MIAMI—Newly licensed private businesses are becoming a lifeline for Cuba, bringing in about half of the country’s total food imports as the cash-strapped Communist government struggles to keep power plants running and provide public transport because of acute fuel shortages.
Havana passed laws allowing Cubans to form small businesses that can employ up to 100 people in the wake of country-wide protests that shook the impoverished island two years ago. Since then, more than 8,000 small and medium businesses have registered with the government. They are involved in a range of activities that go from tourism and construction to computer programming.
These businesses are now leading importers in a country that relies on imports of everything from fuel to most of its food. Cuba’s economy minister, Alejandro Gil Fernandez, said in a report to Cuba’s Congress on the state of the economy that imports by private companies could top $1 billion this year. They are on track to provide more than half of Cuba’s food imports, said Pavel Vidal, a Cuban economist at the Universidad Javeriana in Cali, Colombia.
“In the last two years, the private sector has been dominating commerce in Cuba to an unprecedented level,” Aldo Álvarez, a Cuban lawyer turned importer based in Havana, said in a telephone interview. “We not only have businesses, but we have the capacity to import.”
Allowing small businesses to operate is a dramatic step for the conservative Communist government. Havana has allowed individuals to be self-employed in a limited but growing number of occupations—which ranged from “clown” to “knife sharpener”—since the 1990s. The new policy expands the size and kinds of businesses Cubans can operate.
Last week, more than 70 Cuban entrepreneurs met in Miami with U.S. officials, leading Cuban-American businessmen and potential suppliers in a bid to boost the island’s private sector and understand how to navigate rules to trade with the U.S.
Cuba’s embassy to the U.S. referred comments to a recent radio interview with deputy foreign minister Carlos Fernández de Cossío, who said that Havana’s decision to allow small businesses was a sovereign decision but that Cuba wouldn’t allow big concentrations of property, wealth, and capital to develop, “at least for the moment.” He told Miami public radio station WLRN last week that economic liberalization won’t lead to a political challenge of Cuba’s single-party rule.
“We are not aiming at that,” he said.
A U.S. State Department spokesman said the Biden administration “is committed to supporting Cuba’s independent private sector in ways that maximize benefit to the Cuban people while minimizing benefit to the Cuban government.”
More than 400,000 Cubans have left the island for the U.S. over the past two years, according to data by U.S. Customs and Border Protection. The emigration wave has been fueled by political repression and severe electricity, fuel and food shortages, migrants say, in the worst economic crisis since the dissolution of the Soviet Union, Cuba’s main ally and trade partner, in the 1990s. Tourism, the island’s main moneymaker, collapsed as a result of the Covid-19 pandemic and has yet to fully recover.
Most of the damaging economic and financial sanctions imposed by the Trump administration remain in place. High inflation plagues the economy, while food and medicine are hard to find, say residents of Cuba and their relatives abroad. Days ago, the nation’s economy minister warned Cubans to prepare for more prolonged blackouts and fuel shortages that will severely restrict public and private transport.
Most Cubans who have government jobs or pensions make the equivalent of $20 a month or less and stand in line for hours to get government-provided rations that are many times scarce and late in arriving.
Much of Havana is crumbling, but in some neighborhoods the change brought by the businesses is palpable. Privately owned restaurants, bakeries, beauty salons and even gyms dot streets where before there were none.
“Now there are little grocery stores every other block selling inexpensive things, food products,” says former U.S. Congressman Joe García, who helps connect Cuban small-business owners with suppliers. “People complain that they’re expensive, but before there was nothing.”
Álvarez brings in about nine containers full of products such as chicken, flour and cleaning goods every month. He said that he wants to increase the number of containers filled with imports to 15 a month.
With a staff of 60, Álvarez keeps his products in a warehouse he rents from an idle Cuban state company and distributes them to private restaurants and grocery stores throughout the island.
For many of the businesses, finance is the biggest obstacle. Because of the U.S. trade embargo, Cubans cannot transfer funds from the island to U.S. bank accounts, complicating import payments. Some Cuban business people travel out of the island with pockets full of cash. Many say they stuff their clothes, suitcases and pockets and hope the authorities don’t check.
To avoid the complication of physically moving hard currency out of the island, many business owners engage in informal currency swaps, often through foreign travel agencies, which connect with Cuban importers on the island and agree to pay off their suppliers abroad. In exchange, their tourist groups receive the equivalent in Cuban pesos when they arrive on the island.
“The Cuban pesos often don’t leave Cuba. They just change hands outside the rails of the system,” said Matt Aho, a Cuban expert at Akerman, a law firm whose Miami office hosted the event.
New U.S. regulations that would allow Cuban entrepreneurs to use bank accounts in the U.S. to facilitate trade for Cuban small businesses have been under discussion for months, U.S. officials say.
Cuba’s nascent private sector is seen with suspicion by some on both sides of the Florida Straits. The Cuban government has a history of loosening up tight control of business activity when it faces a crisis and backtracking when the crisis is over. Many Cubans who have set up businesses fear that the government could shut them down.
“We live with high levels of uncertainty,” says Álvarez. “It’s not the first time the Cuban state goes in one direction, only to reverse course and go in another one.”
Vidal, the economist, calls the new businesses the biggest challenge for Cuba’s centrally planned economy. Government hard-liners fear they threaten state control, he said. Many Cubans who don’t have access to dollars blame the new enterprises for the high prices of consumer goods that are beyond their reach.
“They are in a crossfire,” says Vidal.
In Miami—as well as in Havana—some Cubans worry that only Cubans with close ties to the government are able to form successful private companies.
However, the Cuban delegation that attended the Miami conference succeeded in changing the minds of some attendees.
“We’ve had doubts about whether these business owners are beneficiaries of the dictatorship,” said Santiago Álvarez, who now lives in Miami and served time in a U.S. prison on weapons charges related to an anti-Castro plot. “ After meeting them I’ve realized that they are hard workers just like I am.”
Last weekend, Álvarez invited the visiting Cuban entrepreneurs to a paella at his home.
Source: Msn.com
