Headlines | Columnist Service


Cuba: Intense Focus on the Economy

HAVANA, Aug 1 2012 (IPS) - A few days ago a small boat docked at the port of Havana. Flying the Bolivian flag, the “Ana Cecilia” had come from Miami and was loaded with electrical appliances, packages of food and medicine, clothing, and household items most of which were sent by Cuban exiles to their relatives on the island. It was the first of the numerous bimonthly deliveries that are expected.

Underreported by the official Cuban media, the shipment could be a sign that some of the restrictions that are part of the blockade/embargo of Cuba, maintained by the United States since the Kennedy administration, will be modified.

What is curious to say the least is that these shipments, which considerably lowered the cost of the packages sent via charter flights between Cuba and various U.S. cities, began to arrive right as the General Customs Office of the Republic of Cuba announced a law affecting individual imports and shipping. Among other things, the new legislation would impose a fee equal to 100-200 percent of the sale price of imported goods worth more than 50 dollars. The new law drastically increases the final cost of any object received or brought into Cuba by citizens whether or not they are residents.

The central purpose of the changes has to do with the flood of “mules” from Ecuador, Panama, and the U.S. who import large quantities of goods (clothes, jewellery, and food) to supply the small private businesses that are springing up again throughout Cuba.

The side effect of the new law is that the people in the most dire economic condition who receive packages from relatives off the island will now have to ask for money to cover the import fees, which effectively double the real cost of anything sent and will inevitably reduce the amount of goods shipped to the island, including the next boatload from the Ana Cecilia.

Given the introduction of these new fees, sending cash seems like the least painful option, though it involves two disadvantages: first, the punitive official exchange rate, and second, the fact that recipients of the funds will have to spend them in the shops on the island, where prices are much higher, there are fewer choices, and the quality is generally lower.

The economic reason for these new regulations is obvious: in Cuba today, the economy and the currency combined with efforts to raise the efficiency of production are at the centre of the new government’s plan of changes intended to “update the economic model”.

The recently concluded session of the National Assembly of Popular Power, the Cuban parliament, was a reliable reflection of the centrality of economic matters to the government’s concerns and actions.

There are three clear signs of current efforts to jumpstart this country hamstrung by years of economic inefficiency, a lack of financial discipline, and excessive numbers of relatively inefficient state workers: the approval of a recent tax bill that would require all Cuban citizens to pay taxes (until now only independent workers were required to); the announcement of an impending (and experimental) opening of production and services cooperatives whose only ties to the state would be fiscal and legal oversight; and the effort to clean up the national financial system. All moves were debated and approved by the deputies.

It is revealing that at the conclusion of the session, president Raul Castro dedicated a significant part of his speech to discussing the evolution of an economic policy that in his words “has entered a phase that is qualitatively superior in terms of updating the economic model”.

He went on to refer to the advance of the economy, the growth of exports in comparison to imports, the new tax law, the reestablishment of financial discipline, the creation of non-agricultural experimental cooperatives, the creation of incentives for food production and measures that make it easier to sell those items. “It is time to stop thinking only about just getting by and to start working out the general outlines of a plan for sustainable economic development and the infrastructure that it needs,” the president said.

Meanwhile, the effects of the above changes on Cuban society are growing clearer and clearer. Today in Cuba there are almost 400,000 self-employed workers in the private sector and the number is expected to jump significantly once the new cooperatives take shape and the permitted scope of private enterprise is further broadened.

The effect of this evolving reality on day-to-day life in Cuba is complex: while a state cleaning worker earns about 200 pesos per month, a private house cleaner (often without paying for a license) earns the same amount in three days of work. In a country where state employees will remain the country’s primary force of production, it is difficult to see how these two wheels can be made to carry the same cart. (END/COPYRIGHT IPS)

* Leonardo Padura Fuentes is a Cuban writer and journalist whose novels have been translated into more than fifteen languages. His most recent work is The Man Who Loved Dogs, featuring Leon Trotsky and his assassin, Ramon Mercader, as central characters.

Republish | | Print |

Related Tags

aircraft leasing financial modeling