Cuba’s New Mantra: Viva Private Business

Two self-employed florists prepare bunches of flowers in Havana last year. The Cuban government is stepping up economic reforms and estimates that in four or five years, nearly half the workforce will be employed in the private sector.

May 2, 2012

Socialism has been Cuba’s official economic policy for more than a half-century, and some 85 percent of the Cuban workforce is employed by the state.

But that is changing fast. Communist authorities say that nearly half of Cuba’s economic activity will shift to the private or “non-state” sector in the next four or five years.

Those plans signal a new urgency to Cuban President Raul Castro’s economic reforms, and one reason is that Venezuelan President Hugo Chavez, the island’s biggest benefactor, is battling cancer and facing re-election in October.

The new approach was evident in this year’s May Day parade in Havana, which was a little different from the Soviet-style processions of the past.

Between the drumming and the dancing girls writhing around on floats in tightfitting tops, it was hard to hear Cuban officials exhorting workers to greater efficiency and more discipline.

The state workers, duty-bound to attend the parade, were making the most of it, even if there wasn’t a lot to celebrate. Average salaries in Cuba remain stuck at about $20 a month, with officials saying wages can’t rise until productivity increases.

Still, there was a growing contingent of new Cuban workers on the march this year: self-employed entrepreneurs and private business owners like Lazaro Enciso. Carrying a banner with some of his 20 employees, he said he’d come to show support for Raul Castro’s liberalization moves.

“This is a new way to create jobs for our country,” said Enciso, who runs a snack bar, a clothing shop and another business selling religious items. “As long as you’re entrepreneurial, honest and revolutionary, there’s no obstacle to success here.”

Venezuelan Lifeline In Jeopardy?

As Cubans marched and chanted “Long live the revolution,” the island’s biggest financial backer, Venezuela’s Chavez, was in a Havana hospital for another round of cancer treatments.

Chavez provides the island with two-thirds of its oil on favorable terms, along with more than $5 billion a year in exchange for the Cuban doctors and other professionals working in Venezuela.

Now, with Chavez so ill he has prayed on national television for Jesus to spare his life, Cuban economist Pavel Vidal says it’s clear the economic reforms must move faster.

“Cuba’s economy is small, and from a political-economic standpoint, it’s closed, with a high level of dependency on access to hard currency for growth,” says Vidal. “A loss of support from Venezuela would send Cuba into a recession.”

Vidal and others say the damage to Cuba’s economy wouldn’t be as severe as the sudden demise of the Soviet Union a generation ago. The island’s relationship with Venezuela is more interdependent, and even if Chavez is no longer in power, it might take time for their two-way trade to untangle.  READ OR LISTEN TO THE STORY….