Inner-Workings of the Cuban Economy

By Osmel Ramirez Alvarez

If we judge by the Cuban TV news the Mariel mega-port and Special Economic Zone are a smashing success.
If we judge by the Cuban TV news the Mariel mega-port and Special Economic Zone are a smashing success.

HAVANA TIMES — When we watch the country’s economic news on Cuban TV or read about it in Granma, we have the delightful impression that everything is going well. Tourism is booming, Mariel is promising good business prospects; investments made in agriculture are already yielding fruit, etc. However, this media advertising hides a very different and disheartening reality which, out of the system’s habit and evil strategy, is hidden from us.

It’s alternative journalism on different websites which fills this information gap as well as it can. It was via alternative media that we found out about Indian workers being hired to build hotels in Havana (because of the Cuban contracting company’s malfunction which only robs Cuban workers’ wages and therefore are unable to ensure quality); about our airports’ flaws; about the disappointment that US businessmen have had after the US “pilot project” to manufacture mini-tractors was cancelled in Cuba; about the energy crisis due to the economic depression Venezuela was suffering long before the Cuban government announced it, and so on.

In this post, we will examine another example, less “macro”, but which reflects the day-to-day of economic agents which we all form a part of in this great mess that is called the Cuban economy.

Tourists in Havana. Photo: Juan Suarez
Tourists in Havana. Photo: Juan Suarez

As many of you readers know, I’m a tobacco farmer, a traditional crop which is widespread in my town. It’s a prioritized crop because it generates hard currency as it is exported and sold nationally to tourists: as well as a profitable national market due to exorbitant tobacco and cigarette prices in relation to the Cuban people’s wages.

Hypothetically-speaking, the authorities jack up the price because it’s a legal drug which affects consumers’ health and should therefore discourage consumption. However, many of us question this and believe that it’s to collect more of the money in circulation, with less products available, so as to be able to export more.

With such a large business, you would think that this sector would really get priority and that everything would flow, especially when nearly all of the rest of the national economy isn’t competitive or efficient. However, that isn’t the case. In fact, it’s the complete opposite, the domestic blockade is so strong and endemic to the Cuban system that areas which bring in profits like a goldmine, face truly stupid problems.

On October 15th, Cuba’s tobacco season began which will last until January 15th. And those of us who have planned to start sowing “early” have to do it sticking to the timetable due to logistical matters which relate to the crop’s drying capacity and specifications. We also have to prepare the soil, which takes several jobs, and this should mainly be done in August because regular rainfall comes in September and prevents us from doing this properly.

The majority of farmers haven’t “become rich” with tobacco cultivation like people believe.
The majority of farmers haven’t “become rich” with tobacco cultivation like people believe.  Illustration: Carlos

The majority of farmers haven’t “become rich” with tobacco cultivation like people believe. Only the State gets hold of the huge profits. It’s true that prices are much higher than they were before, however, the value of supplies has increased even more so and that then increases production costs. At the end of the day, the majority of us only earn the basic to get by throughout the year, just a little less miserable than a regular worker. There are rich farmers, of course there are, but they ar few and there are other reasons for this.

Agricultural credits are essential in most cases and this is precisely where my example of inefficiency, which I’m putting into the spotlight, comes into play. You would think that we have had access to funding since August so as to begin to pay for preparing the soil: that we have money in hand to buy plants and supplies in October and to pay workers because these are intensive activities which can’t be delayed. However, with the Cuban domestic blockade intact, suppositions clearly don’t hold.

This season, up until November 25th, dozens of tobacco farmers in Mayari hadn’t been able to access credit because of bureaucratic obstacles: and many of us had already sown our tobacco. By tightening the belt a thousand notches, taking our scarce resources to maintain our families so as to pay labor or accumulating debt with third parties who charge interest a lot of the time. It’s more than a difficulty, it’s an infuriating situation, which has been argued time and time again with those responsible and there wasn’t a quick solution. It seems like nobody was to blame and they always justify this with the same problem: “we don’t have enough people to see all of you in a timely and correct manner”: “We’re working on it but it’s a difficult matter.”

Tobacco field.
Tobacco field.

People were already ironically commenting that the solution would be for them to give us the credit in spring “to wait for the credit” and as it would take so long, it would come out in August, and that way we’ll have the money to work on time. It seems ridiculous but the entire system is ridiculous.

On the 27th, we finally decided to gather together at the Banking Committee where they approve all of the bank’s credits and we were all approved. It was pure bureaucracy and an anti-economic strategy to delay funding so as to ensure that people had already sowed their crops, so as not to “risk” their investment. Even more absurd because we need liquid money to be able to pay for preparing the soil and the planting, which are the one of the most expensive tasks.

Many people weren’t able to stick to the timetable precisely because they couldn’t find anybody to give them the money while the delinquent government bankers oiled the financial machine which has been left rusty by the dysfunctional system.  Does anybody believe that with similar economic model in place, we’ll be able to attain a prosperous and sustainable Socialism, which Raul Castro promised us? I’ll leave you to draw your own conclusions.

4 thoughts on “Inner-Workings of the Cuban Economy

  • To better illustrate rhe disaster that is the Cuban economy…..
    Cuba owes the Czech authorities $276m (£222m), and has offered to pay the Czech Republuc in RUM….. yes RUM!!! If the offer is accepted the Czechs would have enough Cuban rum for more than a century. OMG, what an f’n disaster!

  • Broken system. Academics that have never run a business always imagine the efficiency of a non profit system. Reality is so different.

  • Send this information to the U.S. news agencies. also to the government!!

  • Osmel Ramirez Alvarez describes how the Castro regime and its cohorts live in the dream world which he described of tourism booming, the $5 billion port of Mariel bringing manufacturing businesses to Cuba, the new railway line and road spur carrying ever increasing volumes of goods produced in Cuba to Mariel for shipment around the world and an energetic agricultural sector with ever increasing production.All this is shown on TV and described in Granma, the official organ of the Communist party of Cuba.
    The reality is vastly different. Cuba under the Castro dictatorship is sinking ever further into an economic morass. Mariel is to date a white elephant. There is little to no traffic on either the new railway or the new spur from the Autopista. I have yet to see a single train on that line, and between the spur egress and Havana – a distance of some 30-35 km, there are few container trucks in sight – within the last month, I counted only three in that distance on a weekday.
    How much confidence does Raul Castro actually have in the people of Cuba? We know that Fidel was on record as describing them as “scum” and “criminals, anti-social elements, loafers and parasites” but what of Raul who is more factual? His conclusion on July 7, 2013 was:

    “Thus part of society has come to see theft from the state as normal. There has been propagation of illegal constructions with relative impunity moreover in inappropriate sites, non-authorized occupation of housing, illicit marketing of goods and services, non-fulfillment of working hours, illegal cattle rustling and slaughter, capture of marine species in danger of extinction and utilization of the art of fishing, felling of forestry resources including in Havana’s magnificent Botanical Gardens, the hoarding of products in short supply and of bribes and their resale at higher prices, participation in games outside the law, price violations, the acceptance of bribes and privileges, preying on tourism and infraction of established regulations relating to informatics security.”

    Who writing in these pages would care to disagree with Raul Castro’s own assessment of the results of his and his late brother’s dictatorship? Secondly, having read the President of Cuba’s own assessment, how can foreign companies be expected to invest in the country which he described?

    Osmel describes the inefficiency of the administration and banking systems in fairly broad strokes, but the detail is worse. Air conditioned banks make their customers wait outside in the humid heat with ‘security’ allowing in one person at a time. An application submitted with plans to build a simple 650 sq. ft. house was still awaiting a decision twelve months later. State employees avoid taking decisions as in saying “yes” or “no”, they might make a mistake. The whole economic system is bogged down.

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