Upcoming Cuba Restrictions on Free Enterprise?  

As has been discussed in previous posts, in recent years Cuba has seen a growing private sector of its economy. For example, the number of Cubans working with self-employment licenses rose to 567,982 people in mid-2017, compared with 157,731 in 2010. In response to this growth the Cuban government over the last year has imposed various restrictions on this sector. [1]

Although President Raúl Castro at the 2016 Congress of the Communist Party of Cuba criticized the lethargy of many of the state-owned enterprises and praised the innovations of the growing private sector, Cuba has been struggling with the challenges of creating and managing a mixed economy. The biggest challenge for the regime has been the increasing wealth of those in the private sector and thus the rising economic inequality on the island. [2]

New Draft Economic Regulations [3]

Now Reuters reports that a “draft of new Cuban economic regulations proposes increasing state control over the private sector and curtailing private enterprise.”

The 166-page document “would allow homes only one license to operate a restaurant, cafeteria or bar. That would limit the number of seats per establishment to 50. Many of Havana’s most successful private restaurants currently hold several licenses enabling them to have a seating capacity of 100 or more.”

This draft, which is dated Aug. 3, 2017, and signed by Marcia Fernández Andreu, deputy chief of the secretariat of Cuba’s Council of Ministers, states that it ”strengthens control at a municipal, provincial and national level.” In addition, it provides that enforcement against infractions will be more “rigorous.”

The draft apparently was recently sent to provincial and national organs of administration for consultation. Its leak is suspected to gauge public opinion and could lead to revisions.

Reactions

Even before this new draft was released, the Miami-based Havana Consulting Group had warned that the recent Cuban restrictions on the private sector would generate an annual “flight of local capital abroad” of between 280 and 350 million dollars. Those restrictions also probably would be a negative factor for new foreign investment on the island. [4]

In addition, the new proposed regulations probably would prompt some younger Cubans to lose hope of change in their country and prompt their desire to emigrate, thereby exacerbating Cuba’s problems associated with an aging and declining population.

Finally for the very reasons that Raúl Castro advanced at the recent Party Congress, the proposed regulations could adversely affect Cuba’s employment opportunities and gross national product.

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[1] See posts listed in the “Cuban Economy” section of List of Posts to dwkcommentaries—Topical: CUBA

[2] Raúl Castro Discusses Socio-Economic Issues in Report to Seventh Congress of the Communist Party of Cuba, dwkcommentaries.com (April 19, 2016). 

[3] Reuters, Exclusive—Cuba Draft Rules Propose Curtailing Fledgling Private Sector, N.Y. Times (Feb. 22, 2018).   

[4] Study: The obstacles of the regime to the private sector generate a flight of millions abroad, Diario de Cuba (Feb. 20, 2018). 

Cuba Addresses Its Aging and Declining Population

Granma, the official newspaper of the Communist Party of Cuba, has published an article describing how Cuba is seeking to meet the needs of its aging population.[1]

The country’s Older Adult Attention program focuses on specialized care with medical coverage provided in hospitals, seniors’ community circles, older adult centers, and retirement homes, which aim to strengthen links between this demographic and the rest of the population, while promoting the role of the family as key to their longevity.

The 274 Older Adult Centers with capacity for 9,393 people, as well as 3,310 daily spots offered in retirement homes, are open daily from 8am to 5pm, to individuals whose families are unable to take care of them during the day, returning to their homes in the evening. These people are responsible for themselves and carrying out their usual daily activities.

The 148 retirement homes with capacity for 11, 771 provide full-time care with subsidized food and medicine; physiotherapy and rehabilitation services; periodic specialized consultations to treat various pathologies; plus nightwear, clothing, and footwear.

The program also has 250 Caregivers Training Centers which prepare those responsible for helping and supporting older adults in need of personalized care, due to some kind of impairment.

Now an estimated 19% of the population is age 60 or older. This is due to Cuba’s good health care, declining birth rate and emigration, resulting in a shrinking work force. This article, however, did not address the economic challenges of these phenomena.

President Obama’s Presidential Policy Directive—United States-Cuba Normalization mentioned Cuba’s aging and declining population due, in part, to emigration.

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[1 Barbosa, Healthy longevity for Cuba’s older adults, Granma (Oct. 13, 2016).