Cuba banker says state has lent ‘millions’ to more than 13,000 farmers under ag initiative

HAVANA, AP — Cuba says it has extended more than 13,000 farm credits under an agricultural overhaul launched by President Raul Castro.

Ileana Estevez is president of the Banco de Credito y Comercio. She says state banks have lent “millions” at interest rates ranging from 3 percent in the first years to a high of 7 percent.

Cuba began restructuring the agricultural sector in 2008, letting private farmers cultivate fallow state land. The initiative aims to reduce dependence on costly food imports and is part of a wider economic overhaul.

Farmers can work plots as big as 100 acres (40 hectares) in renewable agreements of 10 years for individuals and up to 25 years for cooperatives.

State newspaper Juventud Rebelde published Estevez’s comments Sunday.



Cuba to allow sale of private homes for first time since revolution

Cuba plans to allow people to buy and sell their homes for the first time since the 1959 revolution brought Fidel Castro to power, the BBC reports.

The decision came during the first congress held by the ruling Communist Party in 14 years.

No details were released on how the new property sales could work, but President Raul Castro is likely to elaborate on a wide-range of economic refroms during a closing speech today in Havana, The Miami Herald reports.

Cubans currently can could only pass on their homes to their children, or work out complicated, and often corrupt, swaps, the BBC reports.

While loosening the power on sale of property, Castro warns that the concentration of property would not be allowed.

Fidel Castro, 84, wrote in an editorial in the party newspaper Monday that he embraces the economic reforms. He no longer holds an official government or party post.

With Castro’s departure from a party position. the person elected to fill the No. 2 spot will be a major clue as to the direction of the country, The Miami Herald notes.

Cuba OKs credits for entrepreneurs, farmers

HAVANA – Cuba has authorized government banks to offer credit to farmers and small business owners, a key step in a series of sweeping economic changes ushered in over the last six months, state-run media announced Wednesday.

The government has granted tens of thousands of business licenses to new entrepreneurs, and has also loosened restrictions in order to allow farmers to sell their products directly to consumers from roadside kiosks. One of the main challenges facing the new businesses is a lack of financing, making bank credits an important ingredient for success.

The program authorizes credits for purchasing farming equipment in authorized stores — rather than on the black market. It also allows for “loans to persons authorized to operate private businesses to finance working capital and investment,” according to an article in the Communist Party daily Granma.

The article said the measure was approved Friday at a meeting of the Council of Ministers, presided over by President Raul Castro. It gave no details on how credits can be obtained, or what interest rate or other rules the payouts will be subject to, or what the total amount of such loans will be.

Some economists have expressed doubts that cash-strapped Cuban banks will be able to handle the loans and have urged the state to reach out to foreign investors for capital.

While the article made no mention of such a move, many entrepreneurs are receiving foreign capital infusions of a kind: seed money sent in the form of remittances from relatives overseas, most of them in the United States and Spain.

A recent decision by the Obama Administration that allows any American to send up to $2,000 a year to Cuba could make such loans even easier.

Castro has said the economic overhaul is intended to update Cuba’s socialist economic model and is not a wholesale switch to capitalism.

The newly approved credit measure “supports the updating of the Cuban economic model,” Granma said Wednesday.

Amid Doubts, Cubans Pursue Private Sector Dreams For some, it is the pursuit of a dream, for most, a necessity. Whatever the motive, a steady stream of Cubans are taking the government up on its offer to let them work for themselves instead of the state.

At municipal labor offices around the country, Cubans are filing in with plans that include everything from opening small restaurants to renting out rooms as they seek one of 250,000 self-employment licenses to be issued in Cuba’s biggest reform in years.

About 30,000 of the permits have been handed out, state-run press reported, and another 16,000 are pending in the first few weeks of President Raul Castro’s plan to improve the Communist-led island’s economy by expanding the private sector and cutting government’s role.

The licenses are key to Castro’s gamble that he can slash 1 million jobs from state payrolls, absorb the unemployed through private businesses and keep Cuba on the socialist straight-and-narrow for years to come.

The government, which controls most of the economy and employs 85 percent of Cuba’s workforce, has outlined 178 jobs or sectors where self-employment will be permitted. It will retain a heavy dose of control through regulations and stiff taxes of 25 percent to 50 percent of net income.

The reform is criticized by some experts as being too limited, but others view it as a reasonable first step toward greater change in one of the world’s last Communist countries.

Clutching a raft of government forms, license applicants wait in line for an opportunity they say is welcome and, despite worries about their chances for success, worth a try.

“I have always wanted to have my own business,” said Ismael Hidalgo, who plans to leave his construction job and do what he always wanted to do — raise animals for sale.

“I think the measures they are taking are very good. Let each one live from what they are capable of doing. Let them live from their own sweat,” he said, standing outside a dimly lit government office in Central Havana.

Maria Caridad Sulton, who will open a small cafeteria, said: “I hope that everything goes better. I think that workers will be able to see the fruit of their labor and a little more.”


Like most of the applicants interviewed, Caridad said she does not expect to make a lot of money, only enough to supplement a meager pension.

Cubans receive various social benefits, but they earn an average salary equivalent to about $20 a month and insist that they need more to live.

“Necessity, necessity and more necessity. If I didn’t have the necessity, I wouldn’t do this,” said Caridad’s husband, Pedro Sarracent Belon, a retired weight lifting coach. “This is a plan for surviving.”

He and others share a concern that taxes and regulation may be too big a burden for the new entrepreneurs, particularly in a country where taxes have been almost nonexistent under the Communist government installed after the 1959 revolution.

“I was born in this revolutionary process and I don’t know what taxes are,” said Sarracent, 56. “I’m doing this test, but I think there are going to be a lot of failures.”

Yudenia Artiles, who plans to sells snacks in the street, was equally skeptical because of taxes, but also because she believes Cuba’s economic problems will get worse with the planned government layoffs.

“There’s no money,” she said. “Now the war is going to be in the street, a lot of competition between vendors in the street, and you’re going to always see problems.”

According to government figures, 20 percent of the licenses granted so far have gone to people who want to sell food.

Like many other Cubans, Artiles has been plying her trade illegally to make ends meet, so a license will allow her to do it without threat of arrest or worse.

She pulled back her shirt sleeve to show a bruised shoulder that she blamed on a whack from a baton-wielding cop.

“The police mistreat you a lot. I have a ‘bastonazo’ from a policeman for illegally selling sweets,” she said.

There are other worries as well.

Many people fear that the government will open the door to private enterprise, then close it as it did during the economic crisis of the 1990s.

While that experience has discouraged some would-be entrepreneurs, it helped Emilio Perez decide to seize the moment and seek a license to rent out a room in his house and to sell food.

“You have to grab this chance. It’s now or never,” he said. “This is Cuba, what will happen tomorrow, I don’t know, but he who doesn’t take the risk neither wins nor loses.”

Cuba’s quick fix

Miami Herald:

It’s amazing that the Castro brothers have any free hands left, what with having used so many fingers to plug the gushing dike that is Cuba’s failed economy.

Their most recent stopper came Sunday, when Raúl Castro announced another contradictory economic salvation: allowing more private enterprise. There are an estimated one million excess workers in Cuba, and the government needs them off its bloated redundant workforce.

Cubans have long made ends meet with what they euphemistically call “by the left” — illegal capitalism.

Mismanaged economy

The Cuban government is getting in on the game by relaxing prohibitions on business licenses. This will allow the Castros to squeeze workers again by charging income and sales taxes on previously under-the-table transactions working Cubans rely on.

This may be a welcome change for the self-employed who long for extra cash without dodging the state police. But it’s not enough to save a woefully mismanaged central economy that does not have enough currency for food.

It’s a step back to the mid 1990s, when more than 200,000 small businesses operated on the island. That leap toward capitalism to save communism fell short, and small business owners had the rug yanked from under them when the economy improved.

Two years into Raúl Castro’s drive to reform agriculture, that industry shrank 13 percent.

High hopes dashed

Even as he announces the pursuit to be less paternalistic and offer fewer services, his cabinet is more cautious. Economy Minister Marino Murillo should be taken at his word: “There shouldn’t be any talk of reforms. Central planning will continue to rule.”

Castro stepped into his brother’s shoes exactly four years ago amid high hopes that he would make bold changes. The novelty of the DVD players and cellphones he permitted has worn off, just as the buzz of new beauty parlors, taxi permits and other forms of self employment will wane if the government doesn’t do a lot more to raise the quality of life, instead of merely padding government coffers.

Fidel Castro’s recent appearances don’t instill confidence. By popping up everywhere from TV shows to the aquarium, he is letting his little brother know that brash moves do not go unnoticed, and eager anticipation of meaningful change is premature.

Cuba picks away at some perks of socialism

MIAMI — Cuba’s workplace cafeterias are closing, President Raul Castro keeps saying the well-off shouldn’t get the same subsidies as the poor, and now there are rumblings that one of the stalwart vestiges of the revolution — the ration booklet — has outlived its usefulness.

As the Cuban government struggles through a deep recession, its leaders have begun picking away at socialism in order to save it. But experts say the latest buzz by the Cuban government is simply another desperate fix to stem the slide of a failed economy that buckled long ago.

Big changes needed

Even one of Havana’s leading economists recently said Cuba’s economy needed to be turned upside down — “feet up.” So taxi drivers got private licenses, farmers now their land and government workers have to pack their own lunches.

“I think what they are trying to do is prepare the people for a hard landing,” said Cuba expert Jonathan Benjamin-Alvarado of the University of Nebraska. “The government is really saying in so many words: We’ve got limited resources and can only do so much. I think they are stuck.”

Hard look at subsidies

In the 18 months since he took office, Raoul Castro restructured the nation’s agricultural system to give idle land to farmers in the hopes that they’ll produce when the state couldn’t. He also allowed taxi drivers to have private licenses; many of them were working illegally, anyway.

Castro suggested it was time to rethink fundamentals such as deep subsidies for everyone.

He started by saving $350 million by closing workplace cafeterias at four government ministries. Workers got a slight boost in pay as a result.

Earlier this month, the Cuban state newspaper Granma published a signed editorial from its top editor criticizing the so-called “supply card,” which provides Cubans with about a week and a half of deeply subsided groceries.

In an article titled “He’s paternalistic, you’re paternalistic, I’m paternalistic,” Granma editor Lazaro Barredo Medina blasted the Cuban “gimme” mentality.

Trying not to spend

“You don’t go to the store to buy, you go so they can give you what’s yours,” he wrote.

Barredo, a member of the Cuban National Assembly, did not say when changes to the system could take place. But in a country where the Communist Party and central government control the media, it was as if Castro had written the newspaper column himself.

“Of all the subjects and problems that can reach Grandma, they chose this one, so undoubtedly they are planning to eliminate what I call the [un]supply card,” Central Cuban dissident Guillermo Farinas said in a telephone interview. “They are doing things like that — and this pilot program to close the workplace cafeteria at some government ministries — because they are trying not to spend money on food. It goes against socialism, but it goes in favor of staying in power, which in the end is what interests the Castro dynasty.”

Low growth forecast

Earlier this year, the Cuban government announced that 2009 economic growth projections had dropped from 2.5 percent to 1.7 percent. Last year, when the rest of the world reeled from the global financial meltdown, Cuba was hit with three hurricanes that cost $10 billion.

Nickel prices tanked, and even tobacco production shrank drastically as fewer smokers around the world lit up.

Suddenly the rush was on to find ways to trim waste from Cuba’s inefficient economic model.

Shift toward reforms

“Cuba goes through cycles of strict ideological code, but that code does not function. That code leads to corruption, leads to the black market and leads to economic collapse,” said Baruch College professor Ted Henken. “So they shift back and forth, and they’ve been doing that for 45 or 50 years.”

For nearly 20 years, Cuba has more often shifted toward market reforms but always stressed that the political system was not to be debated, he said.

“There’s an expression in Cuba: You can play with the chain, but not the monkey,” Henken said. “That’s what they are doing: pulling at the chain, but the monkey is still attached.” – Cuban fiesta in Havana

Cuba to have new wage policies – work harder and make more money


Cuba is pushing state-run companies to adopt new wage policies by 2009 that would allow workers and managers to earn as much as they can, local media said on Thursday, as President Raul Castro seeks to improve economic performance.

The Labor Ministry, in conjunction with Raul Castro’s closest military economic advisors, issued instructions to managers this week on how to design the new system. He ordered it be fully discussed with workers and ready by December, after they failed to meet an August deadline, Cuba’s most popular economic commentator, Ariel Terrero, said on state-run television.

There is little difference in wage scales set by central planners so someone who does little earns almost as much as someone who works hard, including managers.

The plan would replace the current across the board egalitarian system with one based on piece work and concrete conditions in each work place.

Cubans make an average salary of about 17 dollars per month but they receive subsidized food and utilities, transportation, health, education and, in some cases, collective bonuses.

The Cuban state controls more than 90 percent of the economy.

“The goal is to put an end once and for all to these egalitarian concepts that are so damaging for the economy and socialism and that have done more harm than good during these years,” Terrero said.

Raul Castro has pushed for economic incentives, in contrast to Fidel Castro’s penchant for limiting them in the name of equality, since taking over for his legendary brother in February.

“Equality is not the same as egalitarianism,” Raul Castro said in his last major speech to the nation in July. “Egalitarianism is in itself a form of exploitation—exploitation of the good workers by those who are less productive and lazy.”

Raul Castro also has launched a major reform of the agricultural sector to create conditions for state and private farmers to legally earn as much as they can from their efforts after meeting state quotas.

Raul Castro wants to keep the Cuban economy firmly in state hands while making it more efficient, using a model developed by the military when he was defense minister.

As defense minister, the younger Castro set about in the 1980s trying to improve the performance of companies supplying the armed forces of the communist-run country.

They adopted modern management and accounting practices, granted local managers more day-to-day decision making power and tied wages to individual and collective performance instead of nationally set salaries, with some good results.

The model was applied to new military businesses in the civilian sector in the 1990s as Cuba was deep in the economic crisis that followed the collapse of its old trade and aid partner the Soviet Union. The armed forces entered tourism, urban agriculture and other sectors.

“One of the most important things happening now is that more than one important change in how the economy functions is under way … such as how work is measured, management ignorance of the new wage system and the organization of production,” Terrero said.

Castro promoted the man in charge of the military’s businesses, Gen. Julio Casas Regueiro, to defense minister and top party and government posts. Sources said he has installed Maj. Luis Alberto Rodriguez as one of his aides. Rodriguez had run the businesses day-to-day and is married to Raul Castro’s daughter Debra.