Cubans Study a Shrinking List of Banned Private Enterprises

HAVANA — Car dealerships, book publishing and hedge funds are still prohibited. Bed-and-breakfasts are not. Zoos, scuba diving centers and weapons production remain banned. Veterinary services aren’t.

As Cuba’s Communist government continues its piecemeal expansion of the fledgling private sector, Cubans are carefully parsing a list of the economic activities that the government proposes to keep under its control.

The list, published on Wednesday and labeled as provisional, contains 124 activities that would remain forbidden to private enterprise. It would keep the country’s most powerful and productive sectors under the dominion of the state, including those employing many of the most highly educated and highly trained professionals, such as medicine and health care, education, media and construction-related trades like architecture and engineering.

Several days before making the much-anticipated list public, the government announced that it would greatly expand the number of economic activities open to private enterprise — which has been constrained by a different list, of 127 allowed types of businesses — in an effort to create jobs, open new markets and revive the economy. The news could promise a vast opening of the economy, elevating hope and expectations across Cuba.

The new list seems to open major new space for manufacturing. Cubans will now be able to apply for licenses to open cheese, paint and toy factories, for example, though the government has not yet defined the permitted size of such ventures.

While some Cubans hailed the list as an important step forward in the country’s economic liberalization, it left others complaining that the government had not gone far enough.

“It’s messed up,” said Gerardo Guillén García del Barco, 26, an architect in Havana whose profession the government plans to maintain under its sole control. “Every time something appears that looks like a panacea, it ends in nothing.”

“My dream is to do exactly what I’m doing today but within a legal framework,” he said, explaining that he left a government firm and now works freelance without a license. “I want to do my own architecture without being hindered by bureaucracy.”

The changes have been partly driven by dire necessity. Cuba’s long-stagnant economy contracted 11 percent in 2020, as the Trump administration tightened U.S. sanctions on the island and the pandemic halted tourism, the country’s economic lifeblood, leaving the government bereft of foreign currency for imports.

Through a series of reforms over the past decade, the number of Cubans working in the private sector — so-called cuentapropistas — has almost tripled, to about 600,000. But they have worked mainly in occupations confined to the service sector, including running restaurants and bed-and-breakfasts or driving taxis.

Last Saturday, in announcing the planned expansion of private economic activity, Marta Elena Feitó, Cuba’s labor and social security minister, said that the changes would “unleash the productive forces” of the population.

Many Cubans have been hoping that the reforms would address a glaring paradox: The best-educated and most highly skilled members of the work force are in government-controlled jobs and are often paid less than lower-skilled workers in fields already open to private enterprise. Tour guides, waitresses and taxi drivers can make more than surgeons, engineers and scientists, a distortion that former President Raúl Castro called “the unjust inverted pyramid.”

The state’s monopoly on so many occupations — a strategy to maintain political control and to guarantee social services for the population — has driven many highly trained workers out of the public sector and into the nascent private sector, where they take jobs for which they are overqualified. Others go abroad in pursuit of higher earnings.

Ricardo Torres, an economist at the Center for the Study of the Cuban Economy in Havana, said he had a mixed reaction to the list of restricted economic activities published this week.

He was disappointed that it precluded private enterprise in certain sectors including engineering, architecture, accounting and the digital economy.

At the same time, he said, it appeared to open “many areas” to private sector activity, including certain forms of manufacturing and some professional services, including economic consultancies, advertising and graphic design.

“It’s an important step forward,” he said.

The government did not go farther, he said, to protect against the possibility of a mass exodus of poorly paid professionals from the state sector.

“If you open the whole economy to the private sector, eventually it will become dominant,” Mr. Torres said. “The government wants to avoid this.”

But Omar Everleny Pérez, an economist and former professor at the University of Havana, said that the narrow opportunities the list left for the nation’s professional class would not stem the country’s brain drain.

“If professionals can’t see themselves in Cuba doing private activity, the only path left for them is to go abroad,” he said. “And this has been going on for a long time: architects, mathematicians, biologists, they go.”

Expanding the private sector was first enshrined in the Communist Party’s “guidelines” in 2007. Then-President Raúl Castro said that the “updating” of the island’s socialist model should proceed “without hurry but without delay.”

But despite Mr. Castro’s insistence, the reforms were halting, in part because his brother, Fidel Castro — retired but still powerful — opposed them. Following Fidel Castro’s death in 2016, senior Communist Party policymakers continued to delay the reforms, arguing that such moves would engender greater inequality.

In recent months, however, the economic crisis has forged consensus within the party leadership, to the delight of much of the population.

“Many people say, ‘Why not do it faster?’” said Mr. Pérez, the economist. “I’m in that group.”

“But it’s clear that things are advancing,” he said. “They’re not going backward.”

Analysts said that while the expansion of the private sector suggested a loosening of the government’s grip on the economy, it
did not mean the state was about to fully embrace capitalism.

“I think Cuba is going to advance along a road that is more or less the Vietnam model,” Mr. Pérez said. “It’s not going to be an end to socialism.”

As for the possibility that private sector expansion will spur inequality, Mr. Pérez said it seemed inevitable, but he also expected the Cuban government to step in with its social safety net.

“There’s inequality, and there will be inequality,” he said. “I think there has to be recognition that the state will help those who are left behind.”

Taken together with other moves to restructure the Cuban economy, such as the recent legalization of import and export for the private sector, analysts said, the latest reforms could have a positive bearing on Cuban-United States relations, which chilled considerably as the Trump administration took a hard-line approach to the Caribbean nation.

“The United States in general and the government in particular looks favorably on the expansion of private activity,” Mr. Torres said. “And this, in a way, for me, creates a more favorable environment in which relations can be rebuilt.”

Ed Augustin reported from Havana, and Kirk Semple from Mexico City.