Cuba: The Black Market Never Sleeps / Iván García

Two street vendors selling garlic and onions along a road in Pinar del Río. Taken from Martí News.

Ivan Garcia, 15 December 2017 — In the papers, it appeared that El Encanto state pizzeria, in Havana’s La Vibora neighborhood half an hour by car from downtown Havana, sold around a dozen daily products: lasagna, cannelloni, five versions of spaghetti and pizzas, beer, entrepanes (sandwiches), guava, crab and empanadas, among other offers.

But the reality was different. The dining room remained closed and there was only a kiosk in the doorway that sold cigarettes, beer and bad quality pizzas. However, the administrative reports described a varied menu and exceeded the daily sales plan set by the Diez de Octubre municipality’s food service company.

Every Friday, between 1998 and 2003, José the administrator, and Julio the warehouse manager — both  currently reside in the United States — delivered an  envelope with two thousand pesos, equivalent to 80 dollars, to the driver of Eduardo Manzano, then director of the municipal food service company.

The cheese, tomato puree, oil, flour and other supplies — intended to be used to make the items on the menu — were sold in the lucrative Havana black market. Various people bought the items “wholesale,” and then resold them at supply-and-demand prices to the population.

“The business was a hit. You reported ghost productions and sold the raw materials. In those years, state food service centers were assigned products that they called ‘of the chain’, such as gouda cheese and imported foods. On the street they sold like hot cakes and at high prices. On a bad day, I earned a thousand pesos, equivalent to 40 dollars. A normal day, 150 dollars. And on a good one I pocketed 300 fulas. Even the police worked with us: they seized or confiscated the beef that was stolen from the slaughterhouses and then did not sell it at a good price. The key to robbery (where almost everything that is offered in the underground market comes out), is to have a good pen, an accountant or an economist that can mask the theft,” Julio said before leaving.

Currently, the El Encanto continues to be a supplier to the black market in the neighborhood, like other state cafes and restaurants in the area. It has always worked like this since  the beginning of the 1960s when Fidel Castro’s revolution began to generate scarcities and shortages throughout the country.

In the more than fifty years since then, there have been stages of ups and downs, depending on the amount of domestic or imported merchandise in the stores. Or due to certain economic circumstances, such as the so-called Special Period in the early 1990s — after the collapse of the Soviet bloc and the end of its subsidies for Cuba — when the little remaining in the storehouses had to be carefully distributed. Or unforeseen situations, such as hurricanes, when the State has to draw on its central reserves and control the donations.

In Cuba there are two types of black market. The one that is supplied by state institutions and the private one, supplied by ’mules’ with articles acquired abroad.

Igor, an economist, calculates that “the state black market moves billions of pesos annually. In the future, when they do a serious study, they will know exact figures.” In his opinion, in nine out of ten manufacturing, food service or tourist businesses, among others, state resources are stolen and later sold in the underground market.

And he emphasizes something to keep in mind: “Those who favor theft on a larger scale are the bosses. The worker usually steals a little tidbit, to consume or sell it. The administrators are the ones who steal by the truckload. Any director of a food or tourism company, in one year can buy a house and a car, keep two mistresses and go on vacation three or four times a year to an all-inclusive hotel in Varadero.

“Cyclically, the government mounts a campaign to stop the corruption caused by the black market and arrests several bosses. But it cannot stop the theft because this is how thousands of managers, officials and employees  improve their quality of life. The day theft from the state, corruption and the black market disappear, the revolution falls.”

Daniel, with a degree in political science, agrees. “The phenomenon of theft, the black market and diversion of resources in societies with Marxist ideology is symptomatic. In the former USSR and other communist countries in Eastern Europe, theft was common in companies and the proceeds supported businesses that were set up using raw materials stolen from the State. In socialism, prosperity does not come as a result of your talent, training and experience, but from loyalty to political power.”

Daniel believes that calling the means of production “the property of the people,” something so ethereal, makes people lose the sense of it belonging to anyone and everyone who can holds out their hand. “The top Cuban leaders know it. That is why the campaign against the black market is more publicity than anything else. When there are raids or arrests, it’s always the small fry who get caught. If it sometimes involves heavyweights, it’s more for a political issue than for complying with the law.”

According to Roger, “after a hurricane hits the island, police operations start up and you have to keep your head down. But that does not last long. Then things relax again. In this biz you should be well connected with high officials and every time you drop them a ’little gift’, in case one day you fall into disgrace, they will feel obliged to help you.

“After Hurricane Irma, people were sensitized, thousands of families lost everything, and the authorities are hunting for those who sell mattresses, tiles or water tanks. But those who know the ropes know how and who to contact, so they do not get caught. The black market never sleeps.”

Roger, knows this better than anyone: he already has a buyer for two mattresses made in the Dominican Republic, supposedly destined for victims of the hurricane.

Carlos, a sociologist, affirms that “in nations with economic and political structures such as Cuba, where personal loyalty, friendship and connections prevails, the black market will never disappear. And the worst thing is: they form groups or gangs that end up transforming themselves into mafia cartels with huge amounts of money that can buy willingness and even lives. In a democratic future, if the island doesn’t send all that corruption to the bottom of the sea, it could be strengthened and reproduced, as happened in Russia.”

Corruption, bureaucracy and the black market have already taken root in the daily life of Cubans.

The regime controls the whole society and all the information and also aims to control the entire economy, including the private sector. Different institutional estates manipulate the retail prices of food and goods, obtaining great profits. There is no financial transparency with the hard currencies that enter the country. No official is accountable to the people. That opacity and secrecy propitiate the consolidation of criminal factions.

The culture of stealing from the State and the black market has become a kind of antibody that many citizens have in order to defend themselves against the gangster model that has been developing in the country for more than half a century.

Because in Cuba, Castro Corporation Inc. leaves very few loopholes to the rest of the population.