MSN News, July 22, 2021
“Cuba’s communist authorities have for decades treated private entrepreneurs as a threat to be contained, not encouraged.”
On a farm not far from the town where Cuba’s protests first erupted this month, police investigators last summer carried out a major sting operation. Their target was not a dissident activist, but a dairyman nicknamed El Rey del Queso: The King of Cheese.
His offense? Operating a clandestine factory that produced tire-sized hunks of cheese for private sale in Havana. Authorities arrested the King, confiscated hundreds of pounds of yellow queso and produced a news report about the bust on Cuban state television depicting him as a villain.
“He was delivering this cheese every week,” Dailyn Valdes Perez, a first lieutenant in the Economic Crimes division of the Interior Ministry, told the cameras, describing the business as if it were a drug ring.
Cuba’s communist authorities have for decades treated private entrepreneurs as a threat to be contained, not encouraged. Long after China and Vietnam embraced market reforms, using material prosperity to buttress authoritarian rule, Cuba has clung to an economic model based on centralized planning and state control.
The July 11 protests that shook Cuba’s rulers showed that model might be their biggest vulnerability, as its weak foundation is further eroded by the decades-long U.S. embargo, additional Trump-era sanctions and now the coronavirus pandemic. The country’s economy contracted 11 percent last year, according to government data. Cubans are spending hours in lines to buy basic goods they can barely afford. Hospitals have been overwhelmed by covid patients, and medicine is scarce. Power outages are turning stifling summer heat into an explosive fuse.
“Unless the government makes profound changes, I think people will take to the streets again,” said Camilo Condis, a Cuban entrepreneur and business advocate who hosts the podcast El Enjambre — The Swarm.
Condis said he’s been waiting for the government to move forward with long-promised reforms that would allow for small and medium-sized private businesses, albeit only in certain sectors authorized by the government.
“It’s an essential first step,” he said in an interview from Havana. “And if they don’t take it, they’re digging their own grave.”
Many of the protesters and their supporters insist they’re demanding freedom, not just food. Calls for democracy and sweeping political change have come from a wider range of Cubans who are increasingly willing to challenge the government.
But as with other previous, rare episodes of civil unrest on the island, it’s economic misery, especially food shortages and electricity cuts, that have sent Cubans into the streets. Those pushing President Biden to tighten U.S. economic sanctions insist that they’re the best tools to keep the pressure on.
Since July 11, authorities have cracked down with brigades of police commandos and plainclothes agents wielding clubs, locked up activists and protesters, and disrupted Internet access. Most protest activity has been suppressed, but the country’s economic outlook remains so bleak that demonstrations could flare again at any moment — particularly if conditions continue to deteriorate.
New liberalization measures could alleviate the situation a bit, “but there’s no way to turn things around in the short term,” said one Cuban economist who spoke on the condition of anonymity because they weren’t authorized to be quoted.
Biden officials announced new sanctions Thursday against Cuban military and security officials it said were involved in human rights abuses during the protests.
“This is just the beginning,” Biden said in a statement. “The United States will continue to sanction individuals responsible for oppression of the Cuban people.”
The administration said this week it has also launched a working group to study the potential impact of easing U.S. restrictions on cash remittances sent by Cubans in the United States to their families on the island. The Trump administration banned financial transactions last year involving Fincimex, the firm with ties to the Cuban military that processes the payments. The move led Western Union to close more than 400 offices across the island that for years had been a lifeline to millions of Cubans.
State Department spokesman Ned Price said the administration is studying ways to allow Cubans to resume sending money that “ensure that the funds get into the hands of the Cuban people, while ensuring that they do not, on the other hand, go into the coffers of the regime.”
Cuban American Republicans such as Rep. Mario Diaz-Balart (Fla.) oppose allowing the transfers to resume, saying that would weaken sanctions and throw the economy a lifeline. “What all Cuban people need is for Biden to lead an international campaign for their immediate freedom & provide Internet access that cannot be blocked by the dictatorship,” he wrote on Twitter.
The squeeze of the pandemic has fallen hard on the millions of Cubans who depend on tips from tourists and cash sent from relatives abroad. Cuban beach resorts popular with Canadians, Europeans and Cuban Americans are virtually empty. Flight restrictions as a result of the pandemic have choked off the flow of goods and cash carried in the suitcases of Cuban travelers and visiting Cuban Americans.
Despite a government vaccination campaign using Cuban-made vaccines, the country’s reported coronavirus caseload is now among the highest per capita in Latin America. If the effort fails to bring the virus under control, the country faces the threat of another winter tourist season with empty hotels and meager revenue. This year’s hurricane season is predicted to be an active one, and a major storm that knocks out power for an extended period would compound the strain.
Cuban authorities in the past have used small-bore liberalization steps to defuse public anger. But the government has always kept the private sector under the thumb of the state, and continues to make it nearly impossible for business owners to import and export goods, manufacture products or acquire commercial property profitably.
Richard Feinberg, an emeritus professor at the University of California at San Diego who worked on Cuba issues at the National Security Council under President Bill Clinton, said he thought the calculus for authorities on the island might change after the first islandwide spontaneous protests in six decades. “I think it’s been a wake-up call for them,” he said.
“What’s been remarkable has been the lethargy, or lack of a sense of urgency, and the inertia in the bureaucratic structures there as serious problems accumulated in the energy grid and the agricultural sector,” Feinberg said. “These are strategic sectors, and they failed to move on them.”
The price of that complacency was made evident on July 11, he said. “You would think they would recognize economic failures are political and strategic failures, and vulnerabilities.”
Cubans authorities have publicly accepted some responsibility for the conditions that sparked the protests, while mostly blaming U.S. sanctions. Foreign Minister Bruno Rodríguez on Tuesday denounced what he said were U.S. diplomatic efforts to isolate Cuba, calling them “interventionist maneuvers to tighten the blockade around our country.”
One reason the island is so vulnerable to U.S. pressure is the government’s extreme dependency on imported goods and access to the foreign currency needed to buy them. Basic staples such as rice, beans, coffee, sugar, milk and beef, produced in abundance by private Cuban farmers, are now items the government needs to purchase abroad. The government imports cheese from Europe while arresting local farmers like the King of Cheese who try to produce it domestically.
Cuba can’t even raise enough chickens to meet demand. While authorities denounce U.S. sanctions, they spend scarce hard currency to import thousands of pounds of frozen poultry each year from American companies, making the United States one of the country’s top trading partners.
Authorities have taken steps to allow small-business owners to import goods, but they must work through a state-run company that handles the transactions and charges exorbitant fees. Sometimes the Cuban import company takes the money and then doesn’t pay the foreign entity, Condis said. He’s one of many calling for businesses to be able to import and exports goods without the government skimming fees as a middleman.
A more immediate source of frustration for ordinary Cubans is the government’s monopolistic retail model, which many have come to resent as a parasitic presence in their lives. The state-run grocery stores, cellphone monopoly and utility companies on which Cubans rely charge them more and more, while the socialist health-care and education systems that authorities celebrate as their greatest achievements offer them less and less.
Saul Berenthal, a Cuban-born former IBM software engineer who operates a kosher-themed boutique hotel in Havana, has been trying to get the government to approve his proposal to set up a manufacturing plant that could assemble inexpensive tractors for Cuban farmers, while providing a range of agricultural services to help them produce more food.
“They have been so used to importing things that they’ve lost ability to produce themselves,” Berenthal, who left Cuba as a teenager, said from his home in North Carolina.
“I don’t think they can afford to do that anymore,” he said.
He’s been trying to get approval for six years. He said authorities initially told him that the small tractors didn’t meet their technical standards. More recently, he said, they’ve demonstrated interest.
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