Friday, December 06, 2013

Cuba: Cuba's Biggest Black Market Thrives Despite Threats

This article originally appeared in the Institute for War and Peace Reporting,

Cuba's Biggest Black Market Thrives Despite Threats

As authorities warn of clampdown, traders say business should carry on as usual, eased by a bit of bribery.

Traders at a giant outdoor market in the Cuban capital Havana say they have no plans to stop operating despite fears of an imminent government crackdown.

Thousands of shoppers visit the Cuevita market, in the San Miguel de Padrón municipality of Havana, every day. The market also serves as a wholesale outlet supplying the self-employed entrepreneurs known as “cuentapropistas”, who are allowed to operate on the margins of the state-controlled Cuban economy.

Some of the goods on sale at Cuevita have been pilfered from the warehouses of state-run industries. Although this is widely known, police and inspectors turn a blind eye to the presence of illicit goods in exchange for bribes.

Recently, however, the Communist Party newspaper Granma announced a crackdown on the resale of items acquired from the state distribution retail network. The campaign, starting on December 31, could effectively shut the Cuevita market down.

The news has alarmed market traders. Some plan to close their stalls and operate underground, or find alternative items to sell that will not get them into trouble.

Others, however, say they have survived similar clampdowns in the past, so this latest attempt to drive them out of business will probably fail, too.

In a typical raid, a team of inspectors backed by police arrives to search stalls and confiscate illicit items. Fines are handed out and some traders arrested. But the next day, the market re-opens for business.

Cuevita’s traders have developed a number of strategies to protect themselves. Many fence off their stalls with sheets of tin. When traders see a police officer coming, they shout a warning and their colleagues quickly hide any illegal products.

The thriving black market is no secret, anyway. Police and inspectors take bribes whose size depends on the items on sale at a particular stall. Traders say the authorities do not intervene seriously because many senior officials have business interests there themselves.

Elvira, who lives near the Cuevita market, said there was an understanding between traders and police, so that the system ran smoothly.

She used to hold the trading license which cuentapropistas are required to apply for, but she gave it up because it was pointless, and now says she operates much more successfully without official papers.

When a police patrol approached her stall recently, she exchanged friendly greetings with the officers, whom she knew, and then showed them some legal merchandise and handed them some bottles of perfume. They left her alone and turned their attention to other traders.

A year ago, Elvira’s son acquired a cuentapropista license to sell clothing. One day police arrived and handed him a confiscation order, with no further explanation. They searched the house, confiscated all his merchandise and took him to the police station. Elvira paid bail money of 5,000 pesos (200 US dollars) to free him.

When the family tried to reclaim the confiscated stock, the authorities said that the goods had been mislaid and warned them that if they took the case to court, they would lose everything.

Police and officials who turned up later to demand more bribes told Elvira that their colleagues had appropriated the seized goods – “so-and-so took some shoes, so-and-so took some clothes”.

A local resident recounted how the chief inspector for the Cuevita area recently caught a man selling plastic coat-hangers and tried to detain him. The man began shouting that he was already paying the inspector 1,000 pesos a month, so he should not be arrested.

Fines, too, are negotiable. A trader called Sonia displayed the paperwork for a 400-peso fine, which was stamped as paid even though she had negotiated it down to 200 pesos.

Market traders offer goods purloined from the state and not available in normal shops.

One local resident said she bought a bedsheet still in its packaging, stamped as property of the health ministry and clearly intended for use in a hospital. She paid 50 pesos (two dollars), when the equivalent would have cost up to 150 pesos in a normal shop. She also bought a quilt that she said came from Cuban armed forces stores.

Cuentapropistas involved in retail buy their stock at the Cuevita market. Energy-saving light bulbs, for example, are on sale at 16 pesos each and can be resold for 30 pesos. The bulbs are not available in state shops.

Another side of the illicit trade involves manufacturing products from stolen materials. One trader, for example, sells perfume in bulk to cuentapropista retailers. He makes it out of a mixture of alcohol, glycerin and extracts, all stolen from warehouses belonging to Súchel Camacho, the main state manufacturer of hygiene and cosmetic products. (For more on the trade, see Thriving Cuban Market in Fake Goods.)

To curb the trade in stolen goods, the Cuban government has promised to set up wholesale outlets where they would be able to buy raw materials and merchandise, but this plan is still in its early stages. (See Cuban Traders Slow to Win Acceptance.)

Much of the population of the semi-rural neighbourhood where the Cuevita market is located consists of migrants from other areas of Cuba. They have built homes without obtaining planning permission – common practice in some parts of the country. Some have since been given permission to remain there, but those who are there illegally have no right to state employment, so private enterprise is their only option. Camilo Ganga is the pseudonym of a journalist living in Havana, Cuba.