Castro To Allow More Private Business

Cuban president Raúl Castro made headlines this week when he said more private businesses would be allowed to operate in the communist country and that many state jobs would be eliminated.

"We have to permanently erase the notion that Cuba is the only country in the world where people can live without working," Castro said, according to a transcript of his speech reported by <em>Granma</em>, Cuba's newspaper of the communist party. Castro said that Cuba would extend the "exercise of self-employment" and cut "various existing prohibitions on the granting of new licenses and the marketing of certain products, thus making labor contracts more flexible."

Cuba has been here before. In the early 1990s, Cuba freed up some private business sectors to help make up for the loss of aid from the former Soviet Union. One example was the country's <em>paladar</em> program, allowing individuals  to turn their homes into small, privately-owned restaurants. These boomed, becoming the best places to dine in Cuba, but they became a victim of their own success, and the plan was cut back.

"I'm cautious, I've seen this before," said Cuba expert John S. Kavulich II, senior policy advisor to the U.S.—Cuba Trade and Economic Council Inc. "The last time they did this was due to dire economic circumstances, then they backed away. Are we going to see a repeat? I'm probably more optimistic this time."

Cuba's flirtations with private enterprise have yielded positive results. In the world of cigars, the most famous example is that of late tobacco farmer Alejandro Robaina, who showed the Cuban government that privately-owned tobacco farms produced yields far greater than those owned by the state.

Read more on the palador program.

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