Cuba’s pri­vate sec­tor faces in­ter­nal and ex­ter­nal pres­sure

Sun Sentinel Palm Beach Edition - - VOICES & OPINION - By An­drew Otazo An­drew Otazo is the ex­ec­u­tive di­rec­tor of the Wash­ing­ton, D.C.-based Cuba Study Group. Otazo man­ages ini­tia­tives and helps ed­u­cate pol­i­cy­mak­ers on how to cre­ate more ef­fec­tive poli­cies to­ward Cuba.

On Aug. 1, the Cuban gov­ern­ment an­nounced an abrupt halt to is­su­ing li­censes for 27 oc­cu­pa­tions in the is­land’s nascent pri­vate sec­tor. After promis­ing to ad­vance eco­nomic re­form “with­out haste, but with­out pause,” Raúl Cas­tro’s gov­ern­ment has now called for a break.

Over the last seven years, Cubans proved their ca­pac­ity for in­ge­nu­ity by build­ing busi­nesses cater­ing largely to for­eign visi­tors. With­out easy ac­cess to cap­i­tal and only cau­tious of­fi­cial tol­er­a­tion, own­ers needed cre­ativ­ity to be­come suc­cess­ful. Still, in a cli­mate of po­lit­i­cal stale­mate, the ex­pan­sion of pri­vate en­ter­prise gen­er­ated sig­nif­i­cant op­ti­mism. With grow­ing num­bers of U.S. and other in­ter­na­tional visi­tors, many lo­cal en­ter­prises and their em­ploy­ees thrived.

But with suc­cess came ex­po­sure. Even dur­ing Pres­i­dent Obama’s visit to Cuba in 2016, con­ser­va­tive voices in­side Cuba warned against “il­le­gal en­rich­ment.” Be­come “too” suc­cess­ful, and gov­ern­ment in­spec­tors were li­able to knock at your door. By this sum­mer, cuen­tapropis­tas’ (self-em­ployed work­ers) ac­cu­mu­lated “sins” at­tracted the at­ten­tion of higher ech­e­lons of the Cuban state.

There were cer­tainly prob­lems in how some en­ter­prises op­er­ated. In a cash economy where busi­nesses could not op­er­ate their own bank ac­counts, tax eva­sion was to be ex­pected. With no whole­sale mar­ket, pro­pri­etors sourced in­puts from “mules” from abroad or the do­mes­tic black mar­ket. The spite­fully nar­row def­i­ni­tions of most self-em­ploy­ment cat­e­gories made it in­evitable that am­bi­tious Cubans would find them­selves op­er­at­ing in “alegal” spaces. Yet, it is pre­pos­ter­ous to in­dict the emerg­ing pri­vate sec­tor alone. Who sup­plies the black mar­ket if not Cuban state em­ploy­ees?

The irony is that many Cubans would wel­come changes to the pri­vate sec­tor. In May, Cuba’s Na­tional Assem­bly ap­proved rec­og­niz­ing small and medium-sized en­ter­prises, hint­ing that they might fi­nally re­ceive le­gal sta­tus. Con­sol­i­dat­ing ex­ist­ing li­cense cat­e­gories to elim­i­nate con­fu­sion and re­dun­dancy — as the gov­ern­ment is re­port­edly now con­tem­plat­ing — is a wel­come start. Fur­ther­more, re­ports of hir­ing dis­crim­i­na­tion along racial lines in restau­rants and night­clubs de­mand a ro­bust pub­lic re­sponse.

How­ever, the an­nounced strat­egy for “per­fect­ing” the sec­tor makes no sense. By paus­ing the is­suance of li­censes, and not con­sult­ing busi­ness own­ers be­fore­hand, reg­u­la­tory au­thor­i­ties alien­ated po­ten­tial al­lies in find­ing so­lu­tions to shared chal­lenges. In­stead of propos­ing a new reg­u­la­tory frame­work and grant­ing busi­nesses time to com­ply, au­thor­i­ties sim­ply stated that mea­sures would be stud­ied and im­ple­mented at an un­de­ter­mined date. This sent a shock though po­ten­tial par­tic­i­pants in the sec­tor, while es­pe­cially leav­ing those who had al­ready in­vested money in cre­at­ing a busi­ness, but had not yet ap­plied for a li­cense, out to dry.

Most wor­ry­ingly, Cuban op­po­nents of eco­nomic lib­er­al­iza­tion now have al­lies in the Trump ad­min­is­tra­tion. Pres­i­dent Trump framed his par­tial roll­back of Pres­i­dent Barack Obama’s rap­proche­ment as an ef­fort to sup­port Cuba’s pri­vate sec­tor. But by restrict­ing in­di­vid­ual travel to the is­land, he guar­an­teed that Cuban pri­vate busi­ness­peo­ple, not gov­ern­ment-owned ho­tels, will take the hard­est hit. Pre­cisely when the United States should be sup­port­ing the pri­vate sec­tor from a Cuban gov­ern­ment of­fen­sive, new reg­u­la­tions due this fall are slated to make the ex­ec­u­tive branch a co-per­pe­tra­tor in its as­sault.

“Any time they ‘rec­tify’ some­thing,” one Cuban re­cently com­plained of his own gov­ern­ment’s ac­tions, “they do 100 things worse.” The same fa­tal­is­tic judg­ment can be ap­plied to the pur­ported course cor­rec­tion in U.S.-Cuba pol­icy un­der Pres­i­dent Trump. While the Cuban gov­ern­ment takes steps to ham­per grass­roots eco­nomic growth, the Trump ad­min­is­tra­tion’s poli­cies will deny Cuba’s pri­vate sec­tor the re­sources and clout it needs to push back.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.