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Cuba shutters private theaters, threatens other businesses

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(Globalpost/GlobalPost)

By Marc Frank

HAVANA (Reuters) - Cuba closed dozens of home-based movie theaters on Saturday and reaffirmed its plans to end the private sale of imported goods as communist authorities pressed for "order, discipline and obedience" in the growing small business sector.

A government statement issued through official media said home-based theaters and video games will "stop immediately in any type of self employment," a local euphemism for small business.

The statement said "the showing of movies, including in 3D salons, and likewise the organization of computer games, has never been authorized."

The government banned the private sale of imported goods last month, a measure that potentially affects some 20,000 small businesses and their employees who sell clothing, hardware and other goods brought in informally by travelers, some of whom visit the Caribbean island regularly carrying merchandise from the United States, Spain and Latin American countries.

President Raul Castro, who replaced his brother Fidel in 2008, has instituted a series of market-oriented reforms to Cuba's Soviet style economy where the state still employs 79 percent of the 5 million-strong labor force.

"These measures are corrections to continue bringing order to this form of management, fight impunity and insist people live up to the law," the government said on Saturday.

"In no way does this mean a step backward. Quite the contrary, we will continue to decidedly advance in the updating of our economic model," it said, adding that would only be possible "in an atmosphere of order, discipline and obedience."

The import ban has created a fury among entrepreneurs and the public who have tired of buying high priced and low quality clothing from state-run establishments.

Saturday's closing of private theaters will add fuel to the fire as they have been overwhelmingly welcomed by the public.

Marlene, a Havana housewife, said her neighbor was planning to open a 3D salon.

"The state has no 3D theaters, so what is their problem. Sometimes the government seems to want to make our lives worse for the fun of it," she said, asking her last name not be used.

STATE ROLE QUESTIONED

Cuban economist Juan Triana, in his regular Thursday commentary on state-run Radio Taino, said that the government should get out of businesses it had no reason to be in, referring to the ban on imports.

"Is it really worthwhile for the state to continue expending effort, money and prestige in an activity it was not designed for ... and which in general undermines its prestige due to the quality of the products, but also theft, corruption, many costs that are difficult to cover even though prices … are very often two or three times their value," he said.

On Saturday the government said it had decided to postpone the ban on imports until January to give vendors time to liquidate their inventories.

Three years ago the government opened up retail services to "self employment" in the form of 200 licensed activities from clowns, seamstresses, food vendors, taxis and the building trades, to small businesses such as restaurants, cafeterias, bed and breakfasts and entertainment.

The government said the measure was aimed at absorbing excess state labor, improving services, eliminating inefficiencies and bringing black-market activity above ground.

There are now 442,000 self-employed people in Cuba, of whom around 100,000 work as employees of small businesses, according to the government.

Enterprising residents have taken advantage of some of the categories - for example entertainer or seamstress - to offer movies, video games and imported clothing and supplies in greater variety and at lower cost than the state.

In September the government added 12 new licenses, including real estate broker, but also listed all self-employed categories and the content of approved activity. It added phrases such as for seamstress, "does not include the sale of manufactured or imported clothing."

Since then, state employees have been visiting all license holders to review their activities and warn them if they are stepping over the line.

"These recent restrictions reflect an on-going struggle between those Cuban officials who envision a dynamic private sector as benefiting Cuban consumers - in these cases of modern video entertainment and low-cost imported clothing - and those government officials who fear loss of state control over the national economy," said Richard Feinberg, a nonresident senior fellow of the Washington-based Brookings Institution and author of various studies on Cuban reforms.

(Reporting by Marc Frank; Editing by Vicki Allen)

http://www.globalpost.com/dispatch/news/thomson-reuters/131103/cuba-shutters-private-theaters-threatens-other-businesses