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Cubans Study a Shrinking List of Banned Private Enterprises

2021-02-11 20:18:32
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HAVANA – Car dealers, book publishers and hedge funds are still off limits. Bed and breakfasts are not. Zoos, diving centers and weapons production remain off limits. Veterinary services are not.

As Cuba's communist government continues its piecemeal expansion of the fledgling private sector, Cubans carefully analyze a list of the economic activities the government intends to keep under its control.

The list, published Wednesday and labeled preliminary, contains 124 activities that would remain prohibited for private companies. It would keep the most powerful and productive sectors of the country under the rule of the state, including those with many of the most highly educated and skilled professionals, such as medicine and healthcare, education, media and construction-related professions such as architecture and engineering. .

Just days before the long-awaited list went public, the government announced that it would significantly expand the number of economic activities open to private enterprises – which is limited by another list, of 127 allowed types of businesses – in an effort to create jobs, new open markets and revitalize the economy. The news could promise a massive opening of the economy and raise hopes and expectations across Cuba.

The new frame appears to open a great new space for production. Cubans can now apply for permits to open cheese, paint and toy factories, for example, although the government has not yet determined the permitted size of such businesses.

While some Cubans hailed the list as a major step forward in the country's economic liberalization, others continued to complain that the government had not gone far enough.

"It's confused," said Gerardo Guillén García del Barco, 26, an architect in Havana whose profession the government wants to keep under its sole control. "Anytime something that looks like a panacea appears, it ends in nothing."

“My dream is to do exactly what I do today, but within a legal framework,” he said, explaining that he has left a public company and now works freelance without a license. "I want to make my own architecture without being hindered by bureaucracy."

The changes are partly prompted by an urgent need. Cuba's long-stagnant economy shrank 11 percent by 2020, the Trump administration said tightened US sanctions on the island and the pandemic halted tourism, the country's economic lifeline, depriving the government of foreign currency for imports.

A series of reforms over the past decade has nearly tripled the number of Cubans working in the private sector – the so-called cuentapropistas – to about 600,000. But they have mainly worked in professions limited to the service sector, including running restaurants and bed and breakfasts or driving taxis.

Last Saturday, announcing the planned expansion of private economic activity, Marta Elena Feitó, Cuban Minister of Labor and Social Security, said the changes would unleash the productive forces of the population.

Many Cubans hoped that the reforms would address a blatant paradox: the most educated and highly skilled members of the workforce have government-controlled jobs and are often paid less than low-skilled workers in areas already open to private enterprise. . Guides, waitresses and taxi drivers can do more than surgeons, engineers and scientists, a bias that former president Raúl Castro called "the unjust inverted pyramid."

The state monopoly on so many professions – a strategy to maintain political control and ensure social services for the population – has driven many highly skilled workers from the public sector and into the burgeoning private sector, where they take on jobs for which they are overqualified. . Others go abroad to pursue higher earnings.

Ricardo Torres, an economist at the Center for the Study of the Cuban Economy in Havana, said he had a mixed response to the list of limited economic activities published this week.

He was disappointed that it excludes private companies in certain sectors, including engineering, architecture, accounting and the digital economy.

At the same time, he said, it seemed to open up "many areas" to private sector activities, including certain types of manufacturing and some professional services, including economic consultancies, advertising and graphic design.

"It is an important step forward," he said.

The government went no further, he said, to protect itself from the possibility of a massive exodus of low-paid public sector professionals.

"If you open up the entire economy to the private sector, it will eventually become dominant," said Torres. "The government wants to prevent this."

But Omar Everleny Pérez, an economist and former professor at the University of Havana, said the limited opportunities the list leaves for the country's professional class would not stop the country's brain drain.

“If professionals can't see themselves doing private activities in Cuba, the only way they have left is to go abroad,” he said. "And this has been going on for a long time: architects, mathematicians, biologists, they're going."

The expansion of the private sector was first enshrined in the Communist Party's "guidelines" in 2007. Then-President Raúl Castro said the "updating" of the island's socialist model should take place "without haste but without delay".

But despite Mr. Castro's insistence, the reforms stopped, in part because his brother, Fidel Castro – retired but still powerful – opposed them. After the death of Fidel Castro in 2016, senior Communist Party policymakers continued to delay reforms, arguing that such measures would lead to greater inequality.

In recent months, however, the economic crisis has led to consensus within the party leadership, much to the delight of much of the population.

"A lot of people say," Why not do it faster? "Said Mr. Pérez, the economist." I'm in that group. "

"But it is clear that things are moving forward," he said. "They don't deteriorate."

Analysts said that while the expansion of the private sector suggested a relaxation of the government's grip on the economy, it did not mean the state was on the verge of fully embracing capitalism.

"I think Cuba will continue on a path that is more or less the Vietnamese model," said Mr Pérez. "It will not end socialism."

As for the possibility that private sector expansion will fuel inequality, Mr Pérez said it seemed inevitable, but he also expected the Cuban government to step in with its social safety net.

"There is inequality, and there will be inequality," he said. "I think there must be recognition that the state will help those who are left behind."

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