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Originally published Monday, July 23, 2012 at 6:45 AM

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Cuba economy czar says cooperatives by year-end

Cuba's economy czar said Monday that plans are in place to begin an experimental phase of non-state cooperatives in sectors ranging from food services to transportation by the end of the year.

Associated Press

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HAVANA —

Cuba's economy czar said Monday that plans are in place to begin an experimental phase of non-state cooperatives in sectors ranging from food services to transportation by the end of the year.

While cooperative farming has already begun, Cubans have been waiting for regulations allowing them to form worker-owned co-ops in other sectors. The pilot program announced by Marino Murillo in a session of Cuba's parliament will include 222 cooperatives.

The creation of midsize cooperatives is a long-promised lynchpin of President Raul Castro's economic reforms, and Cuba's economy czar promised state support to jump-start the pilot program. Murillo said some will be converted state-run enterprises, and co-ops will be given preference over private single-owner businesses.

"For these cooperatives and the non-state entities, in the coming year $100 million is being budgeted which is the financing necessary so they can be assured production, because if we create them and there is no financing, they won't work," Murillo told lawmakers in one of the parliament's twice-a-year sessions.

He also reiterated that Cuba must also make its state-run enterprises more efficient and productive, since they will continue to dominate.

"The most important part of our economy will be the socialist state enterprise," Murillo said. "Don't think that all of a sudden the private-sector workers will generate $40 billion, $50 billion in GDP."

Castro's five-year plan to overhaul the economy has already legalized the sale of homes and cars and swelled the ranks of private-sector entrepreneurs by a quarter-million since 2010.

Nearly all are small mom-and-pop shops, however, the likes of restaurants, cell-phone repair shops and jewelers.

Cuba insists that the reforms are not are not a wholesale embrace of capitalism but rather an "updating" of the nation's socialist model, and most key sectors will remain under government control.

Other than a statute on taxation, no new laws were announced Monday. Foreign journalists were not allowed access to the session of the National Assembly, but state television aired Murillo's speech in the evening.

For islanders wondering whether the assembly would take action on long-promised reform of travel restrictions, it was another disappointment.

Early this year, Parliament President Ricardo Alarcon said in an interview that a "radical and profound" change to the rules, which keep most Cubans from leaving the country, was imminent.

There has been no word since then about scrapping the much-loathed "tarjeta blanca," or "white card," which islanders must apply for to travel abroad.

Speaking to parliament, Castro repeated that the government still intends to reform the migratory rules, but did not say when it might happen.

"It has not been relegated. On the contrary," Castro said. "We have continued working toward its gradual relaxation, taking into account the associated side-effects."

The pace of Castro's reforms has slowed this year with no blockbuster changes announced since December, leading many economists to question whether Cuba can meet its own targets for reducing bloated state payrolls by 1 million workers, and shifting 40 percent of the economy into non-state control.

Last week, the island's burgeoning small business class was dealt a blow with the low-key announcement of new, stiff tariffs on imported goods.

The entrepreneurs say that without access to wholesale markets, the only way they can supply their businesses is through "mules" who transit between Cuba and places such as Miami, Ecuador and Panama with their bags stuffed with food, spices, clothing, electronics, diapers and other items tough to come by on the island.

On Monday, Cuban state media published an article seeking to quiet what it called the "numerous comments and anxieties" about the new customs duties.

It made no mention of the small businesses, however, and insisted that the measures were necessary because excess baggage is slowing down service at the airport, making it resemble a cargo terminal.

Murillo said Monday that Cuba is studying how to establish wholesale markets, but did not announce specific plans.

Economists say it's clear that Castro's changes are here to stay, but change is happening slowly and measures to stimulate the private sector come with other decisions throwing up obstacles in entrepreneurs' paths.

"It's very confusing because they are really sending mixed signals," said Sergio Diaz-Briquets, a Cuba analyst based in the Washington area.

Castro also reiterated that the government will not be pressured into hurrying.

"On a national level and above all in the exterior, there has been no lack of appeals, not always well-intentioned, to accelerate the pace of transformation," Castro said. "It is a matter of such scope upon which the country's socialist and independent future depends, that there will never be space for the siren calls that call us to immediately dismantle socialism and impose so-called shock therapies on the people."

Cuba celebrates Revolution Day on Thursday. The date is sometimes used to make major announcements, though less so in recent years since Castro replaced his older brother Fidel as president.

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