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Cuba’s New Economy
Posted on Apr 14, 2011
By Reese Erlich
Havana has a familiar feel by now. It’s my 12th visit since 1968. By 11 a.m. the temperature hits 95 degrees. I sweat like Sydney Greenstreet in “The Maltese Falcon.” Some Cubans cheerfully walk with their children. Although others fill the street corners with nothing to do, I see significant changes since my last reporting trip, in 2008.
A hardware store and a furniture store have popped up near the corner of 17th Street and M. They are no big deal by U.S. standards, but I remember when a friend had to spend months finding black market cement, iron and paint to remodel his house. Now all these items are for sale in stores, even if they cost a lot by Cuban standards.
Privately owned snack bars, restaurants and B&Bs have cropped up all around town. Starting Jan. 1, a change in government rules encouraged the creation of small businesses, in part by lowering the cost of business licenses.
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So far, however, only a few thousand have been laid off, out of a workforce of 5 million. About 80 percent of Cubans work for the state. To date, more than 113,000 people nationwide have taken out business licenses, and 100,000 plan to lease government land as small farmers.
On April 16 the Cuban Communist Party will begin its congress to decide which economic reforms to implement and how quickly. But ordinary Cubans, including rank-and-file communists, are raising objections to the layoffs and elimination of the ration card system.
From all indications, some reforms that were supposed to take months to implement will now take years. Cubans are cautiously optimistic about the changes, but they’re also scared.
Everyone I spoke with agrees the centralized Cuban economic model isn’t working. Economist Blanca Munster, who works at a government institute, tells me that 70 percent of the country’s food is already produced by private farmers and co-ops. She says the state farms, which the government promoted for years, are very inefficient.
“The state farm produces tomatoes and fruit, but there are no boxes to ship them and no trucks to take the produce to the city,” she says.
Under the new reforms, state companies will have to show a profit or face possible bankruptcy. Cuban authorities are finally admitting that free markets are a much more efficient means to operate small farms, restaurants, bicycle repair shops and similar enterprises.
But since the early 1960s, when Fidel Castro announced that Cuba would follow a Marxist model, Cubans have received subsidized food, utilities, housing, education and medical care. What will happen to these pillars of the revolution under the new reforms?
I drive out to Villa Panamericana to meet the Ford family once again. Villa Panamericana, on the eastern outskirts of Havana, was built to house athletes for the 1991 Pan American Games. The government later gave the apartments to ordinary Cubans.
I first met Angela Jimenez 20 years ago. As a black woman living in Havana before the 1959 revolution, she could find work only as a domestic servant. Her daughter, Ernestina Ford, received a free university education and became a professor.
Her granddaughter, Yoama Ford, could have left the country but chose to stay in Cuba. She works as a translator. Yoama welcomed me into the two-bedroom apartment that she shares with her husband, mother and father.
Combining all the family members’ incomes, plus a few dollars received from relatives living abroad, the Fords do OK economically. But prices for some essentials remain high. Yoama notes that high cost makes “it very difficult to buy beef in the market.”
Gasoline has hit almost $5 a gallon due to the Middle East crises. That would be expensive in the U.S., but in Cuba, where the average monthly salary is $18, it’s a catastrophe.
We walk down the street to a government-owned beer and pizza restaurant that charges affordable prices, something new for the neighborhood. Yoama Ford likes the competition between private and state-owned restaurants, which she thinks will improve both.
In general she’s optimistic about the economic reforms. “I’m trying to go with the flow, trying to see the good side of it—even if sometimes there are things that aren’t working.”
In another town outside Havana, a college professor named Marta tells me about the discussions taking place in her Communist Party chapter. She asks that her full name not be used. Marta says the discussions before the start of the party congress have focused on the layoffs.
“We worry about the middle-income people, the workers, people who don’t have options to find other jobs,” she says. “There is support for the changes because it’s the right thing, but people worry about not having a job.”
Manuel Yepe smiles when he hears Marta’s comment. He’s a former ambassador and former ranking Communist Party official.
“Everyone has a general view favorable to the changes,” he notes with a chuckle. “But when it comes to their personal situation, they would like it not to affect them directly.”
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