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Chavez’s Defeat and the Economic Reforms in Cuba

September 30, 2010 Leave a comment

Maybe he was surprised that Chavez was defeated in the popular vote. In Havana alarms went off. The unstoppable South American Santa Claus is a very valuable asset for the Cuban political strategy. He is its strong man.

He’s also fundamental for supporting an economy that is foundering. The frenzied Chavez offers the oil the island needs, to avoid slipping into and age of darkness, at rock bottom prices.

That’s why the leaders pamper him despite his drivel and verbal incontinence. Maybe his political mentor, Fidel Castro, is upset because of the Caracas autocrat’s mania to hold elections every time he feels like it.

It’s a known fact that Castro does not believe in that damaging vice called democracy, nor in holding referendums. Even less in holding a referendum just to lose it. Tough guys like the mythic bearded one only hold elections if they know for certain that they’ll win more than 95% of the votes.

That strange habit of the swarthy caudillo’s trying his luck at the ballot, keeps the island’s rulers on their toes. It’s a known fact that the fall of the Soviet Union threw Cuba suddenly and without warning into a crisis which has lasted for 21 years, and which in its darkest days took us close to the stone age.

Castro knows that the Cuban government can’t allow another violent worsening of conditions, with food shortages and 14-hour blackouts. That could be the end of his revolution. Already, advisers are looking through their files for contingency plans, just in case Chavez loses power in 2013.

To stop being the beggars of the Caribbean, living off the resources of another country, it’s urgent to get the weakened internal economy rolling again. This is the time for the fans of the Chinese Model. They’re probably on edge.

They think this is the time to speed up the reforms and economic openings. It’s a task for titans. And there’s little time. The red commander could lose his post in three years. There aren’t many  options at hand. The most feasible is to bet on the market economy but keep a tight hand on the reins of power, like China does.

Playing two cards. Capitalism on the outside and socialism on the inside. Of course, that needs improved relations with America, and Obama lifting the embargo.

The wise make their estimates. Maquiladoras — cross-border factories — would come by the dozen, and the hundreds of thousands on unemployed would work for a pittance. Like the Asian Giant, Cuba offers a cheap, docile workforce, with a union that will not encourage them to protest or strike.

In that economic model, with the worst of wild capitalism, fans may forget a little detail. Cuba is not China. It doesn’t have an internal market of a billion people and Cubans do not work like slaves.

Whatever it is, something must be done to take the local economy out of its slump. Chavez is no guarantor. Maybe it’s time to speed up the changes. It would also reveal if the policies of the Castro brothers are aligned or not.

If stagnation continues, it would risk their continuity in power. And that is a powerful incentive to speed up the reforms.

Translated by: Xavier Noguer

 


ETESCA Down on its Luck

July 28, 2010 1 comment

One day before collecting their bonus in convertible pesos, known as CUCs, which the Cuban government usually pays to certain institutions, close to sixteen thousand employees from ETECSA, the only telecommunications company on the island, got their second piece of bad news for the month of July.

In the previous days, the company had already started discreetly “downsizing.” This is a nice way of saying they started firing the first few hundred employees so that, according to the company’s executives, “it becomes more efficient and streamlined.”

This new unemployment shock – euphemistically known in Cuba as “relocation” – is part of the plan for strengthening the economy drawn up by General Raúl Castro, the country’s president, who in April during a speech to the Congress of Young Communists, said it would affect more than a million workers.

The unemployment phenomenon, which is vehemently denied by high officials in the government, is nothing new. In 2002, the last year for which there is data, unemployment was 3.3%, but independent economists say the real rate was much higher and is currently over 25% of the Cuban workforce.

Years ago, the government used to pay 60% of their last salary in Cuban pesos to the unemployed during the first 3 months, and offer them training courses. Now, according to the recently downsized employees from ETECSA, they’ll be paid 60% of their former salary just for one month, and then they’ll be on their own.

Besides “downsizing,” the other piece of bad news arrived the day before they collected their CUC bonus, when a memorandum notified them that due to a coordination failure, starting in April, the needed amount of convertible money had not been assigned to ETECSA by the responsible government institutions.

Until July the company had been able to make payments drawing from its reserves of hard currency. But in July there was nothing left. Many employees are angry. On the island, the convertible peso is essential when it comes to buying the basics, such as food, cooking oil, and clothes.

Alejandro, 32, tells how discussions between the workers and their bosses have turned into arguments. “Insults, openly criticizing the government, and calls to stop work until we are paid in hard currency.”

A white collar ETECSA worker earns between 400 and 800 Cubans pesos plus 27.50 in hard currency. Adding it all up it’s less than 60 USD per month. Until the year 2009, the company was a joint venture between the State and an Italian partner.

The Italian partner paid all salaries to a government institution, in hard currency. “For instance, for an engineer the government received up to 2 thousand euros from its foreign partner, and then the state paid 50 the equivalent of fifty CUCs in a combination of hard currency and Cuban pesos. If that is not exploitation, I don’t know what is.”, says Diana.

But it might not be as bad as all that. Company executives have taken notice. According to office rumors they expect there to be a meeting in August where the government would give them the hard currency.

Together with the Tourism Ministry and the Institute for Civil Aviation, ETECSA forms the small group of Cuban institutions which make a profit. This is the reason many employees can’t understand the lack of money to pay their July salaries. The don’t know if they’ll ever be paid either.

Ivan García

Picture: ETECSA main office, in Aguila y Dragones, La Habana. Built in 1927, this building housed the Cuban Telephone Company.

Translated by: Xavier Noguer

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