HAVANA — A modern grocery store whose shelves are stocked with everything from pasta to wine occupies a spot in downtown Havana once occupied by a dingy state flower shop. A former glass parastatal company in a suburb now houses a showroom selling Cuban-made furniture. And at the port, forklifts unload American eggs destined for a private online supermarket that offers home delivery.
These companies are part of an explosion of private companies in recent years throughout Cuba, a notable change in a country where Fidel Castro came to power leading a communist revolution determined to eliminate capitalist notions such as private property.
But today Cuba faces its worst financial crisis in decades, driven by government mismanagement and a decades-long U.S. economic embargo that has led to a collapse in national production, rising inflation, power outages and shortages of fuel, meat and other needs. So communist leaders are embracing private entrepreneurs, a class of people they once vilified.
Taking advantage of the easing of restrictions, Cubans have opened approximately 10,200 private companies since 2021, creating an alternative economy alongside the country’s battered socialist model.
Underscoring the growth of private companies and the government’s economic difficulties, private sector and government imports last year each totaled about $1 billion, government data shows. Much of the private sector’s imports came from the United States and were financed by remittances sent by Cubans there to relatives back home. About 1.5 million people work for private companies, an increase of 30 percent from 2021, and now represent almost half of the total workforce on the Caribbean island.
Despite the growth of the private sector, its overall contribution to the Cuban economy is only about 15 percent of gross domestic production. Still, the transformation is creating deep divisions in the island’s communist system as a new business elite acquires wealth, anathema to Cuba’s revolutionary ideology.
Cubans who work for the state, including administrative professionals, doctors and teachers, earn the equivalent of approximately $15 a month in Cuban pesos, while private sector employees can earn between 5 and 10 times that amount.
A government salary doesn’t go very far in the private stores that have sprung up, where a bag of Italian chips costs $3, a bottle of fine Italian wine $20, and even a basic necessity like toilet paper costs $6. for a package of 10 rolls. Most of those who can pay these prices receive money from abroad, work for other private companies or are diplomats.
“You have to be a millionaire to live in Cuba today,” said Yoandris Hierrezuelo, 38, who sells fruits and vegetables from a cart in Havana and earns about $5 a day. “The State can no longer satisfy the basic needs of the population.”
Cuban officials said the legalization of private companies was not a grudging acceptance of capitalism for the sake of economic survival. “We have a very clear idea of the path for the gradual recovery of the economy with the incorporation of new economic actors that are complementary to the economy of the socialist State,” said Susset Rosales, director of Planning and Development of the Ministry of Economy.
But U.S. officials say private companies could pave the way to greater freedoms.
This year, for the first time, Cuba asked the United Nations World Food Program for help to provide enough milk powder for children, state media reported.
Deteriorating living conditions triggered an unusual public display of discontent in March when hundreds of people took to the streets of Santiago de Cuba, the second largest city, chanting “Energy and food,” according to reports on social media. and the Government.
The hardships have caused an increase in emigration. Since 2022, approximately 500,000 Cubans have left, an extraordinary exodus for a country of 11 million.
In the midst of so much hardship, small private businesses offer a small dose of hope to those who have the money to open them and to their employees.
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