Cubanet, Miriam Celaya, Havana, 11 June 2015 – There is no doubt that we are witnessing a new “Revolutionary Offensive*” in Cuba. This time, it is not that cumbersome operation that wiped out the small private property and, in 1968, gave the coup de grace to whatever mom and pop businesses, stands or cafes barely making ends meet at the beginning of the early socialist plateau and destroyed the services that the State was never able to meet. The methodology has changed, we can all agree on this, but the purpose is about the same.
Now, when the government takes a conciliatory stance and desperately seeks the arrival of capital that it has so demonized, it tries to retract to a minimum, but without fuss, the glimpses of private initiative. All this, given the danger posed to the olive green autocracy by the coexistence of relatively autonomous sectors within the island with the avalanche of businessmen and foreign tourists that are expected to flood the country as soon as the restrictions imposed by the embargo and the Helms Burton Act begin to disappear.
However, it cannot be said that, with Raul’s offensive against the small private sector, we are either facing a circumstantial situation or that it is about the regime’s improvisation. In fact, the circumstance was the initiation of the “self-employed” initiative that constituted an escape valve for the government, needing to move the domestic economy, and the creation of new jobs that would lighten the load for the State.
After all, the General-President always said that with the implementation of self-employment, new ways to reactivate the economy were being “experimented with” for a more prosperous and sustainable socialism. Nevertheless, it is unnecessary to recall that he also made assurances that there would be “no turning back”. What he did not make clear then is that there would be numerous constraints for this sector; so many that they would end up strangling many small entrepreneurs, forcing them to give up.
The crusade began almost on par with the openings, just a couple of years later. Suffice it to review some not-so-random events. In December 2013, dozens of self-employed persons who were engaged in imported apparel surrendered their licenses after liquidating their goods. They were bound by the express official ban against continuing with their business activities. The restrictive measure at that time was justified by a simple appeal: licenses to market imported goods had never been issued, since the self-employed did not pay import taxes and the State has an absolute monopoly on that activity. Those merchants were only allowed to sell handmade clothing manufactured in their capacity as dressmakers, tailors and seamstresses. Ergo, there was no official deceit, but the letter of the law had been misinterpreted or deliberately distorted by the self-employed.
Unofficially, it was an open secret that State stores dealing in hard currencies had had significant declines in sales of clothing, shoes and other items since the beginning of commercial activity of the self-employed because the small business owners’ merchandise offered more variety and was of better quality and price. On the other hand, in the shadow of this new trade, and in the absence of a wholesale market, a whole shenanigans of “mules” had proliferated, bringing goods from different countries of the region and keeping private markets stocked.
In short, individuals in the private trade successfully emulated the State, not only just in sales, but also in rustling, thus creating efficient supply channels that outwitted official controls.
The healthiest logic in that case would have been to set import tariffs and to expand the content of what was included in the sellers’ authorizing licenses. We know that such a concession would go against the restrictive nature of the system itself, though the State has proven, amply and sufficiently, its inability to meet the demands of the population, not to mention the deplorable quality of its offerings. As we say in classical Cuban, “we had to ditch the couch**.” Thus, 2014 began with a considerable decrease in the self-employed sector, although the official press declared otherwise.
In recent days, however, it has finally been officially acknowledged and spoken by the very officials in charge of the case that a high number of self-employed individuals have returned their licenses. The sector has been contracting and this time the decline covers a wider spectrum of occupations.
Everything indicates that the amount of the excessive tax imposed – which has gradually been increased for some occupations — the permanent scourge of an army of corrupt inspectors, the absence of the promised wholesale market, the arbitrariness of the established rules and fines, the “under declarers” and other equally absurd legal restrictions, are taking a toll on these “entrepreneurs” who once believed in the good intentions and the irreversibility of Raul’s reforms.
Interestingly, the segment of those engaged in the rental of rooms and apartments has benefited from a significant tax decrease, though taxes still remain high. It is likely that the faulty hotel infrastructure and the lack of State variants to meet the influx of tourists and other visitors is influencing official tolerance in favor of those who are legally making a living from this activity. Goodwill towards landlords will go on, at least until the State produces an adequate number of units to assimilate the tourist boom that is beginning to surface.
For now, let’s allow the fluctuations in the saga of the self-employed sector to be an example of the ineffectuality of our laws for those who venture to negotiate with old olive-green thugs; but also as an indicator of the high expectations of the Castro regime before the arrival of the cherished foreign investors, which will be – without any doubt — shroud and epitaph of what was once the domestic business sector prototype… dead before being born.
*”Revolutionary Offensive” is the name Fidel Castro applied to the final government confiscation, in 1968, of all remaining private businesses in Cuba, down to the smallest shoeshine stand.
**This common Cuban expression comes from a joke about a cuckolded husband who comes home and sees his wife snuggling on the sofa with her lover. Enraged, he decides to throw out the sofa.
Translated by Norma Whiting