Winnipeg Free Press - PRINT EDITION

One step forward, two steps back in Cuba

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When the Cuban government said in December that it intended to let the population buy modern cars without requiring permits, many suspected that there would be a catch. They were right.

The cars, which can be bought only through state-owned suppliers, cost a fortune.

A 2013 Peugeot 508, marketed in Europe as an affordable sedan costing around $30,000, has a price tag of more than a quarter of a million dollars at a rundown showroom in Havana.

A Chinese Geely, with more than 80,000 kilometres on the odometer, is on sale for about $30,000. The average salary in Cuba is less than $20 a month.

"What do they think they are selling, airplanes?," jokes Erik, a handyman, as he looks at the price list.

"They don't want to sell any cars," agrees Ernesto, a mechanic. "It's all a show."

The prices certainly seem designed to deter purchasers. Some even wonder whether there has been a clerical error causing the prices to be listed in Cuban pesos, Cuba's local currency, which is worth 24 times less than the dollar-pegged convertible peso.

Another theory is that the high prices are a preview of a widely predicted devaluation of the convertible peso as part of the government's commitment to unify the island's two currencies.

A further explanation might lie in the immediate effect of the reform: the elimination of a thriving black-market trade in the permits to buy new cars. For decades these have been awarded to valued individuals, such as exceptional party workers, sports stars and artists, but more recently they had become a currency themselves, changing hands for about $12,000 each. The government says that those with permits will be first in line to buy new cars, a dubious benefit given that many have quadrupled in price since the reform.

"There could hardly be a stronger signal that this remains a controlled economy," one Havana-based diplomat says.

Since taking over from his brother, Fidel Castro, in 2008, President Raù Castro has taken some steps to reduce the state's economic role. He has allowed small-scale self-employment, permitted Cubans to buy houses and given private farmers more autonomy to grow and sell their produce.

He always has insisted that such reforms will be "without haste," however, and now there are signs that he deliberately is slowing things down.

On Jan. 1, the 55th anniversary of the revolution, Castro gave a speech in Santiago, Cuba's second-largest city.

He made no mention of further reform, instead castigating unnamed foreign groups for attempting to introduce "neoliberal" and "neocolonial" thinking.

That day the government also enacted a law banning the resale of clothes imported from abroad.

The trade of "tailor and dressmaker" is one of around 200 private occupations that were officially permitted in 2010. Since then thousands of entrepreneurs have stretched its definition, setting up small clothing stores stocked with brands from Europe and the United States.

The clothes often are imported in suitcases by Cuban travelers taking advantage of another reform, which eliminated the requirement for a permit to travel.

Eva, a 27-year-old from Havana, says that since 2011 she has been flying to Madrid every two months to stock the fashion store she maintains in the back of her apartment. Now, she says, she will close her business.

"Every time we start to breathe a little," she says, "we know the government's grip will soon tighten."

Republished from the Winnipeg Free Press print edition January 15, 2014 A8

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