Iván García, 15 February 2021 — As he drives a ramshackle Soviet-era Moskvitch down a central avenue west of Havana, Samuel, a retired athlete, explains why doing business in Cuba is very difficult. Eleven years ago, when Raúl Castro kicked off the expansion of private work, Samuel used the money he saved plus a loan from his New York-based brother to buy two Willys jeeps manufactured in the 1950s, but updated with modern engineering.
With his earnings from deploying those jeeps as collective taxis, Samuel acquired a brand-new 1958 Impala convertible that he would rent to the tide of North American tourists, who – seduced by the reestablishment of diplomatic relations and the free marketing provided by the generous Obama Doctrine – rolled in on planes and cruise ships to get to know the communist Island of the Caribbean. Samuel had a fleet of two jeeps and two cars and was planning to buy a truck, recondition it, and use it for interprovincial transportation. But he never had legal backing.
“That is the main problem with opening a business in Cuba. There is no agreement or deal, a notarized document spelling out your rights and duties. All that happens is the State one day will tell you that it is authorizing this or that business (which usually was already operating illegally) and then it imposes a severe tax on you and too many controls. You can’t count on a wholesale market, and with every passing year – with no justification – your taxes go up and the inspectors make your life impossible,” Samuel asserts, and adds this:
“Because of certain circumstances, the government has been forced to authorize private work. This has never been to promote free enterprise, so that the most talented will prosper and generate wealth. No. It has always been a concession by the State, forced upon them by their inefficiency or, like now, because they are trapped in an economic crisis and they will let you run certain businesses – but always while pointing the finger at you and not allowing you to gain too many profits.”
Six out of nine entrepreneurs interviewed agree that self-employment is not usually to the liking of the regime’s apparatchiks. “It is a necessary evil that allows the State to reverse the economic depression and attract the half million state workers who between 2010 and 2012 lost their jobs. But, ideologically speaking, we are out of context. We are annoying. The usual suspects who engage in speculation, tax evasion, and personal enrichment. They see us as potential criminals or dissidents of the system, “says Geovany, owner of a body shop, a business that for many years has been in legal limbo.
Manuel, an economist, believes that if a society is committed to the progress of the country and the creativity of its people, then “private work should not be a problem. It is desirable for taxes to be as low as possible so that those business that are the genesis of future small and medium-size enterprises, and even of large companies, can flourish. Under Cuba’s circumstances, it would be very difficult for Bill Gates, Steve Jobs or Jeff Bezos to become what they are today. They would not have passed the startup-in-a-garage stage. And if they had made a lot of money, they would have been accused of illicit enrichment or embezzlement.”
Onilio, a software programmer, prefers to give the regime a chance. Just one more. “I would like to believe that, this time, the announced opening of more than two thousand private jobs will unleash the creativity of Cubans. I intend to set up an electronic payment gateway for food, clothing and household appliances. But for that to work, the government must authorize imports. Either legalize the “mules” – or else make it so that we private entrepreneurs can purchase goods abroad on our own. If the level of importation is too high, then call upon the State-run import companies to manage it. We should have wide autonomy. And bet on ventures that have added value. Not just services.”
At the moment, the regime maintains some restrictions that prevent free importation. An entrepreneur who met with US President Obama during his visit to Havana in March 2016 is skeptical of the current Cuban government strategy.
“I hope I’m wrong and the authorities this time are serious and don’t put the brakes on private work. But the evidence and history make me pessimistic. I remember that as soon as I left the meeting with Obama, the ONAT (National Tax Administration Office) officials began to inspect my business. If there is no structure where to acquire raw materials, free import and export or doing business with foreign entrepreneurs is impeded, it is very difficult for businesses to be transparent. It is the regime itself, by not creating a specific legal framework and by imposing high taxes, which caused the self-employment sector to be distorted. To change things, the government must change its mentality.”
Ramiro, an analyst, considers that the expansion of private work as more a political strategy to seduce the current White House administration than a project to involve private entrepreneurs in Cuba’s economic future. “Too many coincidences. Recently, the government informed the president of Colombia of alleged terrorist plans by the ELN (Army of National Liberation), most members of which reside in Cuba.
What is the real intention here? To distance themselves from the Colombian terrorists? The Cuban government will probably leave the ELN to its own devices, sacrifice it in its attempt to negotiate with Washington. But I am left wondering if the efficient Cuban intelligence services did not know in advance of the attack on a police cadet school in Bogotá in January 2019. It is clear that this move is a message to Biden: that Cuba is willing to negotiate on any topic. It would be necessary to see if they do not sacrifice a bigger piece, such as [Nicolás] Maduro [the contested president of Venezuela]”, the analyst emphasizes and adds:
“Internally, regime leaders know that the White House’s policy guidelines favor relations with the private sector and dissidents. They yield on the issue of the private sector, hence the bait is tossed to expand self-employment, so as to continue repressing the opposition. The government knows it is racing against the clock. The historical figures of the revolutionary process will cease being valid interlocutors within a couple of years, since they are already of retirement age and close to death. It is the new breed of leaders, in my opinion, which must draw up a functional economic policy and a consequent foreign policy. The White House knows this. And within Cuba some things are no longer the same. As a result of the ‘tarea ordenamiento‘* – a strategy about which the people were not consulted – discontent, controversy and criticism from the population have changed the correlation of forces,” and he concludes:
“More and more citizens and sectors are betting on dialogue, transparency and democracy. This segment of civil society is not even dissident – something that has caught the government – which is aiming its media cannons at the opposition – by surprise, being that it is a vast majority of Cubans who seek to dialogue with the regime about the future of Cuba. And not for the regime to negotiate on its own with the United States.
On February 9, a bipartisan resolution presented in the United States Senate by Democratic legislators Bob Menéndez, Richard Durbin and Ben Cardin, and Republican Marco Rubio, expressed solidarity with members of the San Isidro Movement and requested the Cuban authorities to initiate a dialogue process with independent artists. The text also demanded the release of rapper Denis Solís, the cessation of repression against Cuban artists and the immediate repeal of decrees 349 and 370 as well as the other laws and regulations that violate freedom of expression in Cuba.
Local political operatives will choose to negotiate directly with Washington, trying to avoid a national dialogue. They believe that it is possible to return to the honeymoon period that lasted between 2014 and 2016, when the flags of the stars and stripes waved on the balconies and old collective taxis. A rupture that provoked the dictatorship itself, especially after Obama’s historic speech in Havana.
The bulk of the measures approved by the White House at that time benefited the private sector and the Cuban people, not the military companies. But this time the game board is different. The Island is caught in an extensive economic and social crisis. And on Biden’s agenda, Cuba is not a priority.
*Translator’s note: Tarea ordenamiento = the [so-called] ‘Ordering Task’ which is a collection of measures that includes eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency which must be in the form of specially issued pre-paid debit cards, and others.