Foreign Policy Blogs

‘Roberto’ and Other Tales of the Cuban Economy

Ask a self-employed Cuban how she came to possess the goods she is selling, and she might tell you that they came from “Roberto.”

The euphemism indicates that the goods are stolen, and given the scarcity of many products and the unreliability of state retail stores in Cuba, many new entrepreneurs in Cuba are struggling to cobble together their businesses and turning to alternative — and under-the-table — economic strategies. In fact, the channel of goods coming into the country from family, friends, and mules is estimated to have ballooned recently to more than $1 billion per year. This should be no surprise to the state since Cubans lack access to a wholesale market by design. But these informal imports, currently running under the radar, are about to face a 100 percent tax that will go into effect in September.

In the course of the ongoing economic overhaul by the Cuban state, new challenges are indeed arising every step of the way. The path in this case is easy to trace.

  1. The Cuban government lays off workers from the public sector in order to eliminate its inefficiencies and encourage a private sector to develop.
  2. The country does not have the mechanisms to support a new private sector, however, so those new entrepreneurs are forced to get creative. They start acquiring more goods through informal channels in order to maintain their supply.
  3. In this (true) scenario, the Cuban state misses out on any kind of revenue from those “imports”. So the government slaps a 100 percent tax on this kind of trade, which looks more like an effort to stifle the informal trade altogether than an attempt to get in on the spoils.

The problem is that Cuban small business owners will be left in a lurch if this is not coupled with the natural counterweight policy — that is, creating a clear way for entrepreneurs to get the goods they need through official channels — which would allow the Cuban state to earn some revenue from the private sector trade while still generating viable conditions for small businesses in the private sector to operate.

I suspect that sounds too much like capitalism.

But with 387,000 Cubans now self-employed (out of a total island population of 11 million) and a state goal to add another 240,000 private-sector jobs this year, policies that make the lives of private sector entrepreneurs and employees more difficult seem counterintuitive.

The Cuban National Assembly is set to meet on Monday. Here’s hoping we see a good plan.

(Photo: Nerci, Cuenta Propista and Artisan, Habana Vieja; credit Arch Ritter, Nov. 2008)

 
  • Havana Journal

    Great article.

    Let’s hope the Communists can figure out Capitalism.

    Also, you say that “387,000 Cubans now self-employed”. I believe that is how many cuentapropista licenses were taken out but I think about half have been returned.

    Of course we don’t get THAT statistic from the Cuban government.

    Ultimately, same stuff, different day.

Author

Melissa Lockhart Fortner
Melissa Lockhart Fortner

Melissa Lockhart Fortner is Senior External Affairs Officer at the Pacific Council on International Policy in Los Angeles, having served previously as Senior Programs Officer for the Council. From 2007-2009, she held a research position at the University of Southern California (USC) School of International Relations, where she closely followed economic and political developments in Mexico and in Cuba, and analyzed broader Latin American trends. Her research considered the rise and relative successes of Latin American multinationals (multilatinas); economic, social and political changes in Central America since the civil wars in the region; and Wal-Mart’s role in Latin America, among other topics. Melissa is a graduate of Pomona College, and currently resides in Pasadena, California, with her husband, Jeff Fortner.

Follow her on Twitter @LockhartFortner.

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