Iván García, 26 August 2024 — Three years ago, in the summer of 2021, just a month after thousands of Cubans took to the streets to shout for freedom, the grey-haired ruler Miguel Díaz-Canel, handpicked by dictator Raúl Castro to run the country, authorised the opening of small and medium-sized businesses on the island. It was a measure that had been “studied” for ten years with the typical eagerness of communist regimes, where urgency is an unknown concept.
Yoel, 56, was not taken by surprise by the ’new regulations for economic actors’ announced on 19 August and due to come into force a month later, on 19 September. He always knew that a private entrepreneur is a presumed criminal in the eyes of the government. “Those of us who live in Cuba learned to negotiate to survive in the midst of scarcity,” he says, driving a second-hand Toyota Corola.
“From when I was a child in my house, people used to buy food and clothes on the black market. It was the most normal thing in the world. Hands up anyone who didn’t buy a cheap pair of jeans, a litre of oil or five pounds of beef “under the counter”. When there wasn’t a shortage of bread, there was a shortage of butter. People learned to live by their wits’. Nobody asks where what they are buying came from. They guess. And from a State Security officer to the neighbourhood informer, they are forced to resort to illegalities in order to survive. There are thousands of laws to prohibit and control offences. But nobody takes any notice of them. It’s an unwritten understanding between government and society. They let you do it until they think you’ve crossed the line. Then media campaigns are unleashed against illegalities and police raids and summary prosecutions of those operating in the private sector begin.
“In these 65 years we have been humiliated with various labels: outlaws, hucksters, or leaches on the backs of poor people. Some of these traders have been imprisoned, others have emigrated or have taken a step back until the dust settles. It’s a merry-go-round that repeats itself over and over again”. In his opinion, there is a revolving door on the island where people move from legality to the underground with astonishing ease. He gives an example. “When I was 17, I used to buy dollars, which was illegal and if you were caught you could be sentenced to four years in prison. With those ’illegal dollars’, an Angolan partner bought me clothes in shops for foreign technicians, which I then resold on the street.
“I have collected money for the bolita (illegal lottery) and sold beer and bread and steak. Like many Cubans, I have done everything, trying to live as well as possible. When in 1993 they authorised self-employment, I had some money saved up thanks to those little tricks. There is a myth that most of the businesses that emerged in the country were opened with dollars sent by family members living in the United States. In some cases this was true, in others it was not. Many ’bisnes’ in the depths of rural Cuba have been financed with money earned from the sale of food, clothes or construction materials on the black market.
According to Yoel, “these attacks on MSMEs and the self-employed were to be expected. You would have to be very naïve to believe that a government that is anti-capitalist is going to let private businesses prosper. They allow them because the system has broken down. Private business is an umbrella under which these scoundrels protect themselves. They accept us, but with the boot on our backs, a lot of regulations, very high taxes, an army of inspectors who inspect you and when they feel like it, they put you in jail”.
“Opening a business allows you to earn money and live without the crumbs from the state. Most of us are double bookkeepers and under-declare when paying taxes. It’s a war. They screw you with decrees, threats and lies. And we pretend to comply, but then we do whatever we want. When they order businesses to stop, people know what to do. Either they get out of Cuba or they continue to do the same thing informally. Since the emergence of self-employment in 1993, everything has been a government bluff. The private sector is designed for survival, not to make lots of money. These openings serve as international propaganda to sell themselves as reformers.
“We are labelled as entrepreneurs out there. But almost none of us have studied business administration or marketing techniques. In my case, I was a go-getter who worked my way up to owning several businesses. If I see that things are getting hot, I will know that it is time to get on the plane. But behind me, other ’entrepreneurs’ will emerge. Until the system, which is incapable of generating wealth, changes, that will be the the way it goes,” says Yoel.
The owner of two small stores in the old part of Havana, a guy who knows his way around the sewers of the corrupt local bureaucracy, thinks that “it is likely that the government will try to clamp down on MSMEs. This campaign is aimed primarily at autonomous private businesses, which compete against MSMEs run by front men for high-ranking government officials or retired military officers. The reason is simple: they are more efficient and have developed a network of suppliers that works.
“The state, used to receiving dollars from exports, tourism, sales in foreign currency shops and the banking system, thought that we would not be a problem, not least because we could not access foreign currency. But we have been creative. The sales cycles are faster. We have accounts in foreign banks. And to replenish our supplies, we buy dollars on the street at the informal market price. The state-owned companies can’t compete with us even on a tilted playing field” says the entrepreneur.
Dunia, a hairdresser, agrees that “the new regulations are a declaration of war on the private sector. Some will leave the country or shut up shop. Others will start working under the counter. Every Cuban knows that to live in any comfort we have to fend for ourselves. The state can’t even guarantee the seven pounds of rice it provides through the ration card. The government should concern itself with dealing with poverty, not fighting the people who create wealth.
An official of the ONAT, the institution that governs private labour, revealed to Diario Las Américas that the regime’s intention “in addition to more rigorous supervision of the non-state sector, is to recover the two billion that the banking system has stopped receiving. From now on, priority will be given to the opening of state-owned MSMEs. (Micro, Small, and Medium-sized Enterprises). Especially in the commerce sector and in companies that are at a standstill or generate losses for the state. There is the intention that political and mass organisations, such as CDR (Committees for the Defense of the Revolution) and FMC (Federation of Cuban Women), can open MIPYMES that allow them to finance themselves with small shops in the neighbourhood, as well as private stores, where they can sell food and confectionery at lower prices.
Gustavo, an economist, considers that “these new measures show that the government is living in a surreal world. This interference in private property, the idea that MSMEs should be chained to bankrupt state-owned companies and the earmarking of a voluntary reserve to finance vulnerable sectors is a crazy project. And it will fail. No entrepreneur is going to allow the authorities to use his or her capital to finance Cuba’s failed economic model. For entrepreneurs to use the inefficient national banking system for their purchases abroad is nonsense. For the state to implement MSMEs is absurd. It doesn’t exist anywhere in the world.
The government is well aware of this. Its strategy is to supplant autonomous MSMEs with entities under the control of relatives and government officials. It was already happening. Now the mask has definitely come off.
Translated by GH
