A good article by Julia Neima. The following are excerpts only. Access to the full article requires a subscription.
Cuba is undergoing its biggest economic transformation in decades: private firms are back and small businesses employ a quarter of the workforce. But market reform has brought no political opening.
TaTamanía is Cuba’s first private care home, which opened this spring in the capital’s Vedado district. This type of business was long prohibited under the revolution, but in recent years, a lack of resources has left public care facilities in a critical state.
The economic, commercial and financial vice is tightening as Washington expands the scope of its sanctions… Trump’s strategy is to throttle the state monopoly and force the Cuban government to allow a private sector to develop. This challenge has caused major upheaval in what has until recently been one of the world’s most state-controlled economies. The agricultural reform of 1959, the sweeping nationalisations of the 1960s and the 1968 ‘revolutionary offensive’ – during which the government nationalised all small businesses, the last remaining private concerns on the island – led Cuba to a very high degree of centralisation and created a sprawling, paralysing bureaucracy.
The combined effects of the embargo, the tightening of sanctions since the late 2010s and Cuba’s highly centralised system have hit its people hard. They are struggling to survive the toughest economic and social crisis since the revolution.
Tourism, a key sector of the national economy, has shrunk drastically: visitor numbers fell from 4.2 million in 2019 to fewer than 360,000 in the first half of this year. Economic liberalisation therefore appears both the only remaining way of provisioning the country and the prelude to a new era.
The Grupo de Administración Empresarial SA (GAESA) holding company is a product of Cuba’s centralised system and one of the entities sanctioned by Washington. It was run by Castro’s former son-in-law Luis Alberto Rodríguez López-Calleja until Rodríguez’s death in 2022.
Much of the population now regards GAESA as the financial arm of the military and the regime. There is particular resentment over the 50 or so luxury hotels it has self-financed and built since 2016. Nearly all are currently empty because of the economic crisis and US sanctions.
Many Havana residents cannot understand how the materials needed to build the five-star hotel [the 44-storey glass structure in central Havana that opened last year] reached the island despite the embargo or why so much money was lavished on it. In March, the authorities decided to close the hotel, which had been lit up every night despite the absence of tourists, while the rest of the city suffered power cuts. [I too a couple of photos of it in 2024. I vividly remember the reaction of a Havana resident when I asked him about the hotel and who was building it.]
In June Havana, at an impasse and faced with Washington’s escalating threats of intervention, introduced 176 ‘economic and social transformation’ measures. This plan is little short of revolutionary in restoring capitalism to many sectors of the economy, including trade, services, agriculture, manufacturing and energy.
The measures presented by prime minister Manuel Marrero Cruz include allowing foreign capital into the commercial sector, establishing private banks and credit institutions and permitting individuals to hold foreign currency accounts.
Under constant pressure from Washington, which has dismissed these reforms as ‘superficial’, Cuba is going through a critical period. But the mipymes [acronym for the Spanish micro, small, and medium-sized enterprises] have been given a new lease of life: they can now employ more than 100 people and expand their operations unrestricted. Their directors will be allowed to own multiple businesses.
The liberalisation measures introduced in 2021 have already created a new merchant class whose culture is gradually spreading through the major cities, against a backdrop of rapidly growing and increasingly visible inequality.
The ability to import, introduced in 2021 – previously only the state was entitled to do so – is a major driver of growth in private enterprise. Mario, who runs a mipyme that supplies agricultural equipment, was visiting a client in Artemisa province, west of Havana. In a three-hectare field, several farmers were clustered around a recently purchased small red tractor and trailer.
‘So, how’s it going?’ Mario asked. ‘It’s really good – in 30 minutes it can do what used to take a whole morning with the oxen,’ the farmer replied.
Mario set up his business in 2024. ‘We import everything from China. This country’s agricultural sector has huge potential. Cuba needs to move towards agroindustrial production. That’s our company’s ambition.’ He proudly scrolled through photos and videos on his phone showing vast Chinese warehouses filled with row upon row of agricultural machinery destined for Cuba.
Independent farmers, cooperatives and mipymes are now also allowed to sell their produce direct. Previously, almost everything went through the state, which handled distribution via the Acopio agency.
Once his friends had gone, he spoke more openly: ‘The previous system held production back. Acopio would come and collect the harvests. A lot of produce went bad in their warehouses. The state is short of fuel because of the blockade, but there was also indifference and a lack of willingness on the part of officials. A lot of resources went into tourism and very little into agriculture. Private companies pay better and there’s less red tape.’
The wish to prevent a select few from growing rich and to guarantee equality was long used to justify the prohibition of private enterprise in Cuba. And indeed, authorising it has been accompanied by a visible widening of social divisions in recent years: children can now be seen begging – a new phenomenon – and mountains of rubbish are piling up in Havana’s streets. Drug use and prostitution have become more common.
On the outskirts of Havana, a track leads to an extensive lakeside estate. Under the palm trees, waitresses welcome customers to a luxurious bar-restaurant. A meal here costs around $50; a night in a bungalow with a private pool $450, including activities such as kayaking, horse riding and massages.
Patrón, a company founded by Roberto Carlos Chamizo González, is far from universally admired though. ‘That place is obscene,’ several farmers I met said. One of Fidel Castro’s grandsons is a regular visitor. Sandro Castro, who has even posted pictures of himself there on social media, is also a mipymero. In 2019 he opened EFE Bar in Vedado.
Other visitors to El Patrón include Dioniso Arranz, a prominent entrepreneur in Havana’s luxury sector and the son of a former senior official at the foreign trade ministry. Chamizo posts personal photographs on Instagram showing him aboard private jets, in luxury restaurants, in Dubai and holidaying in Italy. He is reputedly very close to the regime and has opened a private restaurant, Mia Culpa, in the GAESA-owned Iberostar Packard hotel.
Social media users have spotted other mipymeros from inside the circles of power, including Ángel David Fernández del Valle, grandson of General Sergio del Valle Jiménez, a close military associate of Fidel Castro. His company Sil26 distributes goods from Supermercado 23, a major (Florida-registered) online retail platform whose products are purchased in the US and shipped to Cuba – for those who can afford them. Gaïa, another distribution company, is headed by Lisa Titolo Castro, one of Raúl Castro’s granddaughters. [moving towards Egypt's or Thailand's ‘free market' model where the military owns/control chunks of the economy or, comparing with countries with a similar size as Cuba's, Tunisia's under the former Ben Ali and Trabelsi families, Jordan, and the Dominican Republic?]
Marxist historian Alexander Hall Lujardo has voiced reservations about the recent reforms: ‘The arrival of the mipymes has an upside and a downside. Without them, there would be no food in Cuba. But at the same time, the merchant bourgeoisie now taking shape will ultimately put its own interests first.’ He advocates an alternative based on cooperatives, which he regards as compatible with a socialist vision. Meanwhile, he has been prohibited from leaving the country. As a condition of being allowed to travel, state security demanded he film a statement incriminating himself – in effect admitting to acts that could be held against him – and publicly renounce any collaboration with the media. He refused.
Raymar Aguado belongs to Cuba’s new generation of leftwing dissidents. A prolific writer, Aguado publishes his work under close surveillance through several online media outlets. ‘Most business owners here want to get rich. The opening of the economy to private actors has not been accompanied by any policy to strengthen the role of trade unions in the sphere of production or the participation of the country’s organised grassroots,’ he said. ‘We have no freedom of association, assembly or expression.’
Cuba is showing the first signs of a local oligarchy taking shape, made up of members of the current leadership. [Regime survival in a new economic model].
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