31 Aug GAESA continues to stifle economic progress in Cuba
Over the last 10 years, Cuban president Raul Castro has been cautiously opening Cuba to private enterprise. In spite of the fact that Raul has allowed some forms of entrepreneurship to operate on the island, many Cubans continue to live in abject poverty. Currently 201 types of private businesses are permitted to operate in Cuba. Among them are restaurants and bed-and-breakfasts that employ close to 1 million Cubans (one-fifth of the Cuban workforce), according to some Cuban economists. However, all of domestic and foreign-owned businesses operate under the close control of GAESA (Grupo de Administración Empresarial, SA), the government agency run by Castro’s son-in-law General Luis Rodriguez that ensures that most profits and revenues generated from businesses on the island go directly to the Castro regime. Unlike small businesses run in the U.S., the Cuban government has considerably more oversight and control over private enterprise and they take the lion’s share of each business’ earnings.
When Raul Castro became president in 2006 he publicly stated that he planned to take Cuba in a more positive economic direction while adhering to traditional Marxist principles. Unfortunately, GAESA’s current policies supported by U.S. President Barack Obama, greatly disincentivize many foreign businesses from operating in Cuba. Regardless of the size of the business, most proprietors are in business to generate profits with minimal governmental oversight. So understandably many foreign businesses are reluctant to set up shop in a country like Cuba where the government has so much control over private business, and demands over half the profits. Raul Castro and Luis Rodriguez are effectively “getting in their own way” by implementing policies that discourage foreign investment in Cuba, as they continue to further stifle economic progress by keeping a tight reign on Cuban-run businesses.