Concrete Ways to Alleviate Shortages in Cuba

From HT editor Circles Robinson

Havana photo by Juan Suarez

HAVANA TIMES – First of all let me say, like so many Cubans have stated on our publication, the shortages of basic foods, personal hygiene products and medicines is not something at all new on the island.  It has been going on, off-and-on, for six decades. 

However, extreme shortages have also occurred, etched in many Cubans’ memories. The ones in the 1990s and the current 2019-2021 shortages stand out as the most extreme for those people born after Fidel took over in 1959.

What’s most incredible to me is that instead of taking bold action the government makes people routinely line up, risking Covid infection, to get something to eat for their families. Likewise, for any personal hygiene or home cleaning product that might be for sale.

To give you an idea of how bad the situation is, when people see a line with dozens or hundreds, they join in to get their place without even knowing what might be for sale if they actually make it into the store.

A major contradiction in discourse/reality is that on the TV news the president and other leaders keep telling people they need to be more productive to produce more food and consumer products. How in the hell does one do that if they must wait 3 to 6 hours in line during the day?

I’m convinced the reason is the Communist Party/Government’s unwillingness to pursue a non-perfect solution to the extreme situation. It would mean breaking inertia and taking the bold step of giving up the monopoly over all retail sales on the island and the huge mark up the military corporation puts on their products.

There are numerous multinational supermarket chains in the non-US world (to avoid the embargo) that would most likely love to open stores in Cuba as long as they had real security over their properties/investments and be able to manage their own finances including importation of goods and the taking out of profits. Carrefour, Almacenes Éxito S.A., Grupo Elektra S.A.B. de C.V. are three of them but there are dozens more possibilities. 

These chains would sell in US dollars or other hard currency equivalents, not in the devalued Cuban pesos that the Cuban government doesn’t want either.  The state could put on a big sales tax and benefit in that way without having to run inefficient, poorly stocked stores as it does today. Workers in the foreign chain stores will no doubt be better paid and the service far more consumer friendly than what exists today.

This, again, is not a panacea. If the Cuban military corporation, CIMEX, was able to stock their stores and provide stable product supplies, even if at highly taxed prices, the idea of offering a multinational to come in would not be as necessary.

However, there are two key precedents. Two of Fidel Castro’s favorite multinationals were Nestle and Adidas, for ice cream products and sports shoes and clothing respectively.  He gave them both a virtual monopoly on the captive local market.  The financial arrangements and what the Cuban government or Communist Party got out of it were never made public. Fidel himself was often seen wearing a warm-up outfit with the Adidas label in plain sight, in a country where advertising was a no-no.

The chain would probably want to sell with less than the over 200% markup the military puts on most of their products.  The foreign company would likely want to promote greater sales by making more reasonable prices.

Yes, just like the government/military’s US dollar stores today, not everyone would be able to shop there. However, the illicit market would garner its supplies to resell just as is happening today with those stores.

With the government out of the picture except to collect the tax levied, the stores would be full of products according to consumer demand.  Wouldn’t that be better than the current desperate situation? The same could be done with medicines. Let a reputable foreign pharmacy company open shops under a similar arrangement. Thus, alleviating some of the hardship that leads to pain and desperation.

Again, these suggestions are not a best-case scenario. Probably two thirds of Cubans don’t have frequent or any access to dollars or equivalents because they don’t receive help from family abroad. But at least when they are able to shop occasionally, or to purchase on the illicit market, an abundance of products in the country would no doubt bring down the outlandish prices Cubans pay today for scarce basic goods, when and if they appear.

If the government/military is willing to give up their monopoly and settle for a flat tax on sales, the state coffers would benefit, and Cubans might have more time to work harder as the president and other leaders urge as the patriotic thing to do in these hard times.

Read more from Cuba here on Havana Times.


One thought on “Concrete Ways to Alleviate Shortages in Cuba

  • July 12, 2021 at 3:41 pm
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    Circles Robinson makes some very poignant points in attempting to provide solutions to the economic crisis beholding Cuba today and for the past decades. The idea of potentially bringing in to the Cuban commercial retail space – grocery stores – like we see here in the West seems to be a good idea. But the crystal clear caveat must be these multinational enterprises will only enter if they are allowed – in writing – to operate as stand alone business entities as they operate in the capitalist and communist world outside Cuba.

    These multinational grocery chains would demand from the current communist leaders unfettered access to their own way of doing retail business operations. They would want “incentives” to come to Cuba. Incentives such as inexpensive land to build warehouses to store merchandise; available workforce to be paid according to the stores wage policies and not wages extorted from workers; retail profits to be distributed freely to shareholders as done in the Western world; store locations set up according to retail potential sales maximization. Taxes will be paid as per any other Cuban business operation.

    I suppose the most important incentive is the stores executives, be they trained Cubans or otherwise, unequivocally be allowed to enter the Cuban market and operate as they do outside the Cuban market. That is hands off all business operations from the communist government. Hands off in all day to day operations with regard to the planning, operating, organizing, directing and controlling all aspects of retail operations.

    Any of the brand stores Circles named would more than likely love to do business in Cuba under an unfettered fair market system. But what exactly would entice them to enter this communist, unyielding, repressive, potentially hostile market?

    Circles is correct in asking what special deal did Addidas sports wear conglomerate and Neilson ice cream multinational company receive from Fidel to allow those two colossal corporate entities to operate in Cuba, unfettered, for so long and with a monolithic monopoly on their sold products. Those companies certainly had to be offered some form of lucrative incentive(s). Perhaps it was the monopoly incentive. Probably, it was more than that. What exactly, we’ll never know.

    In the final analysis, I doubt those prominent commercial retail giants namely, “Carrefour, Almacenes Éxito S.A., Grupo Elektra S.A.B. de C.V. are three of them but there are dozens more possibilities.” would even consider the possibility of doing business on an island that today is experiencing serious political and warranted public social upheaval. Corporate executives read and are completely aware what is presently happening in Cuba today.

    When the Cuban “President Diaz-Canel sounded the war horn saying “the streets belong to the revolutionaries”. (Unprecedented Events in Cuba Demand Politics not War, July 12, 2021) retail corporate Board members of the stores stated, along with their corporate executives, together with corporate shareholders are paying close attention to the crisis in Cuba today and will not want to commercially engage in a potential political catastrophe that can manifest itself into the streets where things can get very nasty very quickly. No business entity will seriously invest in such a potentially hostile climate. It makes no business sense. For the corporate retail giants, it is a lose lose business situation in Cuba presently.

    President Diaz- Canel the leader of the country, one who is suppose to set a positive tone for the country, one who is suppose to calm the unprecedented situation, one who is suppose to reassure foreign investors that Cuba is a good place to do business, what does he go and do? President Diaz- Canel proverbially shoots himself, and the country, in the foot and provokes and antagonizes the volatile situation making it even worse, especially for foreign investors.

    With Cuban communist leaders who put communist ideology above all else, this will cause foreign business entities to give a thumbs down to dropping investment dollars on an island so desperate for foreign help. Meanwhile the majority of reasonable Cubans, unfortunately, must continue to suffer.

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