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Mesa-Lago: 'I cannot see the Government acquiring another strategic partner like the Soviet Union or Venezuela'

'Raúl Castro has been attempting economic reform for ten years. Is Díaz-Canel going to achieve what the general could not in an entire decade?'


"What alternative does the economy of Cuba have if it is not the non-State sector? Unless there appears another subsidy-distributing savior, like the Soviet Union or Venezuela were. But I cannot see there being another strategic partner," stated the economist and academic Carmelo Mesa-Lago during the presentation of his latest book in Madrid.

He explained that he found implausible the prospect of China being this deliverer, although Beijing has increased trade with Havana: in 2014 it was 9% and the most recent numbers, from 2015, indicated 16%.

The book Voces de cambio en el sector no estatal cubano. Cuentapropistas, usufructuarios, socios de cooperativas y compraventa de viviendas (Voices of Change in the Cuban Non-State Sector. The Self-Employed, Usufruct Workers, Partners of Cooperatives and Property Sales), coordinated by Mesa-Lago, was presented this Tuesday afternoon in Madrid's Casa de América.

“Many people have told me, inside and outside Cuba, that Raúl Castro is weary, that he can´t take it any more, that he wants out of this. Miguel Díaz-Canel is the designated first vice-president, the man who would be the successor to the general on 24 February next year. Díaz-Canel does not have widespread support, but rather only those who also back Castro: the Party and the Armed Forces. If Raúl Castro retires completely, what is Díaz-Canel going to do? He cannot do anything. Raúl Castro has been attempting reform for 10 years. Is Díaz-Canel going to achieve what the general could not in an entire decade? This is one of the fundamental questions, and I don't have an answer for that," explained the Cuban academic.

At the event on Tuesday, Mesa-Lago also talked about Economy Minister Marino Murillo.

"We haven't heard a thing from Murillo for the past eight or nine months. He has disappeared. He was the person responsible for the report on the process of economic reforms, and for implementing them. This worries me very much, because he was the man who was in charge of all this," he expressed.

The academic also spoke about another aspect of the national economy: the sale of professional services.

"The purchase of Cuban professional services by Venezuela and Brazil has diminished, and revenue has dipped. In 2016 it may have dropped to 5 billion dollars or less," he said.

With regards to the book presented this Tuesday, he explained that it was a joint work, produced in collaboration with Roberto Veiga González and Lenier González Mederos, both Cubans residing on the Island, who conducted the interviews; Sofía Vera Rojas, a doctoral candidate in Political Science at the University of Pittsburgh; and Aníbal Perez-Liñán, a professor of Political Science at the same institution, who did the tabulations and their analysis.

"There were 80 interviews, of people in four sectors (the self employed, usufruct workers, partners of cooperatives, and peopled involved in property sales). We did not provide answers to choose from. Rather, they were open-ended interviews, with nothing to mark. They took between an hour and a half and two hours. They were very intensive," he stressed.

Regarding the number of people interviewed, he expressed regret: “We do not claim that this was a scientific survey. Unfortunately, that would have been impossible. We would have had to request permission from the authorities in Cuba, and they were not going to give it to us. I have colleagues who were able to conduct interviews in Cuba, but with a 10-year moratorium on their release, such that when the results finally come out, they're already out-of-date.”

Regarding the data featured in this volume, he stated that, with reference to satisfaction with what they do, and what they earn, 80% of the self-employed reported that they were very satisfied (with scores of 8, 9 and 10), and only 5% gave scores of 1 to 3.

Other data obtained in this study indicated that 57% of workers in the non-State sector have between 1 and 5 employees. Only 2% reported having more than 15.

"Another surprise for us was that 93% reported having net profits after the payment of taxes. And two thirds of them said that they reinvested all their profits. There is, therefore, a process of business growth, but with limits placed on it by the State. The owner of a paladar (restaurant) cannot have a chain. He cannot have several," explained Mesa-Lago.

He indicated that there are five taxes levied on the self employed and, in this regard, observed that the most absurd of all is the one on their staffs: "The more employees a self-employed businessperson hires, the higher the taxes he must pay. This is absurd, because it is in the State's interest for there to be more employees. In statements some years ago, the Government announced that 1.8 million State employees are unnecessary. Hence, the State has to reduce their numbers, and, for this, needs for non-State jobs to be created. They are penalizing someone who actually helps to solve a problem that is fundamental."

The interviews also found that 92% of workers in the non-State sector would like to expand their businesses, and even sell abroad.

"The book has more than statistics. One can see what people are saying. One of the people interviewed said that he saw a container with his products, to be sold in Bahamas and Barbados. It is impressive, because there are so many restrictions, but the self-employed still have an enterprising spirit, one that could really be magnificent if they did not face so many hurdles."

As for advertising, he defined it as very rudimentary. 67% is comprised of calling cards, flyers, and signs placed at the front of the business. Just 19% of entrepreneurs have access to the Internet.

The fundamental problems cited by the self-employed and usufruct workers were the difficulty of obtaining raw materials, State bureaucracy and interference, red tape and taxes. In response to the question "What would you like to see improve?" two thirds of those interviewed indicated the State bureaucracy, and the issue of raw materials.

With reference to remittances, only 24% of those interviewed reported receiving economic remittances: "Here there was fear. I think that people were wary. Later 68% responded recognized that they received help from relatives on and off the Island."

Mesa-Lago also lamented the fact that many qualified professionals engage in unskilled labor activities.

"What the State must do is allow professionals to practice their trades: of 201 activities approved by the Government for self-employed labor, most are unskilled. There are not even 10 that constitute skilled labor,” he complained.

"My conclusion is that if there were more flexibility, and the non-State sector were bolstered, there would be growth in the Cuban economy, and an improvement in social welfare. Unfortunately, reform is very slow. And, of course, there is the question of the decentralization of the State sector," concluded the academic.

Participating in the function on Tuesday were Consuelo Naranjo, director of the History Institute, Advanced Scientific Research Council; José Antonio Alonso, Professor of Applied Economics at the Universidad Complutense de Madrid; and Carlos Malamud, a principal research historian with the Elcano Institute of International Studies.

A distinguished professor of Economics and Latin American Studies at the University of Pittsburgh, Mesa-Lago is the author of a range of books and articles on the Cuban economy and comparative economic systems, among other topics. He has received several prizes, among them the Alexander von Humboldt Stiftung (1991, 2002), and recognition by the International Labour Organization (WLO) for his research on decent work, jointly with Nelson Mandela (2007). In 2015 he was named one of the 50 most influential intellectuals in Ibero-America.

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