Cuba’s Private Sector Readies for Government Offensive

“And constant faith in victory.” (Raul Castro, July 14th 2017)           

By Vicente Morin Aguado        

HAVANA TIMES — Raul Castro dedicated the heart of his latest speech – at the National Assemby – to the self-employed sector which is considered to be a motor for the economy, but as fishermen say, there are people who fish and then get scared of fish eyes.

Opening his speech, after the long paragraph before his attack, the leader argued his case. “Divergence from the laws established within this sector and the abuse of legal regulations currently in force, such as using raw materials and equipment from illegal sources has been made evident. Likewise, under declaring income so as to avoid paying tax and shortcomings in state control at every level.”

Tax evasion isn’t anything new in this world, it usually only becomes news when somebody famous does it, like let’s say Al Capone in Chicago in the ‘30s and now, Cristiano Ronaldo. Referring to “illegal” activities, in the case of raw materials and equipment, even though the backdrop to this problem is known, the leader himself offers us a clue when he says:

“There are testimonies of cases where the same person already has two, three, four and even five restaurants. Not in one province, but in several, a person who has traveled over 30 times to different countries around the world. Where do they get their money from?”

The same question would be valid for his nephew Tony Castro who spent a summer in Bodrum, Turkey, but let’s not get off the main subject of our comment.

It’s clear that a thorough reforms process applied to the economy will call for the corresponding legal framework to be reformulated, which has never happened in Cuba because this would mean accepting the end of the Socialist invention which is currently in force. Therefore, running several restaurants, a sign of financial prosperity in any other country, is considered “illegal” here in Cuba. The same can be said of a successful business person who repeatedly travels abroad in search of those items that are inexplicably said to exist outside of the Law.

The Castro idea of self-employment is limited to letting some steam out of the pressure cooker without modifying its content, that is to say, in true Lampedusa style, everything must change so that everything can stay the same.  All we have to do is interpret the question Raul asks himself in this recent speech: What is the State doing, especially a Socialist State, running a barber shop with one, two or three chairs…?

Small businesses will be allowed, but it seems to be an absolute insult to Cuban socialism that self-employed entrepreneurs and cooperatives are able to make a chain of barber shops work financially-speaking, not even a beauty salon whose services exceed the inefficiency accumulated in Cuba over the last half of a century.

There is some logic in the Cuban leader’s understanding of this; it’s the same thing as putting a glass with crystal clear water next to a crude glass vase with cloudy water.

At least Raul Castro has formally assumed the main responsibility of the negative consequences of these faint reforms. Maybe at 86 years old, he isn’t up for daring to be a Deng Xiaoping and that’s why he has gone back on himself and asks: “Whose mistakes are these? – cooperatives, small private businesses, self-employed workers – Us, mainly.”

His repeated confession is a warning that self-employment will continue to exist in formal terms but it’ll be something else in day-to-day living. Non-governmental cooperative and other small businesses outside of the government’s direct control will face a great “legal” attack, stemming from the deliberate, individual interpretation of the legal framework that is called “socialist”, which was created when the self-employed work didn’t exist in Cuba.

A telling example: the state maintains the right to hold a complete monopoly on foreign trade, which openly clashes with the progress of Cuba’s national market for consumer products – clothes, shoes, electrical appliances and other things – as small private businesses have proven themselves to be much more efficient than hard-currency stores.  Communist reasoning, in true Castro fashion, is demanding that this emerging market be nipped in the bud.

If you want more of the same, all you have to do is remember the government’s negative response for any kind of direct funding from abroad for cooperatives and/or small private businsses, an intiative which clashes with the other well-established Cuban State monopoly, the banking system, which is repeatedly incompetent.

Nothing can therefore be expected from this ruling elite who have aged in power.  The historic leadership of Fidel’s Revolution has never assessed their mistakes, which have been many and cost many millions in financial terms, as well as being disastrous for the social strata in a country that is lacking a functional economic system.

We are left with the current leader’s humble confession, faint because he doesn’t go into any details: “Mistakes are mistakes, and they are our own mistakes, and if we are going to measure them against the hierarchy among us, these mistakes are first and foremost mine…”

Run, there’s soup!

If, the all-powerful Head of the Socialist State voices his opinion in such a sincere manner, self-employed workers can expect an offensive of custom officials, inspectors, police visits and other government officials, which arise from laws that not one of the 614 “lawmakers” in the Assembly who listened to Raul, dared to question.

I will write a second article about this reality we live everyday.  For now, we are left with these words lingering on the General-President’s breath “And constant faith in victory.” (Raul Castro, July 14th 2017)

Vicente Morín Aguado: [email protected]