Cuba Strengthens Military Monopoly over Domestic Markets

Cuba’s “reform process” was designed, not to solve the people’s problems, but those of the State and its bureaucracy.

Pedro Campos

Havana clothes vendor. Photo: Caridad

HAVANA TIMES — Recently, the government of the new Cuban Right set down regulations that barred private businesses from selling items of clothing and industrial articles brought from abroad, a practice that had gained ground over the last two years owing to the scant impetus given the self-employed sector by the measures of the so-called “reform process.”

Many are curious about this “step back”, which the officialdom seeks to portray as part of the need to impose order and discipline in the market, to prevent the misappropriation of resources and other similar practices.

The explanation is far simpler than that: the hard-currency stores operated by the State, particularly the TRD branch which is part of the commercial monopoly maintained by Cuba’s Revolutionary Armed Forces (FAR), have been facing the growing competition from the thousands of private businesses that sell clothing and other industrially-produced items on sidewalks, hallways, doorways and living rooms across the country.

These items, what’s more, are generally of a higher quality and cheaper than those offered by the island’s military domestic hard-currency trade monopoly.

It is not true that most of the products sold by these businesses are misappropriated State resources. If that were the case, it would be very easy to accuse these businesses of theft. We cannot of course say that no products are procured this way. Everyone in Cuba knows, however, that most of the clothing sold by this new class of business-owners comes from Ecuador, Panama, the United States and Mexico, and, in lesser volumes, from Italy. This holds for other industrially-produced articles.

More frequent trips to Cuba by members of the Cuban-American community in the United States and the granting of multiple-entry visas to Cubans by the US have given an unexpected impetus to commercial activities that are beyond State control.

In a way, this is reminiscent of the trade pirates practiced during colonial times, which the Spanish throne tried to prevent in order to protect its commercial monopoly.

The new migratory policies that have allowed many Cubans to travel abroad have not resulted in a massive exodus, as some bureaucrats who had hoped to see dissidents and unemployed persons go had expected. Rather, it has served to establish a broad commercial bridge between Cuba and other countries, relations which feed the island’s incipient self-employed sector and allows it to successfully compete with the stagnated, expensive, obsolete and corrupt State clothing and industrial items market.

Once again, many Cubans are feeling profound disappointment with the policies of the new Cuban Right which, in truth, only seeks to strengthen its State monopoly capitalism and to avail itself of the nascent private capital of Cubans residing on the island, the money of the Miami market and international Capital.

That is how State monopoly capitalism works: when the system is gasping for air, it loosens the monopoly reins. When it begins to breath normally again, it tightens them once more. It happened in the 1990s, following the liberalizing measures that brought about a massive protest on Havana’s ocean drive on August 5, 1994, measures that were gradually “rectified and adjusted.”

We do not have any exact statistics on the number of people who would be left without work as a result of these new, arbitrary State measures, but, judging from the number of people who sell clothing and industrially-manufactured articles around Havana’s neighborhoods, we could be looking at thousands of people who would suddenly swell the ranks of the unemployed. And, let it be clear: their jobs were generated outside the domain of the State, with non-State resources.

The main proponents of the so-called “reform process” are calling for a liberalization of the country’s productive forces, but, in practice, they implement measures that prevent this and that continue to privilege the commercial activity of State monopolies.

Thus, the reform process evinces one of its many contradictions, expressing an interest in State decentralization on the one hand and dictating regulations that restrict individual commercial initiative on the other.

The State understands, but its interests make it impossible for it to accept, that the country’s economy will not develop without a broader, more dynamic domestic market.

The question therefore arises: how sincere is the government when it announces that one of the interests behind the “reform process” is to generate non-State employment?

It is said that, in some places in Cuba’s interior, all items of clothing that haven’t been produced by those who sell them are being confiscated by authorities. Thanks to the “smarts” that Cuba’s State economic monopoly has given rise to, we will soon likely see these new sellers replace the original label on the garment with local brands that read “Juan Perez – Made in Cuba.”

An old saying goes: “whatever the law, there’s always a loophole.” Since Cubans have no say in the making of the law, we have been left with no other choice but to invent the loopholes.

We’re already hearing rumors that new measures to regulate the sale of fuel oil to private cab drivers will be in place by the end of this year and that the government is assessing the possibility of restricting the sale of records and films, out of “copyright considerations.”

It is clear, as many of us have been suggesting since the first measures were implemented, that the “reform process”, plagued as it is by inconsistencies and contradictions, was never designed to solve the problems faced by common Cubans, but to solve the State’s problems. When its actions (as is the case here) affect the interests of the bureaucratic elite and its monopolies, counter-measures are implemented.

Let those who are unaware of the State’s true intentions buy into this business of the “reform process.” Let them continue tightening the screws on the people, that’s their problem. When the people decide to strike back, don’t blame imperialism or “counterrevolutionaries.” We’ve warned you of this many times before: you have to look for the causes of the people’s growing discontent in your own, “revolutionary” actions.
Pedro Campos: [email protected]


16 thoughts on “Cuba Strengthens Military Monopoly over Domestic Markets

  • In any dictatorship the ruling authorities must have the support of the military so it can keep the opposition under control. A key element in this is to give the military economic power and provide benefits not available to the civilian population. The massive housing program underway for the military is another example of keeping it as the power in Cuba. It has no reason to revolt if it is at the top of the pyramid.

  • If a fact is well established, it can’t be twisted. You can play with the possible causes and consequences all you want but the fact itself remains unchanged.

  • No. Twisting facts, changing subject and resulting to personal insults are the tell-tale signs of a Castro apologist.
    Dualism – acting as if the world is bi-polar with the US and Cuba as only alternatives – is another.
    You fit the bill.
    Humberto is no troll and contributed with factual data in lots of places and on lots of occasions. Some stuff isn’t worth losing time over.
    You seem to be insulted he doesn’t take you serious. Others don’t either due to the content of your messages.
    As such I disagree on your characterization of Humberto. that is what I expressed.
    On the facts I disagree with you: see my other replies.

  • You missed the whole point. When analyzing things rationally, there is a heuristic tool known as Occam’s razor and is a very simple principle: among competing hypotheses, the one with the fewest assumptions should be selected.

    The author of the article is claiming the existence of a nation wide conspiracy to explain trivial events that are not even specific to Cuba but common to ANY current form of government. Picking the conspiracy over the common explanation without any further evidence is silly and a waste of time and effort that could be applied to other, more important issues (like the legalization of foreign trade for individuals)

    “Most of the the clothing sold in Cuba is no “contraband”. It is imported by “mules” that pay the required import taxes. the goods are as such no contraband. What is illegal is to sell these legally imported goods. Trade is the issue here. Not smuggling.”

    Sorry, but you are plainly wrong here. The goods that a person can import free of taxes are explicitly stated as “for personal use” plus extra 10kg in other goods. A mule is obviously not bringing 30kg of personal items (otherwise they wont be able to cover the expense of the ticket), plus they are paying the standard overweight rate for customs that is relatively low (10 CUC per kg if I recall correctly).

    Those rates are intended explicitly for personal allowances and they are obviously using it for commercial purposes and thats illegal and indeed, smuggling. And what you don’t realize is that if the practice persists, they will simply reduce the free allowances and raise the import duties for ALL travelers.

    Also, the government issued licenses for selling clothing items of their own manufacture and they are using it as a front to resell smuggled items. Thats also a violation of the licensing terms, so they can crack on both illegal activities without the need of any dumbass conspiracy.

    Specially when you realize that 90%+ of the imported clothes are ALSO cheap textiles manufactured in Asia (ironically, mostly in China) and sold at huge margins to already impoverished people.

  • Stating an opinion different than yours != being a Castro apologist (or for that matter a gusano). Thats something that die hard fans from both sides on the Cuban divide must to learn to accept.

    Not to mention that in his little world (and yours) being a Castro apologist is an insult as bad as it can be, so even if I reply in kind (that I did not), I would have been in my right.

    Humberto is a well known troll, just look for articles about Cuba and you will find him pasting long articles on unrelated (or loosely related) topics in virtually all of them open to comments. That goes well beyond political animosity: either he is been payed to do so or he is obsessed with the anti Castro rhetoric beyond of what most people consider the boundaries of sanity.

    Either way, he is unlikely to engage in any meaningful discussion regarding Cuba issues and nevertheless i invited him to participate. But I’m not interested in children’s bickering, a discussion is about the arguments and not the person stating them.

    If someone disagrees with something I said, he or she can state why he/she thinks I’m wrong, so I can counter with more arguments and rinse and repeat until either side changes their opinion or both agree to disagree,

  • What Humberto did was in fact expressing his opinion about your post and describing what he felt it was.
    Stop personal insults please.

  • Try this stunt in any other than a Stalinist country and the military / elite would be revoked in the first election.
    The “contraband laws” of Cuba are those to repress the free flow of goods and services other countries value. they may demand import duties, but they let trade flow. With the exception of North Korea I also know of no country that “reserves the right to distribute imported goods” to the military elite that runs the country.
    Most of the the clothing sold in Cuba is no “contraband”. It is imported by “mules” that pay the required import taxes. the goods are as such no contraband. What is illegal is to sell these legally imported goods. Trade is the issue here. Not smuggling.
    Get your facts straight.

  • Lol, try this stunt in any OTHER country and see what happens. There is no hidden agenda here, ALL governments from ALL all sides of the political spectrum enforce very stringent smuggling and contraband laws (never heard the joke about death and taxes?)

    What happens is that something that was been tolerated at a relatively small scale boomed as illegal business moving serious money, money that the government perceives as is not properly taxed (I’m not 100% sure, but my understanding is that they pay a flat tax for the permit in CUP, while an import tax would be a significant percent of the value in foreign currency) so they will do what all governments do an close the loophole.

    There is nothing particularly unusual in this and singling out Cuba because is Cuba takes you nowhere.

  • The military is using its political and judicial power to eliminate a growing and successful challenge of their retail monopoly by independent traders.
    The laws are made to suit and protect the elite and their economic interests.
    The laws you say that need to be enforced are in reality just part of the “conspiracy” against the Cuban people.
    I do agree that opening trade to individuals is the solution. The only real one. That the elite will not allow as it would mean loss of income and loss of control.

  • The Cuban military has seized economic power in Cuba. Cuba had three main economic groups: the Castros, the parlemenarians aound Alarcon and the military under Raul.
    The military wing took over the main companies it did not control (Cimex, …) and unified control under Raul.
    That means the military now control nearly all of tourism and not just Gaviota, their original holding. They also control all of the retail outlets (the TRD’s).
    Textiles are part of the mainstay of their retail trade. The management of the shops is so bad that the low cost and lo quality Chinese crap is not liked by the people. Independent traders have found their way in to that market and took away lots of business from the military. They now are cracking down to reclaim the market smart business and stiff competition has taken away.
    Another proof the elite in Cuba has no real intent to relinquish power nor to allow some real economic freedom.

  • Still spamming any forum under the sun? Stop being a troll and either participate in the debate or go back to your cave and let the grown ups talk with each in peace.

    And I said participate, that means posting your own opinions for a change, not the adorable cut and paste of long, unrelated topics you are so adept at.

  • I did not missed the point. The author claims some kind of military conspiracy to explain something very simple, so I call it BS.

    Besides, your point is also pretty silly, a government (any government) never needs a pretext to enforce their own laws. And in this particular case, it looks like they are preparing for the big gamble that is fixing the dual currency issues and that can’t work unless they crack on a lot of illegal activities.

    Keeping the status quo (aka widespread corruption as the new normal) risks losing a *lot* of money during the transition and with it losing political control of the country and that they wont allow to happen no matter the cost.

    As for that being a dumb move.. don’t bet on it. If they get serious, those people will risk the dreadful illicit economic activity charges (aka maceta law) and losing property and freedom. They can tolerate small scale competition as long as is good for them, but they know exactly whats going on and can disrupt it at anytime if it becomes an annoyance.

    Of course, a real solution would be opening foreign trade to individuals, creating a wholesale market and legalizing private retailer but don’t bet that will happen anytime soon (still, thats a remote possibility if they try to copy the Chinese model)

  • You missed the point. Private sale of imported clothing has ALWAYS been illegal. This new regulation simply expressly states what had been understood prior to its enforcement. Previously, the Castros simply looked the other way when ‘cuentapropistas’ made what was always illegal ‘legal’ when the sale of homemade clothes by a costuera became a licensed business. There was never any “loophole” to close. By enforcing existing law, the Castros are simply forcing this business to go back underground. At least when it was done out in the open, Cubans paid taxes. I know people who make a king’s ransom by Cuban standards going back and forth between Havana and Cancun where they catch a bus to the international zone in Belize to buy clothes for resale in Cuba. They will continue to grease the palms of their contacts in the Aduana (Customs) to get their clothes into Cuba. Now, instead of leaving the front door of their house open to show passersby the clothes they have for sale inside, they will just close the door and only open it for people they recognize. Cubans will not go without their clothes!! Another dumb move by the Catros.

  • Bollocks!!! Such a Castro oligarchy apologist!

  • Bollocks.

    They give them a license to sell what they created themselves and as the author unapologetically admits, they started using it as a front to sell smuggled merchandise (yes, thats what you call items you declare as personal in customs and then sell for profit)

    The authorities didn’t like that, so they closed the legal loophole. Done.

    There is no need to look for nefarious conspiracies to explain what should be common sense to someone NOT raised in a place were corruption rules.

  • A very good essay.

    To be sure, the whole point of the recent economic reforms is to keep the regime in power. Period. It’s not about helping the people, or about furthering the revolution. It’s about maintaining the military’s firm grip on power.

Comments are closed.