Cubans seethe, wait for economic reform

When President Raul Castro of Cuba gave his latest big speech, to a meeting of the National Assembly in July, he repeated his stock response to those who urge him to move faster with reforms to his country's stagnant, state-run economy: Change, he said, would progress "without haste, but without pause."

Many on the island, however, are questioning whether the reforms -- officially called "updating" -- have indeed paused.

The changes Castro has instigated since taking over from his ailing brother, Fidel Castro, in 2006 are significant. Many restrictions on private business, some of which had been in place since the 1960s, have been lifted.

Cubans can now buy and sell houses and cars and can employ people. More than 200,000 of them have become self-employed since October 2010. Farmers can lease idle land from the state. Private eateries are now free to serve whatever they like to as many diners as they like, leading to hundreds of new restaurant openings.

There are plenty of catches, though. Cubans can buy only secondhand cars, because no new-car dealerships have been allowed. The rules on house purchases are proving so complicated many people are still doing what they have always done: swap homes and pay each other under the table.

Private wholesale markets, long-promised, have yet to be authorized. Restaurants and other businesses have to buy their supplies at retail prices from supermarkets or, more often, on the black market.

The 181 permitted categories of self-employment include trades, such as plumbing, but still exclude professions.

The state remains the sole importer of food. Agricultural output remains below its level of 2007. Flagship projects involving foreign investment, such as several much-touted golf resorts, quietly have been put on hold.

There have been some seeming U-turns on the road to a freer economy.

On Sept. 3, the duty payable on travellers' excess baggage above a limit of 30 kilograms per person was raised.

Now the tax must be paid in the "convertible" peso, which is worth 24 times more.

As a result, the cost of bringing in goods such as televisions and music systems has soared from a few dollars to hundreds of dollars.

The government said the change was meant to reduce queues and increase efficiency. Certainly, since 2009, when U.S. President Barack Obama removed almost all restrictions on visits to the island by Cuban-Americans, Havana's airport has struggled to cope with the half-a-dozen daily flights that now arrive from the United States.

Baggage carousels creak under the weight of everything Cuba lacks: flat-pack furniture, children's toys, LCD televisions, computer games and the like. Professional "mules," usually Cuban-Americans, travel back and forth from Florida several times a week. It is, or was, a profitable business.

The rise in duty will hurt private businesses, many of which depend on imports.

"Nothing is available in Cuba, so what are we supposed to do?" complains Walter, who obtained a licence to be a "car electrician" last year and runs a flourishing business installing imported music systems in cars.

He says he will try to find a way around the increased duties. If he fails, though, he will hand back his licence.

One theory about the impasse is that Castro, who is 81, lacks the energy to overcome resistance to change within the ruling Communist Party. The ghostly presence of Fidel Castro remains an obstacle to reform. Fidel's health is again the subject of distracting speculation. He has not been seen in public since March.

Raul Castro's crackdown on corruption is another dampener. Malpractice and fraud have been discovered in every industry examined by investigators. Dozens of Cubans and several foreigners have been jailed.

The latest probe, in which the president's son, Alejandro Castro, played a role, concerned a project to expand a nickel-processing plant, a joint venture with Canada's Sherritt International. After a brief trial, 12 officials, including three deputy ministers, were jailed last month. In their defence, the officials said all their talks with foreign partners were held openly. As evidence, Sherritt provided contracts, some signed by Fidel Castro.

One of the defendants, Antonio Orizon de Los Reyes, who served as a deputy minister of industry for 19 years, passionately argued he was a scapegoat, that his superiors had to know the details of all deals. His speech was met with impromptu applause, but he was sentenced to eight years in jail.

"In this atmosphere everyone is lying low," the foreign businessman says. "No one is making decisions."

Nonetheless, raising hopes of change only to dash them may prove a dangerous business for the regime.

Republished from the Winnipeg Free Press print edition September 17, 2012 A11