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Socialist Cuba experiments with capitalism

This woman in Contramaestre, Cuba, gave up her barber's license because of high taxes.

Steve Chiotakis: In Cuba this weekend, the Communist Party Congress will mark 50 years since the failed U.S. led Bay of Pigs invasion. And at the annual summit, Cuba's socialist leaders will ask the assembly to sign off on some free-market economic reforms. Including one measure that's spawned a brand new class of private entrepreneurs.

From Havana, reporter Grant Fuller filed this report.


Grant Fuller: In Baracoa, the oldest town in Cuba, it's festival time. There's reggaeton music and, as usual, state-run fried chicken stands. But also, young men run private roulette tables, women sell cookies and bubble gum, and a man carries around a rack of hats for sale. This is Cuban-style free enterprise at work.

Last October, President Raul Castro promised to slash half a million jobs from Cuba's inflated government payroll. To cushion the blow of those job cuts, he announced a new venture into the private sector. More than 170,000 Cubans now have self-employment licenses for everything from carpentry to child care.

Lazaro Delgado: This is the best thing the Cuban government has done to help us.

Lazaro Delgado got one of the new permits to sell flowers on the street in Havana.

Delgado: They're giving everyone the chance to work, helping us all start doing something. We can do anything we want as long as we keep our part of the bargain. The state is giving us a chance to make it.

But don't forget, it's still Communist Cuba, and taxes are sky-high. Small business owners give back up to 40 percent of their annual income. And they pay a high monthly fee on top of that. There's also a lack of start-up capital. Government banks announced a plan to provide limited credit for the self-employed, but that program has yet to get rolling.

I'm talking to a woman who works at a Havana office that issues the new licenses. She refuses to give her name for fear of losing her job. She says many Cubans have become so fed up with the slow pace of change that they've returned to her office to give their licenses back.

Woman: They thought having their own business would make things better, but they can't come out on top because the taxes are so high. So people are giving up their licenses more than the government expected.

The new business owners hope this weekend's Communist Party Congress will be a chance to further tweak the system in their favor.

In Havana, I'm Grant Fuller for Marketplace.


Grant Fuller's reporting trip to Cuba was sponsored by The Common Language Project.

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