What was once a drab state-run flower shop in central Havana has now become a modern grocery store with shelves stocked with everything from pasta to wine, and the ceilings and walls have been restored and repainted.
A former state-owned glass company on the outskirts of Havana is now a showroom for a private company selling Cuban-made furniture.
And at the port of Cuba's capital, forklifts carefully unload U.S. eggs from refrigerated containers. Eggs are sent to online independent supermarkets that offer home delivery services similar to Amazon Fresh.
These businesses are part of an explosion of thousands of private businesses that have opened across Cuba in recent years, with communist regimes not allowing such businesses and determined to eliminate the concept of capitalism. It's a remarkable change in a country where Fidel Castro seized power after leading a revolution. Something like private ownership.
But now Cuba is in the midst of one of the worst economic conditions in decades, plagued by government incompetence and mismanagement, and decades of U.S. economic blockade that have led to the collapse of domestic production, rising inflation, constant power outages, and shortages of fuel, meat, and other supplies. is facing a financial crisis. Necessities.
So the island's communist leaders are turning back the clock and embracing the private entrepreneurs they once derided as “dirty” capitalists.
Some 10,200 new private businesses have opened since 2021, taking advantage of government deregulation that gives Cubans the legal right to set up their own businesses, putting them alongside the country's stalled socialist model. , creating a fledgling but dynamic alternative economy.
Private sector and government imports totaled about $1 billion each last year, according to government data, underscoring the growth of private companies and the government's economic woes.
Much of the private sector's imports came from the United States, funded by cash sent by Cubans to relatives back home. Approximately 1.5 million people work in the private sector, an increase of 30% from 2021, and they now make up almost half of the Caribbean island's total workforce.
“Never before has the private sector been given so much room to operate in Cuba,” said Pavel Vidal, a university professor in Cali, Colombia, who studies the Cuban economy. “The government is bankrupt, so it has no choice but to attract other actors.”
Despite the growth of the private sector, its overall contribution to Cuba's economy remains modest, although increasing, accounting for approximately 15% of gross domestic product.
Still, the economic transformation is significant enough to cause deep divisions in the island's communist system as a new business elite gains wealth, something anathema to Cuba's revolutionary ideology.
Cubans working for the state, such as white-collar professionals, doctors and teachers, earn the equivalent of about $15 a month in Cuban pesos, while private sector employees earn five to 10 times that amount.
Salaries from the government are not very high at the private shops that are popping up one after another. There, a bag of Italian potato chips costs $3, a bottle of good Italian wine costs $20, and even everyday items like toilet paper cost $6 a pack. 10 rolls.
Most customers who can pay such prices receive money from abroad, work for other private companies, or are diplomats.
“Today, you have to be a millionaire to live in Cuba,” said Yoandris Hierezuelo, 38, who earns about $5 a day selling fruits and vegetables from a cart in Havana's Vedado district. ) says. “The state can no longer meet the basic needs of its people.”
Cuban government officials said the legalization of private enterprise does not mean a reluctant acceptance of capitalism for the sake of economic survival, making it clear that state-run industry still trivializes the role of the private sector in the economy.
“This is not a quick-fix strategy,” Sassette Rosales, director of planning and development at the Ministry of Economy, said in an interview. “We have a very clear idea of the path to gradual recovery of the economy by incorporating new economic actors that complement the socialist national economy.”
But U.S. officials say the growth of private enterprise could be a game-changer, paving the way for greater democracy and economic freedom.
“The question is: Is that enough?” said Benjamin Ziff, Chargé d'Affaires at the U.S. Embassy in Cuba. “Cuba is falling apart faster than it can be rebuilt. There is no going back.”
A key question, he added, is whether the government will allow the private sector to “expand fast enough and freely enough to meet the challenges.”
The rapid expansion of Cuba's private sector has sparked deep skepticism within Miami's staunchly anti-communist Cuban exile community, and many see this as Cuba's way to survive the economic crisis and cling to power. They downplay it as a ploy by communist leaders.
Rep. María Elvira Salazar, a Republican and one of South Florida's three Cuban-American congresswomen, held a Congressional hearing on private business in January entitled “The Myth of the New Cuban Entrepreneur.” government officials who led the association and suggested that licenses for such businesses were reserved for Cuban relatives.
“The Cuban regime is still in power and there is nothing to prove that they intend to give some of that market share to anyone other than themselves,” she said in an interview.
In fact, Cuba has experimented with free market practices during other difficult times since banning private enterprise in the 1960s, only to later reverse them once economic pressures eased.
When the Soviet Union collapsed in the early 1990s and left Cuba without its main financial backers, the government created a limited number of “self-employment” licenses for some low-income workers, such as barbers and tire repair workers. Issued.
After President Barack Obama restored diplomatic relations with Cuba in 2015 and eased the U.S. embargo, American tourists flooded the country and American companies began seeking investment.
Still, the Communist Party did not fully embrace the private sector, seeing it as a potential Trojan horse for “Yanki imperialists.”
Then came the double whammy. The election of President Donald J. Trump in 2016 reinstated sanctions against Cuba, including a ban on U.S. cruise ship operations to Cuba. Three years later, the Covid-19 pandemic completely shut down Cuba's tourism sector, its biggest source of foreign exchange.
Since then, Cuba has been in economic decline. According to the government, production of staple foods such as pork, rice and pulses fell by more than half between 2019 and 2023.
Cuba has requested help from the United Nations World Food Program for the first time this year to provide enough powdered milk for children, state media reported. Oil shortages and aging power grids are causing rolling blackouts across the country.
In March, hundreds of people took to the streets of Santiago de Cuba, the country's second largest city, shouting “power and food” due to deteriorating living conditions, according to social media and official government reports. Due to the deterioration of the situation, an unusual situation occurred in which the public display of unhappiness occurred.
Economic hardship caused a huge surge in immigration. About 500,000 Cubans have left the island since 2022, an unprecedented exodus for a country of 11 million, with most of those leaving the country going to the United States.
In a time of so much poverty, independent small businesses offer a glimmer of hope to those who can afford to start them and their employees.
Many are taking advantage of regulations introduced in 2021 that give Cubans the legal right to establish their own companies, limited to 100 employees.
New delis and cafes are popping up across Havana, and entire office floors are being rented out to young entrepreneurs, filled with business plans and products ranging from architecture and software to clothing and furniture.
Diana Sainz, who spent most of her life living abroad and working for the European Union, took advantage of economic changes in her home country by opening two home deli markets in Havana, selling pasta, ice cream and other products. We provided a combination of locally produced products. There are also imported items such as beer and cereal.
According to Sainz, there have been no private supermarkets in Cuba for decades. “It’s great that there’s a store on every street corner now,” she said. “If you compare it to five years ago, it's completely different.”
Still, many business owners said the Cuban government could do more to foster the private sector.
Cuba's state-run banks do not allow account holders to access dollar-denominated deposits to pay importers because the Cuban government lacks foreign currency to pay its bills. U.S. sanctions also prohibit direct banking transactions between the U.S. and Cuba.
And the Cuban government has banned private ownership of major industries, including mining and tourism.
However, there are still many opportunities left.
Orbel Martinez, 52, a Cuban-American interior decorator from Miami, recently partnered with a local restaurant owner to renovate La Carretta, a landmark restaurant in Havana that was abandoned by the state 10 years ago. has been restarted.
“The ceiling came down and we had to completely tear down the interior and rebuild it,” he said.
Mr. Martinez grew up in Cuba and worked in Spain and Mexico before resettling in Miami, but never renounced his Cuban residency.
“We're showing the state that it's possible to do things differently,” Martinez said, looking out over a crowded lunchtime crowd at a 136-seat restaurant serving traditional Cuban cuisine. “There is,” he said. “And we're completely private.”
audio creator Patricia Zurbaran.
