Archive for February 4, 2011

Hope for Possible Legalization of Buying/Selling Cars and Houses

February 4, 2011 Leave a comment

In this spring of 2011, we wait expectantly for the announcement of new measures to allow Cubans to buy and sell cars and houses.

It’s likely that during the sessions of the Sixth Congress of the Communist Party of Cuba in April, they will abolish the absurd prohibitions in force that forbid Cuban citizens from buying or selling a home or car.

On the black market, buying and selling cars and houses is one of the most lucrative businesses, which has produced unreal profits. An old Ford car, late 40’s in good condition, can cost up to $30,000, twice the cost of an apartment with three bedrooms and 90 square meters.

Evelyn, 54, who sells houses in Havana illegally, is one of those who think that when this type of buying and selling is legalized, prices could fall.

“A good house could be quoted between $80,000 and $100,000. Maybe more. It will depend on the interest shown by foreigners involved with prostitutes and those Cubans living abroad who wish to acquire housing for their relatives on the island. The signs in the underground market indicate that a significant number of people would throw themselves into buying homes because of the housing shortage in the country,” predicts Evelio.

If housing prices soar, car prices could hit bottom. “It’s not possible that a relic of the twentieth century from General Motors is sold today for $40,000. Or that a mediocre car, like a Russian Lada, costs more than $20,000. It’s crazy. If the state begins to sell cars that are modern and economical, even at outrageous prices and for large profits, the speculative bubble in car sales would decline sharply,” said Joseph, 43, who for two decades has been involved in buying and selling old US-made cars.

In the meetings that are taking place these days in neighborhoods and workplaces, to analyze and discuss the guidelines for the future economic and social policies that Raúl Castro’s government will apply at the Sixth Congress, the most discussed points are the disappearance of the ration card and the authorization to buy and sell homes and cars.

Another topic discussed a lot is the abolition of the country’s entry and exit permits for Cubans, which confers on the regime unlimited power, to be used as a reward or punishment, when authorizing foreign travel. According to reliable sources, this topic will not be discussed in the short term.

What’s really hoped for, I repeat, is the repeal of laws that prohibit buying and selling of houses and cars. At the starting gate, after the gun goes off, there will be foreigners or people who travel frequently living in Cuba.

Heinz, a Swiss man who often visits the island to chase skirts, is considering buying one or two floors when the government gives permission. “In my country an apartment costs about 200,000 francs. Here, I think that one in good condition wouldn’t go over $60,000 dollars. Anyway, in Cuba the laws are very complicated, especially if they allow foreigners to purchase property from the natives. If it’s not authorized, it wouldn’t be worth it to buy a house in the name of another person. There are many dishonest people in Cuba,” he says smiling.

It’s also likely that the business of buying and selling homes won’t suddenly blossom. Some 62% of residences in Cuba are in fair or poor condition. Moreover, there aren’t enough houses. Quite the contrary.

It’s common to have three different generations living under one roof. Young couples have no privacy. And many resort to countless inventions, such as building a loft (half-way to the ceiling) or improvising room dividers.

Either way, there are great expectations about possible state permission to buy and sell houses and cars. In a country fenced-in by so many prohibitive measures, repeals are always very welcome. Although few benefit from them.

Translated by Regina Anavy

February 4 2011

Private Businesses and Suspicions Flourish in Cuba

February 4, 2011 Leave a comment

You already see hundreds of stalls selling CDs and videos. Good-natured, calm señoras who offer a wide range of religious articles and, in any Havana doorway, from one day to the next, a snack bar with fast food emerges.

When in October 2010 they authorized the expansion of self-employment, people took their time.

There were — and still are — doubts, because of the typical ups and downs of the orthodox policies of the government of the Castro brothers, who, when they feel the rope tightening around their necks, open their hands; but when they can breathe a little political and economic oxygen, they vigorously pursue those who engage in private business.

It’s not ancient history. In 1994, Fidel Castro reluctantly allowed people to work for themselves, following some advice discreetly whispered in his ear by the Spanish adviser Carlos Solchaga, sent in haste by Felipe González to stop the meteoric fall of an economy that had lost 35% of its gross domestic product. Then thousands of small private businesses appeared on the island.

It was the plank that saved Cuba from sinking back into the Stone Age. It’s enough to recall that in the ’90’s, blackouts lasted 12 hours a day. Due to malnutrition, exotic diseases such as optic neuropathy and beriberi emerged.

At that time, a dollar was exchanged for 120 pesos. A pack of cigarettes cost 100 pesos. A pound of rice, 80 pesos or more. An avocado could be as much as 120. And an awful bottle of rum, in order to get drunk and forget the hardships, was 150 pesos.

Those were hard years, with real hunger, when many people lost a lot of weight and even teeth. To stop the impending famine, along with military strategists, the State designed the zero option: huge pots, where trucks with armed guards would hand out rations for each block.

But blood did not flow to the river. Thanks, among other factors, to the stampede of 120,000 people who threw themselves into the sea in 1994, after having instigated, on August 5, a resounding popular protest for the authorization of the exodus, which permitted the pressure-cooker, on the point of exploding, to find some relief.

The other factor was the opening up of self-employment. Gradually, from 1994 to 2000, nearly 200,000 workers took out licenses, and businesses of all kinds sprouted. From opening a quality paladar (private restaurant) like La Guarida, where Queen Sofia of Spain dined, to rescuing smaller businesses like selling punch, repairing shoes or renting out clothing for quinceañeras and weddings.

Another determining factor was the emergence of more than 200 businesses with mixed capital. These pockets of capitalism led to the advent of new technologies and innovative methods of accounting and business administration.

Most significantly, what allowed that flowering was the legalization of the U.S. dollar in July 1993. Every year, remittances enter the government coffers of over a billion dollars, becoming the first industry of the country in terms of profits. Remittances, along with the development of tourism, allowed Fidel Castro to stay afloat.

Another plank of salvation was the emergence of an important character for Cuba: Hugo Chávez. The Bolivarian comandante became a godsend for Castro. By bartering oil for doctors or sports trainers, he sold black gold to the island at bargain prices.

This allowed the old guerrilla to return to fantasizing about the Latin American revolution and the fall of the “Yankee empire.” Evo Morales, Rafael Correa, Daniel Ortega and Lula da Silva, from a safe distance, joined the red orchestra. From that point on, Castro didn’t need entrepreneurial types who would make money on their own.

Living without state supervision creates a spirit of political and economic liberty that really bothers the spheres of power. Hundreds of controls, sanctions and excessive taxes were established to discourage self-employment.

And it worked. By 2008, the number of self-employed had declined to 50,000. Castro I made a miscalculation. Before handing over power to his brother in 2006, he failed to discern that despite the Venezuelan oil and entente with fellow revolutionary compañeros in Latin America, Cuba’s economic crisis still was not out of the woods, due to a system that barely functions.

On top of that, the experts’ numbers were not reliable. Apparently, the Cuban economy grew each year like an Asian tiger. And Castro thought he had won the battle. He sent a group of foreign investors back home and tried to recover the monolithic power he always liked to exercise.

But the numbers lied. Cuba was shipwrecked, and the global crisis which appeared in 2009 made it evident. Now General Raúl Castro must put out the fire while trying to establish new rules of the game. Trying to win over distrustful capitalists, with some backward investment laws, which don’t provide sufficient guarantees. Losing money is not welcome in times of trouble.

Unclenching the fist and allowing people to go into business was necessary to cushion the blow of more than 1,000,000 workers sent into unemployment. Many Cubans on the street were suspicious. At first they measured their steps. Given the urgent need to raise cash and try to live better, they jumped into the ring.

The owners of the private restaurants, those who rent rooms and private drivers, among others, gripe about exorbitant taxes. But they know that it will always be better to work for themselves than to work for the government at a ridiculous salary.

Relatives abroad, mostly in the United States, have come forward to help with the private businesses. Most of the owners of new private restaurants have received monetary support from their families in other countries, in order to open a business that requires a minimum investment of $5,000.

In this tenuous winter of 2011 in Cuba, those who invest in small private businesses continue to have doubts and fears about how the government will react when they start to make money.

They hope that Raúl Castro will be different from his brother.

If he isn’t, they are praying they can recover the money invested before the General decides to change policy. Like a mouse dodging the cat.

Photo: EFE. A Cuban sells “burned” (pirated) CDs and DVDs on a street in Havana.

Translated by Regina Anavy

February 4 2011

Free Fall

February 4, 2011 Leave a comment

"Welcome to our Green Caiman"

The only thing need to fall is to be above. And although Renato knows this, he is still not used to the sacrifices of the real Cuba’s tough life. He was a heavyweight in an imports firm. A jet-set of the elite.

He wore the red insignia of the Communist Party and had a promising future ahead of him. On many an evening, he would be enjoying seafood, salad dressed with olive oil and fruits at some luxurious restaurant of Havana. And a good Spanish wine on the side, of course.

On his return back to his splendid house at Miramar, he would smoke a Cohíba cigar and have a cup of strong Brazilian black coffee. He would then go to bed, unstressed and relaxed, to have sex with his wife, an exuberant light-brown-skinned young woman of thirty-two.

As it happens in any marriage, they had plans. And Renato aimed high. He envisioned himself at 47 as director of a ministry and climbing up the ladder within the party hierarchy. His life was beautiful. He spoke several languages and traveled the world. He always had euros, dollars or Swiss francs in his wallet. He was not an extremist in his dealings with his workmates, nor did he judge severely the ideological weaknesses of his friends.

He never climbed higher by trampling over anybody else. He followed a very specific ethical system: to give priority to talent. Loyalty was essential, but it could always be second. He was not a shameless corrupt, either.

Yes: like any Cuban official, he knew some tricks and accepted bribes from capitalist impresarios under the table. But he always negotiated in ways that were favorable for the nation.

He was a professional and a Sybarite. He did not have lovers. He never participated in scandalous orgies. He did not even drink rum in excess. Like any other person with political ambitions, he had his aspirations. He dreamed with one day of becoming president.

He had logical and measured projects, in tune with the system in which he lived. He would even say to his closest friends that a socialism with a human face—one that was efficient and that did not support political repression—was indeed possible.

Renato did not see it coming. The day he was summoned to his supervisor’s office he never imagined that he would be subjected to a prickly telling-off and a litany of accusations due to political immaturity and lack of faith on the historic leaders of the Revolution.

A few weeks later he was thrown out of the party and his official car was taken from him. He no longer had a position of trust. No trips abroad, no business with refined capitalists.

He was stunned. He asked around, he begged, he made appointments with the high powers. He felt they were doing him injustice. His only crime was to believe in the reforms that General Raúl Castro was proposing. And to wish these were even deeper.

Months before this, Renato had participated in a meeting with the high cadres of the party. Everyone in the room was asked to, openly and with no regard to censure, say what their opinion was regarding the supposed economic changes that could be tried in the island in a near future.

He thought this was his chance. He had already undertaken meticulous research on a plethora of options to forward the economy. He expressed that the State needed to get rid of inefficient enterprises. He applauded the measure that resulted in the loss of a million jobs, and he thought the number should be higher, as to lessen the burden of the State. And he provided a series of counsels on how to engage the issue of the self-employment.

Our blunt official was betting, and so he said, on large reforms, market economy, small and medium-sized enterprises funded by Cuban-American capital, on the removal of the tax on the US dollar and on the gradual abolishment of the rationing system.

In his thesis, he did not mention anything about political changes, nor did he judge the work undertaken so far by the revolutionary leaders. After he finished his contribution to the meeting, he did not notice any sign of alarm at the big wigs’ table.

Some bureaucrats with power even came over to congratulate him. Twenty days later, when he was summoned to the supervisor’s office, he understood that his pragmatic project had become the cause of his disgrace.

The blow still hurts. Good-bye to those trips to Europe, to those shrimp dinners in the twilight. Only his wife and family are left. And the certainty that a better Socialism is still possible. Now he suspects that it won’t be feasible within the government of the Castro brothers.

The only thing needed to fall is to be above. When you touch ground, you learn a lesson. In the power structures of Cuba there are two capital sins: the ambition of power and thinking big. Renato had wished for both. And now he is paying for it.

Translated by T

February 4 2011