Monday, October 15, 2007

Loans for small business

Here’s a positive initiative directed toward Cuba, albeit in a future when policies on both sides of the Straits have changed: the Cuba Study Group’s plan to provide credits and business education for Cuban micro-enterprises. It has nothing to do with sanctions, it is not conditioned on change in Cuba’s political leadership, and it is based on the assumption that Cuba has, as the group’s leader Carlos Saladrigas explains in this interview, a fine educational system and a workforce prepared for entrepreneurship. This would be a larger, formal means of carrying out what many Cuban Americans and others outside Cuba have already done to help Cuban entrepreneurs – a flow of direct assistance that would surely be greater if the Administration were not focused on limiting and controlling contact with the island.

A combination of private and public contributions are contemplated to build the fund for micro-loans, but the main connection to the U.S. government seems to be that Washington would have to get out of the way to let it proceed.

Saladrigas is in Europe drumming up interest in the initiative. I’m sure it’s not his intention, but his initiative provides quite a contrast to the widespread efforts emanating from Washington and Miami to pressure Spain and the rest of the EU on their policy toward Cuba.

Hope it prospers someday.


leftside said...

Phil, don't you see as a potential problem the fact that only those Cubans with access to large amounts foreign currency would be eligable for such assistance? After all, I am sure the loans must be matched or some start-up capital. Don't you think the Cuban Govt. would have a problem with the establishment of of a new entrepreneur class conisting of those who've either been 1) hustling illegally, 2) hustling legally, 3) have financial backing off the island, or 4) descendents of the old elites???? You've never addressed this issue as far as I can tell. I think there are CP reformers out there who want to encourage entrepreneurship, but I bet this is the main stumbling block. The question is how to make such as system truly egalitarian and socialist, rather than reward the cheaters and well connected.

Phil Peters said...

Lefty, I'm not a big advocate of breaking the law anywhere, but at the same time I fail to see the moral turpitude in a Cuban who pulls over and gives someone a ride for a few pesos, or earns some money doing freelance carpentry with no license, etc. I think hustle is a good thing.

As for the rest, I don't know all the details of this plan; I haven't studied it. And I don't know that all the details really matter much at this point. What strikes me is the positive and constructive of the initiative, a real breath of fresh air.

Fantomas said...

How much can Fantomas get from the Study Group to launch a business venture in Cuba , dear Phil?

leftside said...

Phil, those who have accumulated enough hard currency to be eligable for such an entreprenureal opening are not your everyday Cuban who hustles here and there to get by (or get a little extra). They are those who likely procure regularly in stolen goods, or take money from the State (everyone else) by providing their service. I am not casting a moral judgement on them either. But you can not expect loyal, law-abiding Cubans in the CP or mass organizations to create a system where these people get to jump to the front of the line in terms of economic opportunity. It is simply unfair and will not fly in any discussion, right or wrong. Any analysis needs to take this reality into consideration - although I know it muddles any possible market-oriented policy intervention. The winners and losers of capitalism is inherently unfair and I doubt any effort to embark into the dark side (however limited) will want to start off by entrenching those who happen to have hard currency laying around at this point. As you know, whoever gets the spoils of the first liberalizations is likely to become the new power elite. ANy legimacy of the Party in the people's eyes will be fatally degraded if they don't treat this potential issue with great care.

Phil Peters said...

Dear Fantomas, I like your attitude. I think you can get a whole lot of money, I want you to get a whole lot of money, and I'm going to get to work on it. Give me time.

Lefty, I'm all for taking all the reality into consideration, but I think there's a risk of thinking too hard about all this. Right now two guys who have tools can't form a partnership to perform home repair services. There are people with cars who can't get licenses to become taxi drivers. There are many similar examples that don't have anything to do with transfer of capital or property, and have nothing to do with privilege. They have to do with government getting out of the way just a little bit. We'll see what happens.

leftside said...

I think this is a central point that most Cuba watchers - particularly in the US - miss. Perhaps because it implies a Cuban Government trying to be what it says it is - a beacon of egalitarianism and justice.

I'm sure there are examples of where the Govt. needs to get out of the way, but there are real economic and political consequences for ill-planned liberalizations. I think they should legalize and begin regulating what is out there now - but that actually involves more State, not less. There are are thousands of home repair services (and private taxis) in Cuba today, some that only survive through theft and others who are totally legit. There has to be a respect for socialist property.

Anonymous said...

what a great advancement! the newfound availablility of small business loans is really going to do good things for the economic morale of the country and can only make things better.