ECONOMY-CUBA: Restrictions on Sales Fuel Growth of Black Market

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, May 22 2002 (IPS) - New restrictions in Cuba on retail sales of computer parts, home appliances and construction materials have fuelled rapid growth of the black market.

The measures, some of which were already in effect, have not yet been reported by Cuba’s state-controlled press, although they were decided in December by the Ministry of Interior Commerce.

“The public doesn’t know anything, but we were told that computer parts, keyboards, mouses and hard discs could not be sold anymore,” said an employee at one of the branches of the state- owned DITA chain of stores that sell hi-tech equipment.

Shops where computer parts could be found up to a few months ago are now selling washing machines, refrigerators, cds and cd- roms.

Although sales of computers to the public have long been banned in this socialist island nation, stores quietly began selling the various components and parts of computers separately in 1999.

“What many people did was buy the pieces one by one to put their own computers together. Some of the parts could be found in the stores, and others on the black market,” explained Melba Díaz, a 39-year-old professional who says she would still like to own a computer.

“Now there is only one option,” she added. “Each time the state stops selling something freely, a new space is opened up for theft and speculation.”

Keyboards that government-owned shops no longer sell and Pentium computers that they never sold can be found on the underground market, which extends throughout this Caribbean island nation of 11 million.

A Pentium IV computer can be had for 1,800 dollars, while less advanced computers cost between 500 and 900 dollars. Keyboards can be found for 15 dollars, and mouses go for 20.

The Cuban peso trades at 26 to the dollar in the government exchange houses. A typical family in Havana needs seven times the average monthly income of 245 dollars to meet their basic needs.

Nevertheless, people save up money that they earn by legal or illegal means, or use part of the dollars they receive from family members abroad, mainly in the United States, to buy computers or other items.

Even more difficult than finding a computer is buying a printer, the sales of which have always been tightly regulated, due to the government’s fear that they will be used to print forbidden documents.

The government decision to clamp down on sales of computer parts coincides with its policy of making information technology more widely available in Cuba by expanding the number of computers in student, scientific and cultural clubs.

But authorities stress that the priority for available funds is the social employment of information technology, rather than private uses.

Retail trade in Cuba is a state monopoly. Sales governed by the law of supply and demand are only allowed in the free farmers’ markets and craft fairs that were created in the mid-1990s, as well as markets of industrial products, where the offer is extremely limited and goods tend to be of low-quality.

The December resolution “prohibits the sale of computers, offset printing equipment, mimeographs, photocopy machines and any other means of large-scale printing, as well as their parts, pieces and accessories, to associations, foundations, non-profit civil society groups and individuals.”

It also slapped restrictions on sales of home appliances and construction industry materials that are in high demand, some of which have never been sold in government stores and others of which simply vanished several years ago from the shelves of stores that sell only in dollars.

Among the items that can no longer be sold are video cassette recorders (VCRs), air conditioners, stoves, cookers, heaters, showers, microwave ovens, toasters, freezers and electric frying pans, rice cookers and coffee makers.

Retail sales in pesos or hard currency are also prohibited for cement, concrete products, red clay bricks and a broad range of other construction materials like granite or washed sand.

In some cases, the restrictions are an expansion of the government’s energy-saving programme, which forms part of the efforts to counteract the effects of the economic crisis that has had the island in its grip since 1990, after the collapse of the Soviet Union and the disappearance of the east European socialist bloc.

“You can’t buy a rice cooker legally, but anyone can go to the back door of a store that sells only to diplomats, and purchase one for three or four times its value,” said a researcher who has studied Cuba’s informal economy.

In Cuba, he who seeks shall find. VCRs cost 250 to 300 dollars, microwave ovens range between 200 and 300 dollars, and even TV sets of Japanese makes that are usually not available in the stores can be found.

With respect to home appliances, there are “deluxe” vendors who offer their services by telephone, place the orders of their regular customers, and deliver the items to their doors at no extra charge.

Construction materials are generally purchased from construction industry workers themselves or their intermediaries, who sell, in Cuban pesos, everything needed to build or refurbish a house.

According to retired economist Rafael García, Cuba’s underground economy constantly demonstrates its capacity for renovation.

“The black market renews itself and is more flexible than the state. It has committed to memory all of the weak points of our institutions, and functions according to the ageold law of supply and demand,” García told IPS.

In one illustration of that capacity to respond to a situation in constant flux, finished products have inconspicuously begun to appear on the shelves of government dollar-only stores, bars and restaurants, with the complicity of the employees.

García said the explanation was simple. “As long as demand exists and the state yields the space needed to satisfy it, the black market will play its role and people will buy what they need, illegally.”