Tuesday, May 31, 2016

Soldiers in Business - Bad Deal

Soldiers in Business: Bad Deal / Cubanet, Luis Cino Alvarez

Cubanet.org, Luis Cino Alvarez, Havana, 30 May 2016 – The survival of
the Castro regime increasingly appears to be in the hands of the
Revolutionary Armed Forces (FAR). And not only because of the generals
who run some of the most important ministries but also because of the
general-businessmen of the Enterprise Administration Group (GAESA).

GAESA, whose managing director is Colonel Luis Alberto Rodriguez
Lopez-Callejas, father of one of Raul Castro's grandsons, invoices more
than a billion dollars a year. It has sugar plants, the TRDs (Hard
Currency Collection Stores), Caribe and Gaviota, which impose abusive
taxes on commodity prices, the Almacenes Universales SA, farms, mills,
telecommunications and computer industry, trade zones, etc. And if that
were not enough, having most of the hotel and marina capacity, it
governs tourism, one of the country's main sources of foreign income.

Some things borrowed from capitalism have functioned successfully in
FAR's enterprises.

At the beginning of 1985, after the shipwreck of the Economic Planning
and Management System copied from the Soviet model, FAR implemented the
Business Improvement System on a trial basis in the company "Ernesto
Guevara," in Manicaragua, Villa Clara, the largest facility of the
Military Industries Union.

The experiment was supervised by General Casas Regueiro, who kept
General Raul Castro, then FAR Minister, regularly informed about the matter.

Two years later, the experiment was extended to the military industries
throughout the country.

The Business Improvement System (SPE), which Raul Castro called "the
most profound and transcendent change to the economy," copied capitalist
forms of organization and administration: corporations, joint stock
companies, management contracts and partnerships with foreign companies.

SPE permitted the Cuban army to ride out the worst years of the Special
Period. If it was not introduced on a national level it was for fear of
its consequences, which would have been worse than those of shock therapy.

In 1994, Fidel Castro, pressured by the deteriorating situation, agreed
that a group of businesses from the Basic Industry Ministry would enter
the SPE on an experimental basis. Later 100 more businesses were

In 1997, the Fifth Congress of the Communist Party adopted the SPE as an
economic strategy. After Raul's succession, the extension of business
improvement to the entire Cuban economy was conceived as a long-term
strategy for preserving the status quo.

At the end of the last decade, when more than 400 businesses that
implemented SPE were the most efficient in the country in terms of costs
and results, it seemed that the Cuban economy was beginning to move to
general application of that system. But it was a too-artificial model to
extrapolate it to the rest of the national economy. To begin with, the
unaffordable and disastrous enterprise system in Cuban pesos was not
compatible with business improvement in dollars.

With SPE, the military men played the economy to advantage. Their
businesses bore fruit in a greenhouse environment. They did not have to
face labor or capital competition, they had unlimited access to state
resources and benefitted from disciplined labor accustomed to obeying
orders. Production factors, prices and marketing were at their disposal.
Investments were provided by foreign businessmen prepared for
unscrupulous deals in exchange for a minimum participation in the

Although they have had relatively modest success, there is not much to
learn from the FAR businesses. And that is because a nation is not
governed as if it were an armored division.* War is one thing, and
managing a country's economy efficiently is something else, although
both things use bellicose language interchangeably.

FAR, dragging its old slogans and obsolete Soviet weapons, also reflects
the system's wear and tear and the distortions of current Cuban society.

Military men crammed into businesses can become problematic in the
not-too-long term. Distanced from the interests of the people, they
contribute to the system's continuity. But they will always be stalked
by temptation. Contact with foreign capitalists foments greed and
corruption. This has been happening for some years.

When they feel their privileges and properties granted by the
proprietary state threatened, their loyalty to the bosses or their
successors will be put to the test. We will see what will happen then.

About the Author: Luis Cino Alvarez

*Translator's note: An allusion to Cuba's hero of independence José
Martí's words to General Maximo Gomez during the independence struggle:
"A nation is not founded, General, as a military camp is commanded."

Translated by Mary Lou Keel

Source: Soldiers in Business: Bad Deal / Cubanet, Luis Cino Alvarez –
Translating Cuba -

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