Cuba reins in entrepreneurs who consider free enterprise too far

A Coral reefs Gables business consultant watched 1 day in June as Cuban government bodies carried out chairs, tables, plates, audio systems and bottles of brought in liquor from a popular private cafe near the U. S. Embassy within Havana.

“ They took everything except the particular drywall and loaded it right into a green truck, ” said Saul Cimbler, president of U. T. -Cuba Business Advisory. He occurred upon the scene outside Este Litoral — a stylish paladar known for the high-end cuisine and customers — just as officers from the Technical Section of Investigations were carting away from its fixtures.

Neighboring business owners told him the particular restaurant got in hot water due to money-laundering allegations. Also problematic, someone said, was that the liquor didn’ to seem to come through official federal government channels and the restaurant was having to pay some of its employees off the publications. El Litoral diners also realized that the restaurant seemed to play just a little loose with the rules. Servers occasionally told them: If you don’ capital t have CUCs (Cuban convertible pesos), we’ ll take dollars. Bucks aren’ t legal tender within Cuba.

2 other private restaurants — the particular nearby Dolce Vita, an Italian language restaurant with water views, plus Lungo Mare, another Italian cafe a little further along the seaside Malecó n — also were cleared plus shut down in an apparent crackdown upon entrepreneurs who have taken the definition of totally free enterprise too far.

Several other Havana paladares and at least 2 in Camagü ey province within central-eastern Cuba also have reportedly already been closed.

At Havana’ s Lungo Mare near the Plaza of the Trend, all the tables are gone from the protected terrace where patrons once sitting under a red-and-white-striped awning and got pizza, arugula salad and nudeln they swore had to be imported through Italy. AlaMesa, a dining application developed by a group of young Cuban business owners, now lists both Italian dining places as “ fuera sobre servicio ” (out associated with service).

The general public face of El Litoral as well as the reputed owner of Lungo Mare and Dolce Vita is Alejandro Marcel Mendivil, whom neighbors state has been arrested. The independent Cuban digital publication 14ymedio , however , reported that the title on the license for El Litoral is Mendivil’ s mother, Nardis Francisca Mendivil, who denied possession of the other two restaurants.

Owning a few restaurants wouldn’ t be a big deal in most locations. But in a recent address to the Nationwide Assembly of People’ s Strength, Cuban leader Raú l Castro made it clear rules will be unplaned, and anyone who hopes to start the mini-empire with multiple private companies is mistaken. New regulations, he or she said, would be forthcoming.

The National Assembly, Cuba’ s parliament, passed updated financial guidelines during its recent program that said a “ concentration associated with property and financial and materials wealth” wouldn’ t be allowed in the non-state sector.

Even though many Cuban cuentapropistas (the self-employed) had hoped for an expansion associated with permissible business activities, the eating place closures are a cautionary tale individuals in Cuba’ s nascent personal sector. Some 543, 000 permit have been issued to self-employed employees, and there are 2, 000 personal restaurants and around 22, 1000 rooms being offered in Cuban casas particulares (private bed and breakfasts).

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This indication is an indication of a room regarding rent in a private home. Managing a casa particular is popular among Cuba’ s self-employed workforce.

Mimi Whitefield mwhitefield@MiamiHerald. com

The crackdown and the possibility of the raft of new regulations are “ surprising and unfortunate, ” stated Ted Henken, a Baruch University professor and co-author of the guide Entrepreneurial Cuba: The particular Changing Policy Landscape . “ This is exactly what the private sector doesn’ t need and it runs countertop to the economic needs of the nation, too.

“ This is a big bucket of chilly water for the cuentapropistas , ” he said. “ Entrepreneurship is about being creative, revolutionary, creating new product lines, not more rules. ”

Castro didn’ t mention the closed dining places by name during his Come july 1st address to the National Assembly, however it was clear he was speaking about owners of private businesses who the government thinks have crossed the line.

“ Malfeasance has been committed; there is information regarding cases where the same person currently has two, three, four and also five restaurants — not in a single province, but in several, ” stated Castro. He also mentioned a business owner who had traveled more than thirty times to different countries.

“ Where did this individual get the money? How did this individual do it? ” Castro asked.

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Cuban innovator Raú l Castro takes part in a meeting celebrating Revolution Day in Pinar del Rí o on This summer 26, 2017.

Alejandro Ernesto AP

But inspite of the problems in the non-state sector, Castro said they shouldn’ t be applied as a pretext to criticize the just decision to allow self-employment.

Cuba began a little experiment in self-employment in 1978, but it was pretty much over with the mid-1980s. After the collapse of its older benefactor, the Soviet Union, Cuba went into an economic tailspin and it cut back self-employment on a limited scale plus allowed private restaurants and bed-and-breakfasts in the 1990s to sop upward some of the unemployment.

But then as the economy improved, this pulled back on its flirtation with the private sector. In 2010, Raú l Castro once again embraced cuentapropismo in an effort to move hundreds of thousands of people off fat state payrolls and deliver a better variety of goods and services to Cuban customers.

While Castro said Cuba doesn’ t intend to roll back self-employment, he furthermore emphasized in his speech that it is “ essential to respect the laws, combine advances, make the positive aspects — which there are more than a few — more wide-spread, and resolutely face the illegalities and other deviations. ”

“ What I see are usually mixed signals where the government desires to position itself as open plus receptive to the private sector yet to remind everyone that all in all their livelihoods depend on the state plus it can control the growth of the businesses and make sure legal specifications are upheld, ” said Ted Piccone, a senior foreign plan fellow at the Brookings Institution.

“ The government seems a need to keep the private industry on a short leash, ” he or she said. It’ s all a part of “ the fundamental battle between these in Cuba who want the status quo and the ones who want change. ”

“ Cuba is the just country in the world that persecutes prosperity and not poverty, ” said Omar Everleny Pé rez, a Cuban economist. But he added: “ I don’ t think the newest regulations will be so harsh that will they’ ll be a disincentive in order to private business. ”

Last October, the Havana provincial government temporarily suspended permit for new private restaurants, stepped upward restaurant inspections and then called within 129 restaurant owners to discuss problems in their operations, such as exceeding no more than 50 seats, tax evasion, purchasing supplies on the black market, troubling neighbors by staying open previous 3 a. m., and operating bar/nightclubs disguised as restaurants.

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The caribbean bar of El Cocinero is a superb stop before dining in this personal restaurant. In October, the Havana provincial government temporarily stopped providing licenses for new paladares — personal restaurants.

Mimi Whitefield mwhitefield@MiamiHerald. com

Private taxi cab drivers also simmered this past winter season after the government imposed price manage measures on set routes.

In his speech, Castro also took aim at fresh non-agricultural cooperatives. Initially, the government permitted beauticians and barbers who were condition employees to take over and run their very own shops as private cooperatives. Later on the concept was expanded to include building and other types of cooperatives.

But approvals for personal cooperatives stalled at 498. Since June, 403 private non-farm cooperatives were operating, said Pé rez.

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Josefina Hernandez cuts a customer’s locks next to a poster of Fidel Castro hanging in a barber store in Old Havana in 2010. Which was the year Cuba began turning more than some formerly state-run barber stores and hair salons to the workers who work in them.


Castro said in the haste to build these new cooperatives, proper arrangements weren’ t made and mistakes were committed. He singled out design cooperatives as problematic.

“ The state construction businesses are being left without workers since the construction cooperatives pay more. They have turn out to be competition for the state, ” stated Pé rez.

Among other issues with the cooperatives discussed at a recent Council associated with Ministers meeting was cuentapropistas ’ use of recycleables, goods and equipment pilfered through state enterprises or obtained simply by other illicit means. But with no workable wholesale network where the personal sector can obtain supplies at sensible prices, Henken said, “ celebrate an environment that forces people in to the black market and to commit various other irregularities. ”

The dueling messages that the authorities is sending out, said Henken, are usually that it wants more prosperity for that non-state sector, “ but it doesn’ t want real prosperity that could challenge authority and control. ”