Cuba slow to ease its grip on shopkeepers

FT.com:

Three years after Cuba’s Rebel Youth newspaper published “The Big Old Swindle” – a scathing series calling for reform of a state-managed retail sector beset by poor management, corruption and abysmal service – debate is still raging over liberalisation. The authorities have yet to act.

Rumours abound in Havana that the state will soon cede control over its thousands of barber shops, cafeterias, bakeries and domestic appliance and car repair businesses, opting to regulate and tax rather than administer, along the lines of the Chinese or Vietnamese model.

Yet the state appears to be doing the opposite, remodelling and opening numerous restaurants, shops and other retail outlets in city after city.

Raúl Castro, president, has insisted that Cuba’s Soviet-style command economy needs fixing. He has hinted that ways must be found to reform the retail sector since taking over from his ailing brother, Fidel Castro, two years ago.

“State companies must be efficient and so must have resources to be so. The rest should adapt to more adequate forms of property given the resources available,” stated a report by the economy ministry last year soon after Mr Castro replaced the minister and his top deputies.

Mr Castro has been short on specifics. However, commentators, economists and analysts propose raising the small number of family businesses and allowing employees to form co-operatives like those long established in agriculture.

There is apparently fierce resistance within the ruling Communist party, especially in the provinces.

“Cuba is not Havana,” a provincial-level party official in eastern Cuba quipped when asked to square the new government-run retail outlets with the idea that the state should get out of the sector.

Pressed, he conceded that the state did not need to run some services, such as every barber shop. But he opposed letting go of larger establishments, such as car repair shops.

“Most cars and trucks in this country are owned by the state,” he said.

A mid-level party cadre who administered eateries in the eastern city of Santiago de Cuba insisted the retail sector’s poor performance was not systemic but subjective. Fixing it was just a matter of improving party discipline, she said.

Cuba’s second city has opened more restaurants, bars, stores and other establishments during the past year than any other.

The administrator, speaking on condition of anonymity, said the province’s new party leader, Lazaro Exposito Canto, had improved the sector. “Since his arrival the retail sector has been completely turned round. It is a matter of caring about the people and being demanding with subordinates,” she said.

The debate has spilled into the pages of Granma, the Communist party daily, which has carried letters to the editor for and against reform. “We have to shake off the stereotype developed over many years that private property is always evil,” González de la Cruz wrote in a recent edition.

“Property, state or private, is valid when it serves a social purpose,” he said.

The opposing view was best expressed in Granma by Guerra González, another correspondent.

“The solution of creating new owners and co-operatives and making current employees into supposed collective owners [in the retail sector] will only lead to uncontrolled free competition and capitalism,” he wrote, adding, “this would represent not only an economic step backward but a political, social and ideological one”.

For the first time since all retail activity – right down to shoe-shine boys – was nationalised in the “revolutionary offensive” of 1968, licences are being handed out to food vendors in the interior who have played cat-and-mouse with police in city streets for decades, saving residents a long walk to state markets.

But that appears to be part of reform already under way in the agriculture sector, where decision-making and food distribution has been decentralised and state lands leased to more than 100,000 farmers.

Authorities, in an apparent concession to popular frustration, are also granting family farms and cooperatives permission to sell a part of what they produce directly using kiosks and horse and bicycle-drawn carts. But not a single state-run retail outlet has been handed over to employees as a co-operative, let alone privatised.

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