Cuban Policy Madness

[El Presidente]

Cuban entrepreneurs gird for ban on

import sales

The Associated Press

Monday, Oct. 21, 2013 | 12:09 a.m.

http://www.lasvegass...all-businesses/

You can find just about anything at El Curita marketplace in gritty central Havana.

Hundreds of entrepreneurs hawk all manner of goods at this bustling bazaar, from watches, shampoos and facial creams to neon-colored tube tops and the striped FC Barcelona soccer jerseys that are increasingly a fashion must.

Three years ago, there was nothing quite like it on this Communist-run island known as much for perpetual scarcity as it is for pristine beaches and world class cigars. And three months from now, it could all be over as authorities begin enforcing a new law banning the private sale of imported goods.

Cuba is in the middle of what it calls a significant opening to limited private enterprise _ even as it swears it won't abandon socialism. But for entrepreneurs who have carved out modestly successful livelihoods after investing their life savings to launch import-dependent businesses, the new measure feels like a big step back.

Announced in late September, the law is likely to snuff out some businesses entirely while driving others back underground in a nation where the black market has long flourished. In some markets, crude signs have already started going up advertising "liquidation" sales.

"I never thought that this would happen. I'm desperate," said Barbara Perez, who sells blouses for $13 and jeans for around $15 from her clothing stall. "I can't sleep because I'm constantly asking myself, `What is going to happen? What am I going to do?'"

Last week, she said, authorities summoned her to hear an explanation of the new rule.

"They treated me well. They read me the new law and they made me sign a paper," Perez said between sobs. She has until Nov. 30 to sell her remaining inventory, and "after that they can confiscate it."

Some 436,000 Cubans are running or working for private small businesses under President Raul Castro's package of social and economic reforms begun in 2010. Among other things, the government has legalized used car and real estate sales and ended the much-detested exit visa required for decades of all islanders seeking to travel overseas.

While critics say the list of nearly 200 approved areas of independent employment is too short, it continues to expand. The same day the ban on selling imports was announced, authorities OKed 18 more professions including blacksmiths, welders and real estate agents.

"Personally, I think the steps so far have been positive," said Josuan Crespo, who can now work legally as a real estate agent. "With this new regulation we can help people with everything to do with buying and selling property."

Perez opened shop three years ago with a seamstress' license, but quickly realized there was no money in making clothing from scratch. For starters, there's no wholesale market offering raw materials to craft new clothes or shoes. When available, fabric can be of dubious quality. And the real demand is for foreign fashions.

"The first 11 days I didn't sell anything. They said my clothes were out of fashion and low-quality," Perez said. "So I decided to sell my sewing machine, my television, my refrigerator, and with the $150 I raised, I bought clothes from a person who brought it from abroad and started selling that."

She and countless other entrepreneurs continue to rely for supply on so-called mules who fly overseas, returning with duffel bags stuffed with underwear, jewelry, auto parts, appliances.

Authorities began taking aim at that sub-industry last year by dramatically hiking customs duties.

Labor Ministry official Jose Barreiro Alfonso recently told Communist Party newspaper Granma that it's necessary to "impose order" in the retail sector, and it will be a crime to "obtain merchandise or other objects for the purpose of resale for profit."

Together, the measures recall previous policies that critics describe as two steps forward, one step back.

In the 1990s, Cubans were allowed to open private restaurants to ease the pain of a severe economic crisis; when the worst had passed, authorities regulated the eateries practically out of existence until they were revived under the recent reforms.

Such policies "create an atmosphere of uncertainty that is not positive, and a level of frustration that will not rise to the level of nationwide protests," said Frank Mora, director of the Latin American and Caribbean Center at Florida International University. "But with this, the government is sending a message to the people that it is maintaining control."

Carmelo Mesa-Lago, a University of Pittsburg professor emeritus of economics, interpreted the new law as an attempt to protect the government's own retail operations.

"It miscalculated" before, Mesa-Lago said. "It thought it could compete with these people who ... sell at a reasonable price while (state-run) stores have very high prices."

After being laid off from his hotel job, Frank Rodriguez, 30, took out a cobbler's license and began selling imported shoes at El Curita. He intends to recover his $3,000 investment one way or another, by selling "here or elsewhere."

"We are living days of complete uncertainty," Rodriguez said. "If they allowed this for three years across the country, why prohibit it now? How, and with what money will I buy food for my daughter?"

Diana Sanchez, who supports herself, her daughter and her retired mother by selling plumbing and household supplies, is considering becoming a manicurist.

"What I sell, I can't make. So they're going to shut me down? You can't do that," Sanchez said. "They allowed this. We had hope, an illusion that things were really going to change. ... We're going to take a step back instead of moving forward."

___

[ogus]

Hope Change Fairness coming soon

[stogieluver]

My wife and I took a "sick day" away from our tour group, hired a private taxi, and went to the LCDH at 5th & 16th and then to the market described in this story. We were amazed at the "free market" goods and entrepreneurial spirit of the vendors in the market. They haggled prices with the best of them in a free market society. We thoroughly enjoyed the experience and left there with two hand made humidors of excellent quality, some clothing items, and other goods. It makes me sick to read this story and to hear of the Cuban government's decision to put these wonderful people out of business.

I thought the Cuban government was finally letting the people use their spirit and work ethic to make a decent living, and now this. It really pisses me off.

[Nino]

The simple reason is that they have become too successful and compete with the gvt. ( military ) run official TRD shops ( Tiendas de Recaudacion de Divisas ) selling better, more fashionable plus more accessible stuff, so the gvt. ( military ) is closing them and revoking their licences, which means they will have to go back to underground mode again.

A shame ? Sure.

Welcome to socialist corruption from the top, Cuban style ....

Update : The popular La Cuevita independent market in HAV with more than 400 "shops" has already been closed by the authorities - see :

http://cafefuerte.com/cuba/8069-jugada-cantada-cierran-popular-mercado-habanero/

And the measures might cause unrest as AFP reports :

http://www.globalpost.com/dispatch/news/afp/131008/cuban-merchants-defy-ban-sale-imported-clothes

Privately-owned small retailers in communist Cuba are defying a government order to stop selling imported clothing or face stiff fines.

Imported clothing is in high demand in Cuba because foreign apparel is cheaper and of higher quality than threads sold in state-run stores.

"We have been here for three years selling without a problem and abiding by the law, and now they say that this is over?" asked Nadia Martinez, 32. "We are not going to close our business."

Martinez has a government license to work as a seamstress, but in practice runs a modestly successful business selling imported clothes on Galiano Street, one of Havana's busiest commercial avenues.

The clothes are not imported by the government, but rather brought in by Cubans traveling to places like Ecuador, Mexico, Spain and the United States.

Until now, the government had seemed to look the other way as she stretched the scope of her legal employment. But it now appears it may regulate away her economic success story.

In 2010 President Raul Castro expanded the list of government-approved self-employment occupations as part of a very gradual reform of its Soviet-style economy.

Castro announced that over the following years he would also be slashing the country's five-million strong bureaucracy -- this on an island with a population of about 11 million -- as a cost-cutting measure.

Today more than 430,000 Cubans work for themselves or in small businesses. Authorized job categories include restaurant owners, barbers, electricians, plumbers, mechanics and other skilled trades.

Privately owned beauty salons and family-owned restaurants known as "paladares" proliferated, often operating from the back of people's houses.

The government, however, remains the country's largest employer, and central planners still try to control the cash-strapped economy.

Deputy Labor Minister Marta Elena Feito recently announced that the government would fine businesses and people found selling imported apparel or re-selling clothing that originated in state-run stores.

Authorities have long tolerated the clothing vendors, and even though Feito said the measures would be enforced "immediately," no vendor has been forced to shut down.

"We're waiting for them to come explain the unexplainable to us, because closing us down cannot be a solution," said Ledibeth Sanchez, 29, another Galiano Street vendor.

A few blocks away Carlos Medina, 44, works at the "Fashion Passions" boutique on Dragones Street. The well-stocked store sells jeans, blouses, T-shirts and imported dresses.

"Everything was going very well and suddenly they change it all," said Medina. He said vendors and store employees are fretting about being potentially being forced to shutter.

"Nobody has notified us, but if they give us the order to close, we'll close," he said in a resigned tone.

Omara Cambas, 46, a former Communist Youth national leader, opened the "Catwalk Workshop" clothing boutique in the Havana neighborhood of El Vedado just three months ago.

"This measure would affect us a lot -- the fact is, I'd be without work," said Cambas.

A key reason so many people have joined the ranks of self-employed -- aside from state job cuts -- is that state salaries average around $20 a month. Though people may not have to pay for housing here, that is not enough for most to put food on the table for their families or buy clothing.

rd/ch-bur/mdl/dw

Copyright AFP, 2013.

[zathan]

The road to hell is paved with good intentions. Socialism is full of good intentions.

[CaptainQuintero]

The road to hell is paved with good intentions. Socialism is full of good intentions.

Like schools and firefighters?

[oliverdst]

Today I heard that Cuba is intending to stop with its 2 currency market (CUC and Pesos).

They want to have just one currency to Cubans and non Cubans.

[meatball41]

Today I heard that Cuba is intending to stop with its 2 currency market (CUC and Pesos).

They want to have just one currency to Cubans and non Cubans.

you are correct, link below is to an MSNBC article

http://worldnews.nbcnews.com/_news/2013/10/22/21079591-cubans-give-muted-welcome-to-end-of-convertible-peso-dual-currency-system?lite

[Nino]

This currency move will more likely be a matter of another year or 2-3, not a matter of weeks or months - it has been discussed ad nauseam for years now ...

But when it comes, it will be swift and overnight so the "unprepared" will lose their shirts.

Who says it's the cookie that goes ... might be the peso disappering - or both for some new funny money.

Wonder if we will be seeing a "black market" for hard currencies like CDN $ or the Euro there soon ....

[celtmick1984]

Like schools and firefighters?

Yes, the government does often take over and corrupt good things.

[Nino]

A 3 day old report with more details to my earlier post on this issue from Havana Times on the "good intentions" the military has for the clothes merchants and other street market sellers ( bold highlighted by me ):

Cuba Strengthens Military Monopoly over Domestic Markets

- See more at: http://www.havanatimes.org/?p=99569#sthash.NhgQHUkz.dpuf

Cuba’s “reform process” was designed, not to solve the people’s problems, but those of the State and its bureaucracy.

Pedro Campos

HAVANA TIMES — Recently, the government of the new Cuban Right set down regulations that barred private businesses from selling items of clothing and industrial articles brought from abroad, a practice that had gained ground over the last two years owing to the scant impetus given the self-employed sector by the measures of the so-called “reform process.”

Many are curious about this “step back”, which the officialdom seeks to portray as part of the need to impose order and discipline in the market, to prevent the misappropriation of resources and other similar practices.

The explanation is far simpler than that: the hard-currency stores operated by the State, particularly the TRD branch which is part of the commercial monopoly maintained by Cuba’s Revolutionary Armed Forces (FAR), have been facing the growing competition from the thousands of private businesses that sell clothing and other industrially-produced items on sidewalks, hallways, doorways and living rooms across the country.

These items, what’s more, are generally of a higher quality and cheaper than those offered by the island’s military domestic hard-currency trade monopoly.

It is not true that most of the products sold by these businesses are misappropriated State resources. If that were the case, it would be very easy to accuse these businesses of theft. We cannot of course say that no products are procured this way. Everyone in Cuba knows, however, that most of the clothing sold by this new class of business-owners comes from Ecuador, Panama, the United States and Mexico, and, in lesser volumes, from Italy. This holds for other industrially-produced articles.

More frequent trips to Cuba by members of the Cuban-American community in the United States and the granting of multiple-entry visas to Cubans by the US have given an unexpected impetus to commercial activities that are beyond State control.

In a way, this is reminiscent of the trade pirates practiced during colonial times, which the Spanish throne tried to prevent in order to protect its commercial monopoly.

The new migratory policies that have allowed many Cubans to travel abroad have not resulted in a massive exodus, as some bureaucrats who had hoped to see dissidents and unemployed persons go had expected. Rather, it has served to establish a broad commercial bridge between Cuba and other countries, relations which feed the island’s incipient self-employed sector and allows it to successfully compete with the stagnated, expensive, obsolete and corrupt State clothing and industrial items market.

Once again, many Cubans are feeling profound disappointment with the policies of the new Cuban Right which, in truth, only seeks to strengthen its State monopoly capitalism and to avail itself of the nascent private capital of Cubans residing on the island, the money of the Miami market and international Capital.

That is how State monopoly capitalism works: when the system is gasping for air, it loosens the monopoly reins. When it begins to breath normally again, it tightens them once more. It happened in the 1990s, following the liberalizing measures that brought about a massive protest on Havana’s ocean drive on August 5, 1994, measures that were gradually “rectified and adjusted.”

We do not have any exact statistics on the number of people who would be left without work as a result of these new, arbitrary State measures, but, judging from the number of people who sell clothing and industrially-manufactured articles around Havana’s neighborhoods, we could be looking at thousands of people who would suddenly swell the ranks of the unemployed. And, let it be clear: their jobs were generated outside the domain of the State, with non-State resources.

The main proponents of the so-called “reform process” are calling for a liberalization of the country’s productive forces, but, in practice, they implement measures that prevent this and that continue to privilege the commercial activity of State monopolies.

Thus, the reform process evinces one of its many contradictions, expressing an interest in State decentralization on the one hand and dictating regulations that restrict individual commercial initiative on the other.

The State understands, but its interests make it impossible for it to accept, that the country’s economy will not develop without a broader, more dynamic domestic market.

The question therefore arises: how sincere is the government when it announces that one of the interests behind the “reform process” is to generate non-State employment?

It is said that, in some places in Cuba’s interior, all items of clothing that haven’t been produced by those who sell them are being confiscated by authorities. Thanks to the “smarts” that Cuba’s State economic monopoly has given rise to, we will soon likely see these new sellers replace the original label on the garment with local brands that read “Juan Perez – Made in Cuba.”

An old saying goes: “whatever the law, there’s always a loophole.” Since Cubans have no say in the making of the law, we have been left with no other choice but to invent the loopholes.

We’re already hearing rumors that new measures to regulate the sale of fuel oil to private cab drivers will be in place by the end of this year and that the government is assessing the possibility of restricting the sale of records and films, out of “copyright considerations.”

It is clear, as many of us have been suggesting since the first measures were implemented, that the “reform process”, plagued as it is by inconsistencies and contradictions, was never designed to solve the problems faced by common Cubans, but to solve the State’s problems. When its actions (as is the case here) affect the interests of the bureaucratic elite and its monopolies, counter-measures are implemented.

Let those who are unaware of the State’s true intentions buy into this business of the “reform process.” Let them continue tightening the screws on the people, that’s their problem. When the people decide to strike back, don’t blame imperialism or “counterrevolutionaries.” We’ve warned you of this many times before: you have to look for the causes of the people’s growing discontent in your own, “revolutionary” actions.

- See more at: http://www.havanatimes.org/?p=99569#sthash.NhgQHUkz.dpuf