancient ice cream machine and is selling cones for 8 cents a pop.

Out of sight of Cuba’s dollar-spending tourists, in areas where money from overseas relatives trickles in only sporadically, dusty towns like this one slowly are being revitalized by a series of private enterprise initiatives ushered in by President Raul Castro.

Visits to more than a dozen towns in the central provinces ofCienfuegos and Sancti Spiritus found private businesses popping up on every main street, places hard hit by the decline of Cuba’s sugar industry and the general economic malaise that has settled over the country after more than half a century of Socialist rule.

Even in one-street hamlets like Yaguaramas, small businesses are buzzing while many residents, and most canines and livestock, lounge sleepily in the broiling midday sun.

The government says about 338,000 Cubans across the island now have licenses to operate private businesses, including more than 4,500 in Cienfuegos and 14,000 in Sancti Spiritus. While the number has not changed significantly since April, it is still more than three times the government’s goal for the year. The businesses are the result of Castro’s plan to inject a measure of capitalism into Cuba’s flatlining Marxist economy.

The new businesses are exceedingly modest. The income generated is nowhere near enough to transform Cuba’s perennially weak economy. But on the level of individual lives, or the hopes of a small town, residents say the reforms have been a boon.

“It’s a way of having something that is all yours,” said Alain Suarez, who along with his family has opened a professional looking “guarapera,” or sugarcane juice stand, in Santa Isabel de Las Lajas, about 25 kilometers (16 miles) from the central city of Cienfuegos up a bumpy byway lined by tall fields of sugar cane.

The bright-faced 23-year-old points to a small pizza stand across the street from his establishment, and another that sells sandwiches. “All these businesses that have opened up recently have given the town new life.”

While he speaks to a reporter, a dozen schoolchildren come over to buy drinks, and a huge press that Suarez’s father concocted with an old American electric motor whirrs from a back room, sending sugarcane juice running down a metal trough and through a little window into a bucket near the front counter. The children pay 4 cents each for a cup, and go off happy.

As Suarez’s little juice stand shows, free enterprise starts off small in a place where most residents make salaries of about $20 a month and where all private businesses, from humble grocery stores to electronics shops to giant factories, were taken over by the socialist state in the late 1960s.

The town was the birthplace of legendary singer Benny More (pronounced mor-AY), who immortalized it in the 1955 song “Lajas, Mi Rincon Querido” (“Lajas, My Beloved Place”). But it has experienced trying days since then, including the dismantling of one of its giant sugar refineries in 2002 and the temporary closure of another since then. Cuba, once famed for its lucrative sugar trade, has seen production plummet, with 2010’s harvest the worst in 105 years.

Other than a brief festival each year to honor More, Lajas rarely gets any tourists, and residents say few receive remittances from relatives in South Florida or elsewhere. And while Castro’s plan to lay off half a million state workers has stalled, Cuba has shed 127,000 government jobs, further thinning the ranks of people with money to spend.

But Cuba’s countryside benefits from a quirk of the country’s economic system. Because big, inefficient state-controlled farms have trouble meeting the country’s demand for food, it may be the only place in the hemisphere where small-scale private farmers are near the top of the income pile.

“Here, everything is reversed,” Omar Everleny Perez, the lead economist at Havana University’s Center for Cuban Economic Studies, told The Associated Press in the first interview that any Cuban government or university economist has given a foreign news organization since the reforms were announced in October 2009.

Perez said Cuban farmers survived the lean years of the 1990s that followed the collapse of the Soviet Union better than city dwellers because they were able to sell the food they grew at relatively high prices to those desperate for nourishment.

“There are bank accounts worth 4 or 5 million Cuban pesos ($160,000 to $200,000) in the hands of farmers,” he said. Perez said 13 percent of Cubans hold 90 percent of the money in all of the island’s private bank accounts. “It is very concentrated, and much of it belongs to the farmers,” he said.

Perez has been unusually outspoken in his criticism of the reforms so far, arguing in opinion pieces published by the Roman Catholic Church and elsewhere that much more needs to be done to pull educated Cuban professionals into the private sector, allow bank credits to would-be entrepreneurs and establish a wholesale market to supply the new businesses.

But he said the changes are actually going better in the countryside.

He pointed to a program started in 2008 that has turned over more than 1.3 million hectares (3.2 million acres) of fallow government land to small-time farmers. While it has been beset by complaints of inefficiency, the program has put cash in the pockets of many rural families and some of it has gone into patronizing or funding new private businesses.

Salvador Parra Maya, a 46-year-old musician in Rodas, a town of about 12,000 in Cienfuegos province, said his family had invested $1,000 in a waist-high refrigerator, countertop and oven for a take-out sandwich shop set up in the front room of its small apartment. Up the block on the main street, a woman sold sticky peanut treats, and a barber had expanded his kiosk with a license to sell bootleg DVDs. It may not be Fifth Avenue, but for Rodas it’s the closest thing.

“The town has improved,” Maya said. “There’s more to buy, the quality of life is better. People are satisfied.”

In Cienfuegos itself, a relative metropolis of about 170,000 along the southern Majagua peninsula, the economic reforms have created a boom in private restaurants, or “paladares,” said Santiago Gonzalez, an engineer who opened a rock’n’ roll-themed eatery called “El Lobo” (The Wolf) in the center of the city.

The restaurant features posters of once-banned 1970s rock groups and a painting of KISS frontman Paul Stanley, with whom Gonzalez shares an eerie resemblance. Despite the somewhat shabby interior, he says his place is always full, with a mix of tourists and Cubans, and that he can clear up to 3,000 pesos ($140) a month after taxes, about seven times what he earned as an engineer.

Gonzalez said the number of paladares in the city had soared from just two before the reforms to between 40 and 50 today.

“From last year to this, you can just see the city changing,” Gonzalez said. “It is a city that is prospering.”

Perez said most of the reforms until now have been designed to alleviate the economic hardship of citizens, and they have been adopted first because they don’t cost the state anything. But he cautioned that the pace of change must pick up significantly to pull Cuba out of its economic malaise.

In addition to bank credits and a wholesale market, Perez has been advocating the creation of mid-sized cooperative companies that can do business directly with the state — making boots for workers, or preparing lunches, or selling transportation services — something that Cuban leaders have promised but not yet implemented.

On Thursday, Cuba announced the legalization of a real estate market, something the government had been promising for more than a year.

“We are only at the beginning of the process,” he said. “The law allowing private enterprise … is not sufficient to boost the economy. Selling sandwiches isn’t going to make the economy grow.”

But in Lajas and other towns, the reforms have been enough to change people’s attitudes, and keep many young people from going away.

“Fewer people are leaving town because they are finding something to do here,” said Arelis Contreras, the mother of two young adults who says she used to worry that her children would leave rather than make a go of it in a town that offered them little work.

“Now, they won’t have to go to Havana or Santiago in search of something better,” she smiled. “Because they will have it right here.”

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