- Associated Press - Monday, July 16, 2012

HAVANA — At first blush, Mama Ines seems to be just the latest in a long line of private restaurants that have opened in Havana as part of President Raul Castro’s fledgling free-market reforms.

But a tiny sign on the facade, easily overlooked, tells the tale: “Tenant of the Office of the Historian.”

The government’s Havana historian, Eusebio Leal, has long overseen the capital’s colonial core with unusually wide latitude to call his own shots.

Now he’s out in front of other state agencies again — this time by leasing government-owned buildings as retail space to Mama Ines and a handful of other private small businesses: here a beauty salon, there a massage parlor, down the street a nursery specializing in bonsai.

Until now, most independent restaurateurs have been operating out of their own homes, restricting their access to good locations and forcing them to cannibalize their living space.

“I’ve never wanted to do a restaurant in my own house,” said Tomas Erasmo Hernandez, owner of Mama Ines. “You know why? Because in my house it would throw everything out of whack. I couldn’t be with my family. You lose privacy.”

Many Cubans essentially lease their homes from the state at nominal rents. Other government entities are beginning to let small shared spaces for the likes of craftspeople and repair technicians.

But Mr. Leal’s initiative is blazing a new trail in this communist-run country by directly renting prime, indoor real estate to private small-business people so they can set up long term, compete with government shops and joint ventures between the state and foreign companies — and truly stand to make a buck.

A (private) place for business

For the entrepreneurs in the Old Havana trial, it’s a chance to tap into the hard-currency economy of the thriving tourism district.

It’s also potentially a daring pilot program that, if expanded and rolled out on a larger scale, could create a new revenue stream for the cash-strapped government and upend five decades of Marxist dogma about the use of state-owned property while giving a boost to small businesses.

“It is more than the vanguard. It is somewhat unique,” said economist Rafael Romeu of the Washington-based Association for the Study of the Cuban Economy. “Retail space in Old Havana would be extremely valuable for reaching tourism.”

The bold project lies in stark contrast to a general slowing of the pace of reforms since a flurry of activity at the end of 2011, when the government legalized the sale of real estate and used cars.

Promises of other major reforms like the creation of midsized cooperative companies, the lifting of travel restrictions and the broadening of the number of jobs that can be privately held have yet to be fulfilled. The number of people taking out new private licenses has fallen this year, and many have turned them back in.

Many businesses have failed to catch on precisely because of a lack of prime real estate, forcing the vast majority to base themselves out of their homes or in makeshift setups on porches and front gardens.

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