Freedom House study reveals optimism in Cuba about economic reforms

The Freedom House report on Cuba released today finds that Cubans see real economic change there, and more Cubans now would rather work for themselves than hold once-prized state jobs.

When Raul Castro announced radical changes to the economic structure of communist Cuba, the country was in a semi-daze.

Many Cubans were excited about the prospects of economic change, particularly opening access to self-employment. But, as state jobs were slashed, many were also worried about going it alone after a lifetime of stable, if paltry, government salaries and subsidies.

But a new Freedom House survey released today shows a radical change in perceptions. Forty-one percent of Cubans say the country is making progress, compared to only 15 percent who felt optimistic about the country’s future when Freedom House last conducted field research in December 2010. In fact, today more Cubans say they would prefer to work for themselves than for the government, the survey shows.

Less than a year ago, Cubans were “very skeptical about change. They doubted real change would happen,” says Daniel Calingaert, deputy director of programs at Freedom House and co-author of the study. This survey was carried out in June, after reforms were implemented formally at the Sixth Communist Party Congress in April. And now, Mr. Calingaert says, Cubans see “change is real.”

This economic opening is the “most significant positive change to have taken place in Cuba since communism was introduced half a century ago,” the new survey concludes.

At first glance, Cuban optimism could be a good sign for the Castro government. But it could also pose additional challenges. Cubans who have tasted economic freedom say they want more, and a bit of stability has also allowed them the luxury to think beyond the day-to-day economics of feeding a family. “It’s opening people to new possibilities,” says Calingaert. “There is more interest in individual freedoms.”

Indeed, one of the more surprising findings is that, when asked what reforms they most wanted, Cubans said increased freedom of expression and the freedom to travel (28 percent). This is a radical change from the most recent study, when economic reform topped the wish list of respondents.

The Cuban government has a long way to go on the freedom front. Most Cubans continue to get their news from the government. The poll showed that only 40 percent of Cubans surveyed knew what happened to Egypt’s leaders, while only 36 percent knew how the revolution in Tunisia ignited.

Here are some of the survey’s specific major findings:

• 79 percent say they have noted visible change in the past six months in Cuba, including more self-employed on the streets.
   
• 63 percent of respondents favor the reforms introduced under Raul Castro. The report quotes an ice-cream vendor: “Imagine, I can make more money selling ice cream than I ever did as an accountant for the government.”
   
• 49 percent say that it is better to work for themselves, compared to 44 percent who say a government job is better.

That is not to say that Cubans aren’t wary of changes ahead of them. For example, the field research culled commentary from Cubans voicing concern about unsteady incomes, having enough funds to start their own businesses – especially those without family in the US to help – and growing resentment among less successful entrepreneurs.

“The changes are causing a sense of insecurity and resentment among some Cubans, as might be expected in a country where citizens were almost entirely dependent on government for their material needs and had no experience of market competition,” the report says. “Such insecurity and resentment accompanied the shift from communism to market economies in Eastern Europe and the former Soviet Union. While the insecurity and resentment presents a challenge for reform in Cuba, it is also a reflection of how profound are the changes that are currently underway.”

By Sara Miller Llana

Source: CSMonitor

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CUBA: Preparing For Perestroika

El Capitolio, or National Capitol Building in Havana, Cuba.

Dividing Old Havana from Chinatown is Cuba’s Capitolio Nacional, a monumental edifice with a fateful past. El Capitolio was conceived during the Roaring ’20s, when the island led the world in sugar exports and the future seemed sky blue.

President Gerardo Machado dreamed of turning Cuba into the Switzerland of the Americas. He decided that his 4 million countrymen needed a domed capitol building even taller and more ornate than the one he toured in Washington. So Cuba’s Congress dutifully poured 3% of the country’s GDP into their new home. (This would be akin to the US Congress spending $420 billion for a new office today, but let’s not give them any ideas…)

It took 8,000 skilled Cuban laborers just three years to complete El Capitolio, which featured gilt ceilings, a giant diamond embedded into the pristine marble floor and the world’s third-largest indoor statue. However, the showy project couldn’t have been more poorly timed. Work completed in 1929, just as America’s stock market crashed and the Great Depression unfolded.

The Smoot-Hawley tariffs crushed Cuban sugar prices by 74%. When El Capitolio’s ribbon was cut in 1931, Cuba’s economy lay in tatters. Machado was forced out of office, and his dream building would perform congressional service for only 28 years before Fidel Castro’s revolutionaries swept into Havana and opted for more austere premises. I don’t need to recite the history from here, which you probably well know.

The winds of change are gathering in Cuba, though. Since Fidel Castro’s health nearly failed in 2006, power has passed to his younger brother, Raul Castro. Raul has quietly reshuffled more than 30 cabinet members to prepare his party and people for a sweeping economic policy overhaul – Perestroika al Cubano. Even the semi-retired Fidel seems to have glumly accepted that change is inevitable, candidly admitting to a visiting US journalist that “the Cuban model doesn’t even work for us anymore.”

The global economic crisis whacked Cuba hard. Venezuela cut back on its largesse as its own economy worsened. Tourism and remittances softened, while nickel export prices tanked. Furthermore, three severe hurricanes left a wake of destruction in 2008. Unable to service Cuba’s estimated $21 billion foreign debt, and running out of generous leftist patrons to hit up, Raul Castro has, apparently, decided he has little choice but to pry open Cuba’s economy.

Castro’s wild card is Cuba’s oil and gas reserves. The island currently produces 60,000 bbl a day. But its US-facing northern waters hold an estimated 5-20 billion barrels of oil and 20 trillion cubic feet of natural gas. (Note: This compares with 29 billion barrels of oil reserves in the entire US.) Accessing this undersea oil requires the sophisticated drilling technology the US excels in. But as long as sanctions remain in place, the US oil majors are excluded from that bonanza. Amidst the applause of oil industry lobbyists, the dance for reengagement has begun, with both partners taking some unprecedented steps.

Raul Castro has issued a far-reaching five-year road map for Cuba’s future economic reform. The proposed changes would put Cuba on a very similar path to that taken by China in the 1980s and Vietnam in the 1990s. Here are some of the ideas: permit real estate transactions amongst Cubans, merge the two-tier currency system, close down inefficient state enterprises, decentralize state ownership, facilitate private ownership of businesses, distribute idle land to farmers, open state-owned wholesale markets and further encourage foreign investment – particularly in tourism.

In recent months, some planned reforms have already been implemented in an effort to delay Cuba’s impending insolvency. Costly subsidies on sugar and personal care products are being scaled back. The government announced plans to shed 500,000 state workers (that’s 10% of the country’s government work force in a country where 85% of workers work for the state) and guide them somehow into the private sector.

Cubans are being encouraged to grow and sell their own fruits and vegetables. The government is inviting foreign investors to develop 10 golf course estates in Cuba, with a new law allowing 99-year land leases to foreign buyers of plots in such projects. In the old days of Fidel’s revolution, such policies were unthinkable.

So what is the potential for a liberalized Cuban economy?

Just look 90 miles across the straits to Florida. A million Cuban-Americans call Miami home. Cuba has 60% of Florida’s population and 80% of its landmass, but greater natural resources and a much longer coastline, so one might conclude that the two are of comparable overall potential.

Perhaps to underscore their similarities, remember the fact that England and Spain cleanly swapped the two in 1763. Today, Florida’s economy is 12 times larger than Cuba’s. One reason is that Florida gets 20 times as many tourists as Cuba, plus an inflow of affluent retirees.

When the US government stops restricting its citizens from traveling to Cuba, the island will become an instant tourist magnet. Offering short flights, sunny beaches, cool music, “old world” architecture and cheap surgery, Cuba should have no problem drawing several million American tourists a year, as further-away destinations like Costa Rica have done.

Should reforms become comprehensive enough, agriculture seems an obvious investment play: Half the land is arable, labor is cheap and rain is plentiful. Cuba’s once-vaunted sugar industry stands in disarray, with 80% of the old mills shut down. However, today’s high sugar prices provide ample incentive to revive the sector, along with other traditional crops such as cigar tobacco.

Despite its long coastline, fisheries and aquaculture remain largely overlooked. Cuba is a world-class producer of nickel, but other mineral deposits remain underexploited. And then there’s the oil. The entire power system needs to be updated, financial services developed, retailing expanded – the opportunities seem endless.

Beyond the subsidized basics, most consumer goods have to be imported, and imports draw heavy duties. Telecom services are costly due to government monopolization and inefficiency. The list goes on. In this environment, it is tough for most Cubans to get by unless they receive remittances, tourist gratuities or tea money.

All in all, we eagerly await the implementation of Cuba’s economic reforms. As this process unfolds, Cuba could transform into one of the world’s most attractive frontier investment destinations. America has a long track record of turning bitter rivals into productive partners (a recent example being Vietnam), and re-engagement with Cuba could be one of Obama’s most notable foreign policy legacies.

Some frontier investors are not waiting for that and are already investing in Cuba. While 100% foreign ownership is permitted, most investors enter joint ventures with Cuban state enterprises, which typically contribute land, labor and sometimes capital. Over 250 such joint ventures exist, mostly for specific sectors or projects. Investments are made in foreign currency, eliminating exchange rate issues, and there are no restrictions on capital repatriation. Corporate income tax is 30% for joint ventures and 35% for wholly owned foreign companies, but tax holidays of five-seven years are available.

A few Cuba-focused investment groups have been established that non-US investors can access. Canada-listed Sherritt Group is a major player in Cuban nickel mining and, formerly, telecoms. A private investment group backed by European investors, Coral Capital has restored Havana’s historic Saratoga Hotel, which was recently ranked by Conde Nast as the 16th best hotel in the world. Coral is now planning a number of golf courses, marina, housing and hotel projects, as is Leisure Canada, a Canada-listed investment vehicle.

Douglas Clayton

Source: Business Insider

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Cuban Catholic magazine says no reason to fear "new rich"

HAVANA – The magazine of the Cuban Catholic Church believes that the creation of wealth and the rise of a “new rich” class as a result of economic reforms being promoted on the communist-ruled island should be accepted by society without fear, though it does represent a “challenge.”

The Web site Palabra Nueva published Friday an article by its editor, Orlando Marquez, which under the title “Without Fear of Riches” reflects on some possible consequences of expanding private employment and replacing egalitarianism with an equality of opportunities.

“The creation of wealth and the coming of the ‘new rich’ could bring the challenge of a different ethical and legal order, but widespread poverty is no less of a challenge or danger to our society,” Marquez says.

Society will be more secure when citizens achieve a standard of living consonant with their abilities and ambitions, while doing no harm to others, he says.

“To procure a wealthier country with honesty and transparency is a necessity in this world. If the conditions and resources are there, aspiring to anything less is a sign of pitiful mediocrity,” the article says.

“We might see some Cubans who are richer and others who are poorer, at least until the waters reach their level. And what a paradox, the difference could be diminished by socializing wealth by means of a tax policy that makes those who have the most contribute to those with the least,” it says.

The adjective “rich” in Cuba has taken on an “unmerited negative significance,” according to Orlando Marquez, who says that “evil is neither in wealth nor in poverty but in the way we live with these realities and in the honesty and goodness of our lives, whether rich or poor.”

The director of Palabra Nueva appears convinced that the “inevitable and difficult” adjustments being undertaken in Cuba could take the country on a better road, and warns that in the future even more reforms may be required.

“Maybe we will need new rules or further updating of the economic model, and it is very probable that we will also need a new, modernized political class driven by a healthy national pride, observing a just rule of law and without fear of wealth,” the article says.

The Raul Castro government has undertaken a plan of adjustments designed to “modernize the socialist economic model” in order to overcome the crisis that has afflicted the island for decades.

The most important measures consist of expanding private employment, the elimination of 500,000 jobs in the public sector this year, and the elimination of “unnecessary” subsidies, among others. EFE

From: Latin American Herald Tribune

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Panic, anger as Cuba plans to lay off 1 of every 10 workers

Cuba’s draconian plan to lay off 10 percent of its workforce is running into a slew of problems — not the least of which are the growing fights over who will wind up on the street.

Cuban and foreign economists say it’s too much, too fast.

Radical leftists are branding Raúl Castro as a capitalist exploiter of workers and – in an odd alignment with Cuban dissidents – are urging workers to fight the job cuts.

One well-known historian and Communist Party member has warned of social chaos, maybe even a mass exodus, and cautioned that the layoffs may be unconstitutional.

Workers desperately trying to keep their jobs are accusing others of corruption. And some blacks and women are warning that those sectors may be hardest hit by the job cuts.

Almost no one doubts the job cuts are necessary in a country where the government pays the salaries of 85 percent of the workers – many of them in little more than make-work jobs. Castro has admitted the state payrolls are padded with more than one million surplus workers.

In his most significant reforms since he succeeded brother Fidel in 2008, Castro is laying off 500,000 workers by April and is expected to cut another 500,000 to 800,000 in three years.

He’s also cutting back other public spending and subsidies, and allowing an expansion of the private business sector in hopes that at least 250,000 of the newly laid off workers will be able to support themselves.

Some Cubans say they are not overly concerned by the job cuts because Castro has promised that no worker “will be left unprotected.’’ The island will eventually muddle through the crisis, they say.

Others say the country is awash in fear, especially among the bureaucrats, administrators, elderly, academics and recent university graduates seen as most likely to be left jobless.

“The entire country is afraid. Fear of who’ll be out of work.

Fear of how you’re going to buy food or something for the kids,’’ said Evelina, a Havana mother of two teenagers. “That’s what people are talking about, every minute, in every place.’’

But the problems with the job cuts extend far beyond the fear. Dissident Havana economist Oscar Espinosa Chepe said he does not doubt the layoffs are needed, but argued that Castro is doing it the wrong way.

“He’s doing in a very abrupt, very brutal way, without first creating the proper conditions’’ by waiting until the private sector had begun expanding, Espinosa said by telephone from Havana.

“They got it ‘bass-ackwards’. They are laying off first and hoping and praying that the small private sector is going to expand enough to absorb them,’’ said Archibald Ritter, a professor at Carleton University in Ottawa who specializes in the Cuban economy.

Former Cuban Deputy Labor Minister Lázaro González Rodríguez wrote in a recent Internet column that while the job cuts are needed, ‘‘what I can’t agree with are the methods, ways and time frame.’’

The organization of labor at most state agencies and enterprises have not been studied for years, González argued, so the decisions on how many employees will be laid off at each workplace “are not the result of a technical study.”

JOB IS A RIGHT

Article 45 of the Cuban constitution also says that a job “in socialist society is a right, a duty and an honor,’’ he added. A group of Afro-Cubans, the Cofradía de la Negritud, in a Sept. 22 declaration urged blacks who believe they are to be dismissed for racial reasons to “not accept this passively and be ready to defend their labor rights.’’

Cuban women also have warned against discriminating against them in the layoffs, with one writer noting that women hold 80 percent of the administrative jobs – a sector singled out for deep cutbacks.

And a group of dissident lawyers, the Corriente Agramontista, issued a set of guidelines this month explaining the rights of workers to appeal their layoffs and if denied, challenge them in court.

Even the leftist International League of Workers, active mostly in Latin America, blasted the layoffs as “a classic capitalist plan’’ and added: “The true defense of socialism in Cuba today means supporting the workers against this plan and ...demanding the right to strike.’’

Castro has promised that the process of selecting those who will keep their jobs will be done not on the basis of seniority but “with strict observance of the principle of suitability.’’

But his government has taken a somewhat hands-off approach to the process, apparently to distance itself from some of the pain of the cutbacks.

The layoffs were first announced by the communist-run Confederation of Cuban Workers (CTC), the island’s lone labor union. And the initial recommendations on who goes are made in each workplace by a Committee of Experts made up of one administrator, one CTC official and either three or five workers chosen by fellow employees.

Final decisions are made by higher-level supervisors. The government has not revealed how many workers have been laid off so far, though the cutbacks were to have started Oct. 4.

But the committees already have sparked intense tensions, especially in government agencies and enterprises with access to goods that can be filched and sold on the black market.

Miriam Celaya, a Havana woman who writes the blog Sin Evasion (Without Evasion), reported on Oct. 23 on a friend who works for a food-related state enterprise in Havana and now sits on its Committee of Experts.

KICKBACK ECONOMY

Workers at the enterprise used to happily kick back their meager salaries to supervisors in exchange for the chance to earn much more by stealing supplies and cheating customers, Celaya wrote, comparing the arrangement to a “Sicilian mafia.’’

The scheme is not uncommon in tourist restaurants, where administrators claim that the state keeps all the profits so they need the workers’ salaries to maintain and upgrade the facilities, two Havana residents said.

But now her friend “must decide, along with the other commissioners, which ones of these thieving associates [who, along with her, and just like her, cheat customers and bribe the bosses] ... remain as part of the gang’’ Celaya wrote.

In another post, Celaya reported “pitched battles’’ between workers as the commissions consider who should keep their jobs.

“These days anyone can be another’s executioner,’’ she added. “Why are they going to fire me and not that woman, who is corrupt ... And why me and not that guy, who’s always late? ...

And of course they don’t fire that woman because she’s having an affair with the boss.’’

Independent journalist Adolfo Pablo Borrazá wrote that at the Book Institute in Havana employees are denouncing co-workers “just to keep their jobs.’’ He added, “Even if it’s a good worker, it would be enough for someone to denounce a criticism of the government.’’

Mutual accusations of corruption during committee sessions at a Havana hotel and José Martí International Airport already have sparked inquiries by prosecutors, according to reports circulating in Havana. The planned layoffs also have sparked warnings of unrest, even among government supporters like Pedro Campos, a historian, Communist Party member and former diplomat.

“This could lead to unnecessary chaos, a social collapse, a massive and uncontrollable exodus,’’ declared a column signed by Campos “and other companeros’’ and published Sept. 27 on the Internet.

But Cubans are more likely to accept the layoffs without complaints, wrote Havana blogger Elha Kovacs on her Internet page, Arma de Tinta – Ink Weapon. “In the long run people will use their personal resources and strategies for survival – and continue thinking about anything except changing the circumstances and conditions at the root of the dramatic scenario,’’ Kovacs added.

Espinosa Chepe said the Castro government may even decide to lay off less than the targeted 500,000, or extend the March 31 deadline, once it realizes the magnitude of the problems ahead.

“I have my doubts that this will go ahead as planned because there are no – none at all – conditions for it to succeed,’’ he said.

By Juan O. Tamayo
 
From: McClatchy

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Cuba: Life After The Castro Brothers

The subject assigned to me, “Cuba: Life after the Castro Brothers”, poses quite a challenge. In the words of a renowned Danish physicist, “prediction is very difficult, especially about the future.” And I would add: more so in the case of Cuba, where even predicting the present is very difficult.

After all, who would have foreseen the “resurrection” of the Narcissist-Leninist Fidel Castro, who was near death not too long ago and has now resumed the role of Maximum Pontificator?

Before venturing into Cuba’s cloudy future, let me share with you a few key facts to provide some perspective. Cuba is facing today the worst economic and financial crisis since the end of Soviet life support in the early 90s. Agriculture is in such dire straits that Cuba has to import 80% of the food it consumes, including sugar.

To secure subsidized oil and generate hard currency, the cash-strapped Castro regime has contracted out to Venezuela and other countries more than a third of its licensed doctors and teachers, along with hundreds of Communist experts in espionage and repression. Last year, the regime, bordering on insolvency, froze bank deposits of foreign investors in Cuba and deferred payment of a large number of overdue accounts.

To pare costs, the Raul Castro regime slashed imports, rationed electricity, and started to phase out workplace lunches as well as the subsidized food basket (ration card). Recently, it announced the layoff of 500, 000 government employees out of a total of 1,000,000 unproductive state jobs, or 20% of the workforce, which will be cut over 2 to 3 years.

To revamp agriculture, the regime distributed fallow lands to some 100,000 small farmers, but only on lease, without providing fertilizers, tools and bank credits. One year later, two thirds of the distributed lands remain unproductive.

The regime is now stepping up the granting of licenses to individuals and hired staff to render a variety of services on their own, ranging from quasi restaurants at home, with a cap of 20 chairs, to barber shops to artisan work in small ateliers. Many of these activities have been going on in the black market for some time. The government now expects them to come out in the open. But to avoid what it calls “concentration of wealth”, the mini businesses will be saddled with four different taxes, including an income tax as high as 50% if the income exceeds $2000 a year.

The proclaimed objective of Raul Castro’s reforms is not to scrap or transform the failed Communist system, but to make it more efficient. Although some believe that Cuba is approaching a China-type opening, the fact is that the bulk of the economy remains under the control of mega State enterprises led by loyal army officers. To quash growing discontent, Raul has intensified repression and exiled most of the prisoners of conscience who were recently released.

The reforms under way signal the beginning of the end of State paternalism in Cuba; the unraveling of the unaffordable government support system that meagerly supplements the average salary of $20 a month. But what is being offered as a solution is nothing more than stopgap measures that do not significantly deregulate the centralized economy, unleash the entrepreneurial spirit of the Cuban people, and cure the dire crisis.

The bankrupt regime may hang on for some time, particularly if it’s bailed out with U.S. tourist dollars and financing. But it will not survive the Castro brothers. The totalitarian grip will eventually splinter and slacken, the fear will wane, and all those yearning for freedom, including the marginalized reformists within the government and the army, will emerge, weigh in and prevail.

Liberation could and should, in my view, be hastened by providing support to the dissident movement, as the U.S. did with Solidarity in Poland, and applying U.S. technology to penetrate Castro’s censorship firewall and overcome the jamming of Radio and TV Marti.

When Cuba truly opens up, I foresee a phased, negotiated transition, culminating in a government of national unity that will install the rule of law, restore individual rights, and pave the way for multi-party elections. The process is bound to be bumpy and messy, but Cubans on the island can draw on the do’s and don’ts of the post-Communist transitions in Eastern Europe and the post-Franco transition in Spain.

Cuban-Americans, with their business experience, contacts and resources, can be very helpful, if they return to the island with a forward-looking mentality—not with the greed of recovering, but with the zeal of rebuilding.

Cuba will definitely resurge post Castro brothers, but it will take some time for the wounds to heal and for the country to settle down. Recovery will require revitalizing the Cuban heritage, dismantling the stifling regulatory system, and renegotiating the country’s huge external debt ($30 billion to the Paris Club of creditors– the largest on a per cap basis).

It will also call for the reconstruction of the island’s dilapidated infrastructure, the shoring up of its social services, and the creation of a business-friendly environment that will attract responsible foreign investors willing to partner with Cuban entrepreneurs.

Investment opportunities will then abound in such areas as tourism, agro-processing, minerals and oil, biotechnology, assembly or maquila, banking, and IT outsourcing.

By Nestor T. Carbonell

From: The Americano

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Over 81,000 Cubans apply for permits for private work

More than 81,000 Cubans applied for licenses to open small businesses or rent their homes since the government decided in October to expand these activities as part of a plan to eliminate 500,000 government jobs, the official daily Granma said on Saturday.

A total of 81,498 Cubans had applied for permits to develope "self employed" (private) work till Nov. 19, less than a month after the announcement of new measures for the expansion and flexibility of that activity, Granma said.

Granma stressed that already 29,038 permits have been delivered and more than 16,000 requests are under study. 20 percent of the accepted "self employed" licenses shall be used to produce or sell food, an activity with great demand on the island.

Another six percent of the permits are for transport activities or passengers transfer (private taxi drivers) and one percent is associated with new ways of house renting.

Raul Castro's government in October allowed the opening of small businesses to help absorb the half a million people, 10 percent of the workforce, who will lose their jobs from the state bloated sectors.

The private work may be exercised in 178 activities, 83 of them are allowed to recruit employees for the first time in 50 years of revolution, a way for the creation of small private companies in the island.

The small private business were eliminated in Cuba on March 13, 1968, as part of the then so-called "Revolutionary Offensive."

After the collapse of the Soviet Union, the Cuban economy fell to its lowest point and the licences for private work were reopened, but with the economic recovery the permits were frozen till Raul Castro' s new reforms.

The economic adjustment plan designed in Cuba is expected to be ratified by the ruling Communist Party at its Sixth Congress, scheduled for the second half of next April.

From: Xinhuanet

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Cuba to Import 130 mln Dollars of Goods to Supply Emerging Private Sector

A watchmaker in Havana reading the "Granma", the official newspaper of the Communist Party.

The Cuban government will spend 130 million U.S. dollars next year in importing goods and raw materials to ensure supplies for the country's emerging private sector as a result of its current economic reform, a trade official said Friday.

Enrique Ramos, the economy ministry's trade director, said that supplies are the major concern for Cubans interested in the new self-employment options.

Wholesale markets with different prices can not be created in short term to ensure the supplies, so retail sales markets in the two currencies circulating in the country (the convertible peso CUC and the Cuban peso CUP) will remain in place, he added.

To ensure supplies to the self-employed sector, the Cuban government will "refocus" the imports and 130 million dollars will be spent to buy different products abroad in 2011, including 36 million spent on food.

Ramos warned that "these supplies will not appear by magic" and stressed the need to strengthen the supply market by increasing domestic production. The official added that the existing inventories of raw materials in the state warehouses will be moved to the network of shops in the country.

Raul Castro's government also plans to incorporate the sale of products in "different formats" for the private sector, so it could be possible to buy raw materials like oil, detergents and soft drinks in containers of more capacity at a relatively lower price."

"To encourage self-employment without guaranteeing the proper supplies would be irresponsible," the official said.

Last September, the government authorized the opening of small businesses to absorb the most of the half million jobs to be eliminated until next March, the first stage of a plan to reduce staff levels in the state bloated sectors. It was also agreed to implement a tax system for the "self-employed" sector to "respond" to the current economic changes.

Raul Castro's government will expand the self-employment to 178 activities in their plan to "upgrade" the socialist model and try to overcome the acute economic crisis affecting the country. The economic adjustment program will be ratified at the sixth edition of the Communist Party of Cuba congress scheduled for late April 2011.

From: Crienglish

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The change in Cuba is halfway

Due to its revolutionary and radical political slogans, Cuba is actually a fairly conservative at least in the classic sense of the term. Things tend to change slowly, if you change something, and many Cubans have had the same jobs, neighbors and, of course, political leaders throughout his life. Therefore recent political events are shaking the inhabitants of the island and have created a strange sense of insecurity.

The Cuban government has announced it will lay off 500. 000 state employees during the next six months as part of a massive operation cuts elsewhere would have provoked street protests. Later another 500 will be dismissed. 000 workers or more, as the government of Raul Castro wants to reduce payroll by 20 percent by the state and redirect the labor to more productive activities like agriculture and construction.

The Government is also cutting social services, arguing that some of the rights enjoyed by Cubans from birth (such as education and free health care to subsidized electricity) can not continue to sustain the current economic performance . Even the ration card, one of the pillars of Cuban socialism, is shrinking and there are rumors that point to their total elimination.

As if those cuts were not disturbing enough already, Fidel Castro has returned to public life in recent months, scaring the Cubans with apocalyptic visions of a nuclear war and warning that U.S. tensions with Iran have put the world on the path of atomic destruction.

The communist government has tried to calm the anxieties of the Cubans with promises like “no one will be abandoned.” Many people eagerly await instructions from the government on new employment opportunities and small business licenses, and official information does not end materialize. Instead, the news spend hours reading the essays of Fidel Castro on world affairs or the excerpts that he selected the book “The Wars of Obama” by Bob Woodward.

“There has been much talk and rumors, but nothing concrete. We are still waiting, “said Alberto Ruiz, an employee of a state restaurant has heard that the premises could be converted into a worker cooperative. Ruiz says he’s eager to know more, but like most people are in a situation of uncertainty, knowing that the country’s economy will suffer but changes without knowing how the crisis can be transformed in new opportunities.

The government has said it will grant 250. 000 new licenses for freelancers in the coming months, allowing Cubans to work for themselves as carpenters, accountants and birthday clowns, among other professions. But the basic information on these licenses, especially relating to taxes, has not yet been published, which has on tenterhooks for many potential entrepreneurs.

The growing impatience has surfaced even in the pages of the Communist Party newspaper, Granma. “Lack of what has begun to do with great interest to the country and some important details to be added in addition to phones, places and other bodies to which can go, because our people is not ready for these new phases and must instruct him, including me, “said a recent letter to the editor signed by H. M.

From:  University 5

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Cuba unveils new tax code for small business

Will Cubans start to work for real?

Cuba unveiled on Friday a new tax code it said was friendlier for small business, signaling authorities are serious about building a larger private sector within the state-dominated economy.

The new system, outlined in the Communist Party daily Granma, greatly increases tax deductions, but also adds taxes and comes with a warning of stiffer enforcement of tax collection.

It replaces a rudimentary tax code in place since 1994 when some self-employment was first authorized but then squeezed by severe regulation.

The tax redesign comes as the government has begun slashing 500,000 workers from state payrolls and preparing to issue 250,000 self-employment licenses to create new jobs in President Raul Castro's biggest reform since taking office in 2008.

He promised economic change when he replaced ailing older brother Fidel Castro and is pushing to boost productivity to help the Caribbean island's troubled economy.

There were just 143,000 self-employed in 2009, according to official figures.

The new tax system enables the self-employed to deduct up to 40 percent from income for the cost of supplies, compared to just 10 percent under the old one.

Formerly, small businesses simply paid a graduated income tax. Now they will also have to pay a 10 percent sales tax and 25 percent social security tax, but both are deductible at the end of the year.

Castro's reform permits the self-employed, for the first time, to hire workers. They will have to pay a 25 percent social security tax for each employee, which will also be deductible, and an undefined labor tax.

ENFORCING SOCIALIST PHILOSOPHY
The Granma story made clear that despite the development of a larger private sector, the government's socialist philosophy remains in place and the labor tax is a way of enforcing it.

"This tax is regulatory in character to avoid concentrations of wealth and indiscriminate use of labor," Granma said.

"The more labor hired the more severe the tax," it said, without providing details.

The Granma story warned that those who are illegally self-employed must obtain a license and said tax scofflaws would face legal action.

"Those who continue working on their own without papers, or do not pay the required taxes, will feel the weight of the law imposed upon them by those mandated to enforce it, the National Tax Office," it said.

Cuba expert Phil Peters at the Lexington Institute in Arlington, Virginia said the new code is an attempt to simplify taxes for small businesses and make sure those taxes are paid.

"My bet is that the sector will grow substantially, but only time will tell how big a tax burden this will be and how many entrepreneurs will be able to live with it," he told Reuters.

The government, which took power in put in a 1959 revolution headed by Fidel Castro, controls about 90 percent of the Cuban economy.

Most small businesses remained in private hands until 1968 when they were all nationalized, down to the shoe shine shops.

The reforms, announced last month, turn back the clock to some degree on the sweeping nationalization.

Along with being able to hire employees, the self-employed will for the first time be able to do business with the state, open bank accounts, receive credits and rent space.

The goal of these changes, Granma said in a story last month, was to "distance ourselves from those conceptions that condemned self-employment almost to extinction and stigmatized those who decided to join it, legally, in the 1990's."

At present, more than 85 percent of the Cuban labor force, or over 5 million people, works for the state, many in unproductive jobs. The government has said it ultimately plans to cut a total of one million state workers, or 20 percent, from state payrolls.

Along with private sector development, many state-owned retail operations will be converted to employee-run cooperatives and leasing arrangements the government said.

From: Tcob1

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Cuba To Cut 500,000 Government Workers

Castro cutting jobs, but now Cubans allowed to cut hair

Cuba's communist government will lay off hundreds of thousands of workers and reduce restrictions on private enterprises to help them find work.

The Cuban Workers Federation -- the country's only trade union -- said some 500,000 jobs will be cut by early next year.

More than 85 percent of Cuba's workforce, or about 5 million people, are currently state-employed.

The plan is the most important reform undertaken since President Raul Castro took over from his brother Fidel in 2008.

The labor overhaul comes less than a week after Fidel Castro was quoted as saying Cuba's communist economy no longer works.

From: Radio Liberty

Video: 500,000 Cubans Booted Off Government Payroll

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