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Published: Friday May 9, 2014 MYT 8:25:02 PM
Updated: Friday May 9, 2014 MYT 8:26:21 PM

Raul Castro's reforms fail to end Cuba's chronic shortages

Cuba's President Raul Castro attends the Mayday parade in Havana May 1, 2014 file photo. REUTERS/Enrique De La Osa

Cuba's President Raul Castro attends the Mayday parade in Havana May 1, 2014 file photo. REUTERS/Enrique De La Osa

HAVANA (Reuters) - In a land where the potato is scarce, black marketeers peddle tubers in hushed tones, like drug dealers on a big city street corner. A months-long reduction in the beer supply has made Cubans cranky. Worse still, some lovers have struggled to find condoms.

Despite market-oriented reforms enacted by President Raul Castro, the communist-run country still encounters chronic shortages.

Some reforms have led to a boom in food production, but other measures such as reducing imports and cracking down on the black market may be aggravating the shortfalls.

Shortages are inevitable in a Soviet-style, command economy, and in Cuba's case it has been made worse by the comprehensive U.S. trade embargo imposed in the early years after the 1959 revolution.

Many Cubans have come to consider shortages normal, providing both a source of frustration and humour. Shoppers routinely swap tips on where to find the basic and the obscure. Others trudge from store to store until they find what they need.

"Cubans are beer people. This beer drought is really hurting sales," said Jose Daniel, the administrator of a Havana cafe. "People see there's no cold beer and they just harrumph, then walk away in a bad mood."

Castro has staked much of his authority on improving the economy since replacing his ailing brother Fidel in 2008. Some experts warn of the political consequences of shortages, saying they impede development and leave the public unhappy.

"Arguably the Soviet Union collapsed when Gorbachev attempted to suppress the consumption of vodka. First priority must be to keep the suds flowing," said Richard Feinberg, a Cuba expert and former national security advisor to U.S. President Bill Clinton.

LIMITS OF REFORM

The persistence of shortages reveals the limits of reform.

While a nascent retail market has proliferated, Cuba has yet to establish a wholesale market, impeding some new 450,000 small business owners who need inventory.

Agricultural reforms have been among the most successful after the government handed over idle or unproductive land to farm cooperatives, but for unexplained reasons potato-growing remains firmly in state hands.

"The consequences are devastating in economic terms," said Sebastian Arcos of Florida International University's Cuban Research Institute. "(Raul Castro) has indicated that economic progress is one of the fundamental sources of his political legitimacy. If the economic situation doesn't improve in the short or even the medium term, his political legitimacy is reduced to being Fidel Castro's brother."

Most shortages pass without official comment, but the recent lack of beer sounded so many alarms that government-controlled media reported a wave of complaints.

Demand was being met for only 55 percent of bottled beer and 73 percent for canned beer, officials said.

After the shortage dragged from February to March without explanation, Cuban brewer Bucanero S.A., a joint venture with the global beer company Anheuser-Busch InBev SA, finally addressed it on Tuesday in the official daily, Granma, saying there were delays in the import of Czech malted barley.

No further explanation was given, and Bucanero said the problem was resolved in the first half of April, implying the shortage should soon be over because it takes 23 days to produce beer for retail sale.

The recent condom shortage was due not to a lack of product, officials said, but to a batch of condoms with the wrong expiration date stamped on the wrapper. An emergency order was placed, and teams went to work erasing the old date, November 2012, and stamping them anew with December 2014. Condom supply should stabilize in the second quarter, the official weekly Trabajadores said.

BLACK MARKET BACKFIRE

Among the reforms that might aggravate scarcity and drive up prices is a reduction of imports. Cuba has also cracked down on the black market, historically supplied by state workers who stole from official stockpiles. It has also cut subsidies for many companies, reducing the supplies for employees to steal.

For example, larceny was once rampant at state workplaces, where Cubans for decades could count on a free lunch. The problem was that those in the cafeteria pilfered supplies that could be resold.

Raul Castro's response was to start closing the lunchrooms in 2009, replacing them with a daily lunch allowance for workers worth about $0.63, enough for a slice of pizza and a soft drink.

At the height of the black market, many workplaces became convenience stores in reverse, with vendors knocking on doors throughout the workday offering illicit goods. That mobile sales force has largely disappeared.

"Greater control was necessary because the economy could not stand all that stealing in a system governed by a planned economy," said one Cuban economist, asking for anonymity due to a prohibition on speaking to reporters.  

Cafeteria owner Cesar Vazquez said the black market was for decades a solution to shortages and high prices in state-run stores.

"Years ago, you could buy cheese, milk and boxes of imported chicken, even gasoline, because state employees would sell everything," Vazquez said. "Now they don't even come knock on the door anymore."

(Reporting by Rosa Tania Valdes; Writing by Daniel Trotta. Editing by Andre Grenon)

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