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Environment

Economic reforms stir mixed emotions in Cuba

As Cuba prepares for the first Communist Party Congress since 1997, many Cubans are concerned how economic reforms introduced this year will affect their livelihood.

Jose Leyet repairs a tire

Economic reforms mean Jose Leye takes home less money

Dressed in blue overalls and with an air compressor pulsating in the background, Jose Leyet mounts a tire on a wheel using a pry bar. In many other countries, and even elsewhere in Cuba, a machine does that work. But because he runs his own business, it's cheaper for Leyet to do it by hand. He's one of hundreds of thousands of Cubans who own, or soon will own, their own small businesses.

Last year the Cuban government announced major economic reforms. Since January 1, when some of the reforms went into effect, more than 113,000 people have been licensed to open businesses and 100,000 others have permission to start private farms on leased government land.

But Leyet said the reforms won't help him. New entrepreneurs will benefit, he said, but the government is also trying to increase revenue by charging existing businesses higher taxes.

"I don't like the reforms," said Leyet. "My taxes have gone up by 30 percent."

Incomes and subsidies

Driving down a crowded street to another part of Havana, a university professor said she supports the reforms. She and other teachers received a 25 percent salary increase two years ago. Marta, who asked that her full name not be used, said she expects additional reforms to help her family.

Cubans in front of snack bar

Many Cubans live from a mix of income sources

"At the very least, the reforms should improve private property rights," she said.

Like many Cubans, Marta and her husband survive on their official salaries, government subsidized food rations and a few dollars from relatives living in the United States. But the income is only enough to provide the basics, she said.

"We don't always have a balanced diet," said Marta. "We don't get yogurt. Beef is very expensive in the stores. The government guarantees some things like rice, eggs, and chicken."

The Cuban economy has been caught between a big drop in prices for its exports, and a huge jump in gasoline prices due to crises in the Middle East. Cubans pay nearly $1.25 (0.86 euros) per liter for gas while earning an average of only $18 a month.

"In general we don't use the car much because it's very expensive," explained Marta.

In order to make ends meet, Marta's husband Roberto, also a university professor, moonlights as a taxi driver.

"I give people short rides," Roberto said. "It's cheaper than a taxi run by the government, and it allows me to buy gas."

What the government plans

The economic reforms are supposed to stimulate the economy and help people like Marta and Roberto.

Woman standing in front of a red wall with a star painted on it in a cafe

Economic reforms are intended to help regular Cubans

The government will save money by laying off 500,000 workers from inefficient government enterprises. State-run workplaces will have to show a profit or face bankruptcy. The government will use the resulting increased revenue to invest in food production and other critical sectors.

Marta, a Communist Party member on her campus, said people are raising a lot of criticisms of the pace of the reforms as the Cuban Communist Party prepares for a national Congress starting Saturday.

Marta said people are concerned that "the changes shouldn't come too rapidly. We worry about middle income people, the workers, people who don’t have options to find other jobs. There is support for the changes because it’s the right thing, but people worry about not having a job."

Slowing change

Manuel Yepe, a former ambassador and former ranking Communist Party official, chuckled when he heard Marta's comments.

Wall with the words Viva Cuba Libre painted on it

Cuban officials slowed the pace of economic reforms

"Everyone has a general view favorable to the changes," he said with a smile. "But when it comes to their personal situation, they would like it not to affect them directly."

He said the 500,000 layoffs, which were supposed to be completed last month, will now take much longer, perhaps years. Authorities will also slow down the elimination of the ration card system, which is supposed to save the national budget $600 million a year.

Right now, every Cuban can buy at least some staples at highly subsidized prices. The government plans to gradually eliminate those subsidies and provide extra cash to low income Cubans.

"Instead of subsidizing the goods, we should subsidize the people who are not able to get the goods properly," said Yepe.

Embargo difficulties

But these internal changes won't be enough, Yepe added. Cuba needs more foreign investment. The nearly 50-year-old US embargo against Cuba prohibits US investment and seeks to prevent Europeans and others from investing as well. Marta said while the embargo is supposedly aimed at hurting Cuba's leadership, in fact, it hurts ordinary people the most.

"We have a sister who is mentally ill," Marta said. "We can't get the latest generation of anti-depressant drugs because they are manufactured in the US and Europe."

Men playing chess on the street in Cuba

The US embargo makes it difficult to find parties willing and able to invest in Cuba

Despite the embargo, Cuban officials hope to get new foreign investment from Europe and China to develop offshore oil fields and increase tourism. That, combined with domestic reforms, is supposed to stimulate the economy and help Cuba address its huge foreign debt. But Yepe said Cuba will limit free market reforms. The government will never allow foreigners or individual Cubans to own major industries. Education and health care will remain free.

"It doesn't mean we're going to have a market economy, and we're going to copy China or Vietnam," said Yepe. "We’re going to continue with our creation of socialism. We have done it in a very creative manner."

Cubans are anxiously waiting to see if that "creativity" actually puts more food on the table and more money in their pockets.

Author: Reese Erlich, Havana

Editor: Sean Sinico

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