Cuba’s shadow economy sees some daylight

A Cuban man who did not want to be identified melts gold to make gold false teeth in his workshop in Havana. (Associated Press)A Cuban man who did not want to be identified melts gold to make gold false teeth in his workshop in Havana. (Associated Press)
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HAVANA — Want some paprika-infused chorizo sausage? How about a bit of buffalo mozzarella?

Or maybe you just need more cooking oil this month, or a homemade soft drink you can afford on paltry wages. Perhaps you are looking for something more precious, such as an imported air conditioner or some hand-rolled cigars at a fraction of the official price.

In a Marxist country, where virtually all economic activity is regulated, and where supermarkets and ration shops run out of such basics as sugar, eggs and toilet paper, you can get nearly anything on Cuba’s thriving black market — if you have a “friend,” or the right telephone number.

A raft of economic changes introduced over the past year by President Raul Castro, including the right to work for oneself in 178 approved jobs, has been billed as a wide new opening for entrepreneurship, on an island of 11 million people where the state employs more than four in five workers and controls virtually all means of production.

In reality, many of the new jobs, everything from food vendor to wedding photographer, manicurist to construction worker, have existed for years in the informal economy, and many of those seeking work licenses already were offering the same services under the table.

And while the black market in developed countries might be dominated by drugs, bootleg DVDs and prostitution, in Cuba it literally can cover anything.

One man drives his car into Havana each day with links of handmade sausage stuffed under the passenger seat. A woman sells skintight spandex miniskirts and gaudy, patterned blouses from behind a flowery curtain in her ramshackle apartment.

Economists, and Cubans themselves, say nearly everyone on the island is in on it.

“Everyone with a job robs something,” said Marki, a chain-smoking, 44-year-old transportation specialist. “The guy who works in the sugar industry steals sugar so he can resell it. The women who work with textiles steal thread so they can make their own clothes.”

Marki makes his living as a “mule,” ferrying clothes from Europe to Havana for sale at three underground stores, and has spent time in prison for his activities. Like several of the people interviewed for this article, he agreed to speak on condition he not be further identified for fear he could get into trouble.

Merchandise flows into the informal market from overseas, but also from the river of goods that disappear in pockets, backpacks, even trucks from state-owned warehouses, factories, supermarkets and offices.

There are no official government statistics on how much is stolen each year, though petty thievery is routinely denounced in the official news media.

On June 21, the Communist Party newspaper Granma reported that efforts to stop theft at state-run enterprises in the capital had “taken a step back” in recent months. It blamed managers for lax oversight after an initial surge of compliance with Mr. Castro’s exhortations to stop the pilfering.

“Criminal and corrupt acts have gone up because of a lack of internal control,” the paper said.

An extensive study by Canadian economist Archibald Ritter in 2005 examined the myriad ways Cubans augment salaries of just $20 a month through illegal trade — everything from a woman selling stolen spaghetti door-to-door, to a bartender at a tourist hot spot replacing high-quality rum with his own moonshine, to a bicycle repairman selling spare parts out the back door.

Mr. Ritter and several others who study the Cuban economy said it is impossible to estimate the dollar value of the black market.

“You could probably say that 95 percent or more of the population participates in the underground economy in one way or another. It’s tremendously widespread,” said Mr. Ritter, a professor at Carlton University in Ottawa. “Stealing from the state, for Cubans, is like taking firewood from the forest, or picking blueberries in the wild. It’s considered public property that wouldn’t otherwise be used productively, so one helps oneself.”

Cubans even have a term for obtaining the things they need, legally or illegally: “resolver,” which loosely translates as solving a problem. Over the decades it has lost its negative connotations and is now taken as a necessity of survival.

“Turning to the black market and informal sector for nearly everything is so common that it has become the norm, with little or no thought of legality or morality,” said Ted Henken, a professor at New York’s Baruch College, who has spent years studying Cuba’s economy. “When legal options are limited or nonexistent, then everyone breaks the law, and when everyone breaks the law, the law loses its legitimacy and essentially ceases to exist.”

There is evidence, however, that Mr. Castro is persuading at least some black market operators to play by the rules and pay taxes.

In the past seven months, more than 220,000 Cubans have received licenses to work for themselves, joining about 100,000 who legally have worked independently since the 1990s. Of those, 68 percent were officially “unemployed” when they took out their licenses, 16 percent had state jobs and another 16 percent were listed as “retired,” according to statistics on the government website Cubadebate.cu.

Many of these jobless and nominally retired people were likely making ends meet by working in the informal market, and even the former government workers were probably connected in one way or another.

“You have to find a way to survive,” said Manuel Rodriguez, the former head of a Cienfuegos medical center for children with disabilities.

Mr. Rodriguez said his monthly government ration card plus his and his wife’s meager salaries only covered two weeks’ worth of food. “I sat in the park one day and thought, ‘What can I do?’ “

He began bicycling around town on Sundays, renting out bootleg DVDs of the latest Hollywood films, which others had downloaded from the Internet. Mr. Rodriguez, who moved to Miami in 2009, defended his decision to turn to the black market to put food on the table.

“I wasn’t hurting anyone,” he said. “It’s not pornography. It’s not drugs.”

In fact, the sale and rental of pirated DVDs now is one of the 178 jobs that can now be done legally in Cuba, which ignores U.S. intellectual-property rights in response to Washington’s 49-year economic embargo.

New license holders complain the taxes and social security payments can be well over 50 percent of sales, raw materials are hard to come by because there is no wholesale market, and government promises to provide bank credits and retail space have been slow to develop.

But many say they jumped at the chance to go legit anyway, tired of always looking over their shoulder.

“We started off illegally, years ago, but when they started to give out licenses, we got one because it means peace of mind,” said Odalis Losano, a 46-year-old single mother who obtained a license in December to sell lunches she prepares on her home stove. “Now we don’t have to be afraid of the police or the inspectors.”

Paradoxically, the expansion of a legal free market may be increasing the size of the black market, particularly for the goods and services the new entrepreneurs need to survive.

Newly legalized pizzerias must have a steady supply of cheese, flour and tomato paste; self-employed construction workers must have building materials; manicurists must find nail polish.

And then there are the many activities that by their nature must remain hidden under Cuba’s controlled system.

The Internet is strictly regulated in Cuba, so those who sell time on accounts that belong to doctors, professors and computer technicians do so on the sly. The government maintains a monopoly on that most quintessential of Cuban products, the cigar, so the hundreds of underground stogie-rolling factories will stay underground.

Likewise, the sale of gold is regulated, so those who melt it down for false teeth won’t get licenses anytime soon.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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