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Cuba: The second revolution?

Cuba: The second revolution?

For the first time since the 1959 coup, Cubans are able to buy and sell
property, set up businesses and farm their own land. Could these new
liberties signal a move towards a free-market economy? Don't count on
it, says Margareta Pagano.
Margereta Pagano
Sunday 15 April 2012

It's the sort of glitz you would expect to see in Hollywood, not
Communist Cuba. Drop-dead gorgeous, 6ft-tall women, stitched into the
skimpiest of red dresses, work their way around the gala dinner to which
1,500 men and woman have come from around the world, paying $500 a head
a ticket to attend. And what a spectacle it is: stunning opera singers
caress a selection of tasteful arias, lithe dancers spin to Cuban
rhythms, while Jim Belushi, the American actor and comedian, keeps
guests on their toes as Master of Ceremonies.

What you won't have seen in Hollywood, though, is a room so big filled
with cigar smoke so thick that it hangs like a mushroom cloud, making it
hard to breathe, if not see. Yet the cigar-girls in red are tempting
guests to smoke still more, giving away the latest hand-rolled vitolas
to sample between the four-course meal. Welcome to the gala dinner, the
finale of the week-long 14th Habanos Cigar Festival held in Havana – and
a festival that the visiting cigar aficionados acclaim as the most
glittering ever.

It's my first visit to the cigar Oscars, so I can't compare. But what's
for sure is the glitz is not just for show: tobacco is big bucks. Seated
on the top table next to the stage is a young Western woman, puffing
away on the fattest cigar imaginable. She is Alison Cooper, chief
executive of Imperial Tobacco, the world's fourth-biggest tobacco
company, and she is sitting alongside Ricardo Alarcon, president of
Cuba's National Assembly and one of the most powerful men in the
country. Also present is trade minister Rodriguez Malmierca. Cooper is
here to do business; Imperial is a joint venture partner with kHabanos,
Cuba's state premium-cigar company, and Cuban cigars are a significant
part of its sales. Tobacco is worth more than $400m a year to Cuba in
exports, and the industry is a huge employer.

Seated not far from Cooper is another British woman, 40-year-old Jemma
Freeman, managing director of Hunters & Frankau, which imports most of
the four million Havana cigars smoked in the UK each year. Jemma is also
there to collect the "Habanos Man" of the year award, cementing a
relationship between the Freeman family and the Cubans that goes back to
the 1930s. Why so many women? Freeman laughs. "Serendipity, I think. But
women have always been involved in the cigar industry; the Cohiba cigars
smoked by Fidel Castro were made only by women and most of the
hand-rollers are women," she says, puffing away.

A third British woman makes her way through the tables, chatting quietly
to Cuba's political elite as well as the foreign buyers. Dianna Melrose,
the British Ambassador to Cuba, has been our woman in Havana for four
years. The ambassador spends much of her time promoting trade between
the countries – small but growing now that Cuba is opening up to more
foreign joint ventures. UK companies want to work with the Cubans, she
says, on projects ranging from the tourist resorts and golf courses
planned along the island's white-sand beaches to oil specialists hoping
for a piece of the action in the oil reserves being discovered in Cuban
waters in the Gulf of Mexico.

But cigars, adds Melrose, are special, playing a deep part in Cuban
nationalism: "No one in the world makes cigars like the Cubans – they
dominate the luxury market and generate important export revenue."
That's why this festival is so crucial, and why there are so many
busloads of well-heeled Russian, Indian and Chinese cigar tourists on
Havana's streets on the hunt for the perfect Montecristo Sublimes or a
Cohiba Behike 56, which sell for £40 each in their home country. Luckily
for Cuba, sales to these new markets are booming.

There are buyers from Europe, too – I'm with a party of cigar
aficionados from Boisdale, the UK jazz restaurant group run by Scottish
entrepreneur Ranald Macdonald. Boisdale is one of the biggest sellers of
Cuban cigars in the UK and Macdonald claims that sales are up despite
the smoking ban – but that's not the case elsewhere. Western Europe
still makes up about half of all Cuba's exports but they are in decline
– sales to Spain, once its biggest partner, plunged 20 per cent last
year, which is not something the industry – or Cuba – can afford.

Cuba is one of the last countries in the world that declares itself
Communist; locals call it tropical socialism. However, crippling
finances have forced the Castro regime to embark on a series of reforms
to revive the economy. The changes started in earnest when Fidel's
brother, Raul, took over as president after his brother's illness in
2008. But they were small steps. Then, in April last year, the Communist
Party Congress sped up the reforms with another 313 guidelines for
relaxing the economy, giving people the right to become self-employed in
188 different trades.

For the first time since the revolution in 1959, when Fidel, Raul and
the Argentine guerilla fighter Che Guevara toppled the US-backed
dictator Fulgencio Batista, Cubans are free again to own small
businesses and farm their own land. Even more revolutionary, they are
allowed to buy and sell their own homes; till now, they could only swap
them. They can set up cafés, beauticians, gyms, hairdressers, run their
own taxis and be plumbers, albeit with state licences.

Nearly a million Cubans are now working out of "state hands" and there
are plans to cut more free; some say Raul is dismantling the state as
radically as Lady Thatcher did in the UK. By 2015, the plan is to have a
third of the workforce working in the "non-state" and co-operative
sector. Yet Cubans are not permitted to refer to what's happening as a
transfer to the private sector; Raul, always said to be the purer
Marxist of the two brothers, may be a reformer but he defends the
changes to create a "sustainable socialism". He said recently: "Many
Cubans confuse socialism with freebies and subsidies, and equality with

ism." The regime has made it plain, too, that state planning remains the
main policy, and that the accumulation of big wealth into private hands
will never be allowed.

But it may be too late. Many of the self-employed running the
restaurants and bars, and others dealing on the fringes of the black
market, are already making good money. It's this young, highly educated
and wealthier elite who are increasingly frustrated by the petty
restrictions on their daily lives; they have mobile phones, but only
just. For months, imported mobile phones were left stored in warehouses
because the regime couldn't decide whether the public should be allowed
to have them. Finally, Raul gave the go-ahead. They can have email
accounts at work but are not allowed private ones. Satellite television
is banned, which is perhaps why watching forbidden US TV hits such as
Desperate Housewives has become an obsession for many Cubans. But
satellite dishes exist – friends share with each other, and hide them in
water tanks if they suspect they are being watched.

It is the paladares – derived from the Spanish for "the palate" – which
are the most visible of the reforms. These are the restaurants run out
of people's homes that sprang up in the early 1990s to feed relatives
and friends during the terrible hardships when the Russians pulled out
after the collapse of the Soviet Union. This was when Fidel Castro
declared a national emergency known as the "Special Period in
Peacetime", after the Soviet Union withdrew aid and credit, and dropped
the oil-for-sugar swap that was worth $3bn a year to Cuba. Fidel also
opened up the country for the first time to foreign investment and
tourism; small businesses were able to operate with a licence and the
dollar was legalised– a policy then reversed again. This is also when
Castro started doing business with the Canadian tycoon Ian Delaney, now
retired from the mining colossus Sherritt International. Cuba has a
third of the world's nickel reserves and Delaney helped out by investing
in the country's nickel and cobalt mines and providing jobs. He's still
known as Castro's "favourite capitalist".

Cubans still talk of this "periodo especial" with bitterness, when food
was in such short supply that Cubans lost on average 20lb in weight and
the economy shrank by a third. One Cuban tells me about friends who ate
orange leaves sprinkled with sugar for breakfast: "Yet this is a country
where if you throw a pip in the ground, it will become a tree within
months. The ground is so fertile we could grow everything ourselves. But
we import food from around the world – even pineapples from the
Philippines. It's madness."

One of Fidel's costliest mistakes was to switch investment out of
agriculture to a forced industrialisation, a policy that destroyed the
farming industry. Two-thirds of all food is now imported, much of it
from the US despite the trade embargo, as there are two exemptions to
the sanctions. Ironically, that means the US is Cuba's fifth-biggest
trading partner.

Food is basic: rice, black beans, chicken and roast pork are the
mainstay diet and people still queue for subsidised rations at corner
shops. But the restaurants get by, and are now allowed to buy from
private suppliers. One of the most popular paladares is the Doña Eutimia
in Old Havana's beautiful Cathedral Square. It's run by Leticia Abad,
seats about 20, and used to be the workshop of her late husband, a
famous sculptor; the beautiful metal-wrought doors are his legacy. The
restaurant is named after an elderly black woman, Eutimia, who lived
locally and cooked food for the Cuban artists working by the square.
Today, Abad runs it with her family and Abiel San Miguel – the paladares
can now employ non-family members for the first time – who proudly shows
me the restaurant's listing in Condé Nast Traveller magazine. How does
he find the changes? "Good but slow," he says, cautiously.

Next door to Eutimia is an artists' workshop, run in co-operative style.
Since the early 1990s, Cuba's musicians and artists have been treated
with special care. Artists such as Wifredo Lam and Alexis "Kacho" Leyva
have been allowed to travel overseas, sell and show their work abroad,

sign contracts with foreign distributors – even in the US – and keep
some of the revenue from sales. Some live part-time in Madrid and other
capitals but they can travel freely, unlike most Cubans who have to go
through a laborious process to get exit visas. As with the restaurants,
individuals are also opening their homes as art galleries so they may
invite overseas buyers to see their work privately. Yet publicly there
is little to see of such a thriving cultural life; Alberto Korda's
gripping Che Guevara photograph still dominates the hotel foyers and shops.

In the West, there is much talk of Cuba's second revolution; that the
reforms, coupled with the newly discovered oil, will put the country on
a path to a free-market economy and, then, capitalism. But that's not
what most Cubans think. One, who prefers to remain anonymous, says the
changes are only about keeping the current regime in power: "This is
about lifting the boot off our neck just enough to let us breathe a
little more." Another says it's impossible to know, and that anyone who
tells you otherwise is lying.

Economic reforms may be gathering pace but political ones are slower.
While Raul Castro has signed the UN human rights convention – something
his brother refused to do – and around 100 political prisoners have been
released, dissidents were rounded up ahead of Pope Benedict XVI's visit
to Cuba last month. Calls for more political freedom are regularly
crushed – although young students who have been openly demanding more
political freedom are being tolerated, for now. The mood feels tense.
Most people don't talk in public about the regime; if they do, they
stroke their chins to indicate the bearded Fidel. But at home, the only
talk is of change.

The cigar festival is said to be the best time to see Havana; the
Cubans, naturally warm and gregarious, are more cheerful than ever
because bars such as Floridita and La Bodeguita, home of the mojito and
made famous by Ernest Hemingway, are busier than ever and the taxis
fuller. There's also music everywhere; in every café, street corner and
town square there are live bands where old and young dance so
comfortably together. But even so you sense a sadness, an impatience
that they can't be trusted with more freedom. "The freedom to think for
ourselves, that's what we want," says one. The streets, which are
impeccably clean, are also run down; the beautiful Art Deco and glorious
baroque houses and hotels are dilapidated. Everything needs painting,
cracks in buildings need mending, potholes need filling.

Daily life is frugal, but Cuba does boast one of the highest living
standards in Latin America: they have one of the highest literacy rates
in the world and schools and colleges are free. So is healthcare, and
Cubans enjoy one of the highest longevity rates in the world, despite
nearly everyone smoking cigars or cigarettes. It's rather shocking to
the re-trained eye, but at the Corona cigar factory that I visit in
Havana, where most of the workers are women, they smoke while preparing
the leaves and rolling the tobacco. One, a young woman in her early
forties who has been working six days a week in the factory for 20
years, explains that they are given five cigars a day as part of their
wages. Earning about 420 Cuban pesos a month – around £10 – they are
paid above the average monthly wage.

Smoking may be ubiquitous, but Cuba also has one of the most advanced
biomedical and pharmaceutical industries in the world. Big investments
in healthcare by Castro in the 1960s have paid off. Joint research with
the Chinese on new monoclonal antibodies and vaccines for treating lung
cancer is cutting edge, and clinical trials are now taking place in
China. A revolutionary new diabetes drug has also just been developed
which European doctors are keen to acquire. Indeed, biotech and medical
services are the country's biggest export – more than 30,000 Cuban
doctors and sports instructors work in Venezuela as part of a deal
between the nations to swap doctors for oil.

With the Soviets gone, Cuba's biggest trading partners today are China
and Venezuela; China's giant blue-and-white Yutong buses are everywhere,
taking the one million or more tourists to the beach resorts and other
beauty spots, some of which the Cubans are not allowed to visit. It's a
two-way trade; China's bus-makers are taking Cubans back to China to
teach them about mechanics, because they've learned so many tricks from
having to mend the Dodge and Chevrolet cars that they have been driving
since the 1950s. Trade with Venezuela is crucial, too. The Venezuelan
president, Hugo Chavez, is visiting the country again regularly for
cancer treatment. But the big question now is whether Chavez will be
either well enough, or able to win his own elections later this year.

What next? Ambassador Melrose is cautious: "There are significant
economic reforms under way that are creating new economic freedoms for
Cuban people and leading inexorably towards a more market-based economy.
I believe Raul when he says these changes are irreversible. He is the
key figure driving the reforms. But there are lots of factors that will
shape Cuba's future, including the impact of a significant oil find in
the Gulf, the elections in Venezuela and the US, global food and
commodity prices and, importantly, future succession to a younger

The Castros have not yet picked a successor; Fidel is 85 and Raul is 80,
while most of the politicians around them are in their seventies. At
January's Communist conference, Raul admitted young blood should be
brought in, but no one has said how. Two politicians, Carlos Lage and
Felipe Pérez Roque, who were seen as reformers and potential heirs, were
caught criticising the regime and quietly disappeared from political
life. What Cubans fear most is that hardliners might take over if Raul
dies, taking the country back a few decades or even plunging it into
civil war as the young and frustrated take action to introduce a social

But they also fear a power vacuum, one in which the 1.2 million Cubans
living in exile on their own doorstep in Florida might move swiftly to
take control with US backing. Many are said to be planning to claim back
land they argue was taken from them after the revolution. Others fear
that if Cuba implodes, it could become a centre for the organised
terrorism and drug-trafficking which bedevil its Latin American
neighbours. "The last thing we want is for the organised-crime and mafia
people to come in and take control. Compared with our neighbours, our
crime rates are relatively low and we don't have such extremes between
wealth and poverty, " says one retired businessman. This is also why so
many moderate Cubans argue that if the US is serious about wanting to
encourage Cuba on the path towards a managed social democracy, or a form
of state-controlled market economy as China and Vietnam are doing, then
it must abolish the embargo.

A more sympathetic approach by US President Obama if he wins the coming
elections would strengthen their case for reforming the economy, and
speed up social change; there are many wealthy, articulate US-Cubans who
want to see an orderly shift in power. They are hopeful that Obama will
put lifting sanctions to the top of the agenda if he wins again, as
there appears to be majority support in Congress for ending the embargo
which has done such damage.

Indeed, it is the US sanctions which give the Castro regime its
justification for being "at war", as it provides Raul with a narrative
to defend the one-party state by showing the US as the implacable enemy.
At the same time, it gives the regime a perfect excuse to justify to the
Cuban public the country's economic failure, as they claim sanctions
have cost the country $70bn in revenues since the revolution.

On a clear day it is possible to see across from Cuba to Florida, a
stretch of water of 90 miles or so. It's when you are up in the
beautiful hills, overlooking Havana and across the Gulf from Hemingway's
old farmhouse, the Finca Vigia, that you realise just how absurd the
stand-off is between two countries so close, yet so far. Nestling under
the trees is Hemingway's recently restored boat, the black-and-red
painted Pilar. It's the boat he used to cross between Key West and the
island which he adored and which he was supposedly forced to leave
because of US political pressure. The boat trips should start again.

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