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HavanaJournal.com: Cuba Business

Cuban merchants hoping for more economic freedoms in Cuba

Posted February 24, 2008 by publisher in Cuba Business.
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By Manuel Roig-Franzia | Washington Post Foreign Service


Idalberto Estrada reaches for a squash at his stand in Cojimar, a Havana suburb. He and other vegetable vendors are among the few Cubans who have licenses to run private businesses.

Idalberto Estrada really wanted to make a sale.

He slashed a slender blade through the barklike brown skin of a yuca root, a staple of the meager Cuban diet. A woman with brightly dyed red hair leaned in skeptically, examining the root’s white flesh beneath Estrada’s sidewalk umbrella in this Havana suburb.

“Beautiful, isn’t it?” Estrada, 37, said, smiling hopefully.

The woman handed over a faded peso, and Estrada sighed with relief, knowing he was closer to breaking even for the day. In a country where more than 97 percent of adults work for the government and most private businesses are illegal, Estrada is an entrepreneur, opting for the risks and rewards of a tiny business over working for the state.

Estrada’s experience as a mini-capitalist in this socialist nation was made possible by a mid-1990s reform that legalized about 150 types of micro-businesses and was pushed for by Fidel Castro’s brother, Raúl. Fidel, 81, announced his retirement Tuesday after half a century of dominance, and Raúl, 76, is expected to be named president when the National Assembly meets Sunday.

Estrada and the 100,000 to 150,000 other self-employed Cubans provide a glimpse of what the future might look like here, and help explain some of the low-intensity excitement about the possibility of historic change. Estrada sometimes earns three or four times what he made before quitting the Cuban navy six years ago, when his pay was the equivalent of $17 a month. He still struggles to make ends meet, but he is much better off than the overwhelming majority of his neighbors who live in rotting homes with spotty plumbing and have to feed themselves on state salaries as low as $11 a month.

Raúl, who has been interim president in the 19 months since Fidel underwent multiple intestinal surgeries, has stoked hopes of even more dramatic change by hinting for months about “structural and conceptual” shifts in Cuba’s economy. Economists and many islanders see much in Raúl’s track record to suggest that he may expand private business opportunities and perhaps even restore some of the vaunted mid-1990s reforms that his all-powerful brother dismantled.

“I see it as a great possibility that Raúl will make changes to Cuba’s economy,” Óscar Espinosa Chepe, a former Cuban government economist and diplomat who was imprisoned in a 2003 crackdown on dissidents, said in an interview. “He is much more pragmatic than his brother.”

For all the expectations of a Raúl Castro presidency, there is still a hint of suspense in the capital of Havana. Cubans, who love political gossip, have speculated since Tuesday about possible alternative scenarios, including the appointment of a puppet president from the Council of State, the selection of Vice President Carlos Lage instead of Raúl or a theatrically staged demand by the National Assembly for Fidel to reverse his decision and make a triumphant return to the presidency. But even in the unlikely event that Raúl is not named president, he would still be expected to play a huge role in shaping Cuba’s economy.

Raúl pushed to make some self-employment legal in the mid-1990s as Cuba’s economy was staggering and its populace starving after the Soviet Union collapsed. Besides allowing produce vendors, the government also began granting licenses for guesthouses, mechanic shops and small restaurants, known as paladares.

But the biggest change Fidel let his brother talk him into was allowing more tourism. About 270,000 tourists went to Cuba in 1989. By 2006, that figure had jumped to 2.2 million, with nearly one in four tourists coming from Canada, according to the Cuban government. Once a bargain, Havana is now one of the most expensive cities to visit in Latin America, with rooms at more than half a dozen top hotels going for $200 to $600 a night.

The influx of foreign money from tourism and joint ventures in mining, tobacco and citrus stabilized Cuba’s economy in the late 1990s and early 2000s. (The Cuban government keeps up to 30 percent of profits.) And that’s when Fidel Castro’s government began taking back some of the business liberties it had granted.

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