The Economist - USA (2021-02-13)

TheEconomistFebruary 13th 2021 33

1

“D

eep down, we are one single govern-

ment, one single country,” said Ven-

ezuela’s loquacious president, Hugo Chá-

vez, of the relationship with Cuba in 2007.

Fidel Castro, Cuba’s ailing revolutionary

leader, was like a father to him. Venezuela

provided millions of barrels of subsidised

oil to shield Cuba from the economic con-

sequences of its socialist system. Cuban

doctors served Venezuela’s poorest neigh-

bourhoods, boosting Chávez’s popularity

and providing Cuba with extra cash. Cuban

spies schooled Chávez and Nicolás Madu-

ro, who became president after he died in

2013, in the dark arts of perpetual rule.

Their political and economic alliance was

the strongest in Latin America.

 Now the allies are discreetly sharing

another experience: adoption of free-mar-

ket practices to rescue their moribund

economies. Neither admits this. The goal,

each claims, is “perfeccionamiento”—per-

fection—of socialism, not its abolition.

On February 6th Cuba’s council of min-

isters expanded the number of trades open

to self-employed entrepreneurs, called

cuentapropistas. A list dating from 2010

(and twice revised) permitted private en-

terprise in 127 professions. Cubans could

be horse-cart drivers and birthday clowns

but not computer programmers or pet vet-

erinarians. A new list, published on Febru-

ary 10th, specifies 124 sectors reserved for

the state (or entirely banned). Everything

else is to be permitted for entrepreneurs.

Some finicky rules, like those that bar hair-

dressers from offering manicures, are ex-

pected to be scrapped.

This follows another long-awaited re-

form. On January 1st, after more than a de-

cade of debate, Cuba’s government ended

its economy-distorting dual-currency sys-

tem. The cuc, a supposedly hard currency

that Cuba introduced 1994 after the col-

lapse of the Soviet Union, is being phased

out. The surviving Cuban peso has been

pegged at 24 to the American dollar (but is

now trading at 50 in the black market).

State enterprises, which could hide their

losses by valuing each of their Cuban pesos

at $1, will no longer have that luxury. That

will probably lead to lay-offs. The govern-

ment hopes that sacked workers will be-

come newly liberated cuentapropistas. 

Venezuela, which sabotaged private en-

terprise with expropriations and price con-

trols but did not outlaw it, has been on a

similar journey. Mr Maduro scrapped its

bewildering system of multiple exchange

rates in 2018. The American dollar, former-

ly the “criminal dollar”, has recently been

allowed to circulate freely. It is much more

common on the streets of Caracas than bo-

lívar banknotes, of which the government

is not printing enough to meet demand.

The government no longer enforces price

controls. It has even raised the price of pet-

rol for the first time since 1996; state-run

petrol stations take dollars. In November

Santa Teresa, a private maker of rum, is-

sued the country’s first corporate bond de-

nominated in dollars in two decades.

Shops, once emptied by price controls,

Cuba and Venezuela

Practically perfect

CARACAS

Latin America’s most socialist countries open up, hesitantly, to the market

The Americas

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