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    The war on Cuba’s ‘paladares’ – The regime’s campaign against privateinitiative grows more sophisticated

    The war on Cuba’s ‘paladares’: The regime’s campaign against private
    initiative grows more sophisticated
    ELÍAS AMOR | Valencia | 20 de Octubre de 2016 – 14:00 CEST.

    Observers and analysts have been discussing the Castro regime’s decision
    to temporarily ban new licenses to open small restaurants (paladares) in
    Havana, run by entrepreneurs. At the same time a warning has been issued
    to those already operating that they will be subject to stricter
    controls, with the initiation of a process of summons that will instruct
    violators regarding regulation violations, including “evading taxes,
    buying supplies on the black market or operating illegal clubs and bars. “

    Limiting supply on any market is a public policy measure with very
    negative effects on the population, with results that are just the
    opposite of those it pursues, even in economies like Cuba’s under Castro
    in which the market delivers only a portion of goods and services, with
    the State playing a major role in the their provisioning.

    This absolutely unexpected decision by the regime flies in the face of
    information indicating an increase in tourists and travellers,
    constituting a market with a growing need for dining services. The
    Castro regime’s war against Cuba’s paladares is nothing new. Whenever
    any type of private economic activity flourishes on the Island,
    reactionary Stalin-like measures are adopted to show who is in control
    of the economy. What has happened with the paladares is just more of the

    Its immediate effects will be:
    1. Stifling one of the possible channels for economic emancipation,
    supposedly opened up by the “Guidelines.”
    2. Limiting the supply of popular food offerings, which will increase
    the prices of those that continue to operate on the market.
    3. Directly benefitting suppliers (State and hotels) that were
    struggling to compete with small restaurants.
    4. Curtailing growth in the supply of agricultural products for
    entrepreneurs, thereby raising consumer prices.
    5. Reducing the entry of “mules” with intermediate goods for small
    restaurants that were having trouble obtaining supplies on domestic markets.
    6. Frustrating expectations and personal projects.
    7. Bolstering administrative/political control over economic activity.
    8. Cutting job creation at these establishments.
    9. Hampering the sector’s evolution towards specialization,
    diversification and improved productivity.
    10. Producing a decline in tax revenues.

    The main difference between the current campaign against the paladares
    and previous efforts is that the regime’s initiative against private
    enterprise in Cuba is becoming increasingly sophisticated. Thus, the
    meetings to which owners of paladares are summoned are attended by
    “Popular Power” representatives from Havana and various State
    institutions, such as the National Tax Administration Office (ONAT) and
    the ubiquitous State Security. And, as stated by some of those called to
    these meetings, they are told that the paladares are important to the
    economy, and that the irregularities are not only found at private
    businesses, but also State operations too. To date, however, the bulk of
    the administrative pressure has fallen on the former.

    Let us take a look at what these serious problems are, according to the
    regime. For example, the use of public parking areas to accommodate
    paladar customers (which could be resolved by renting them); the
    purchasing of goods on the black market (an activity that is necessary
    because there are constant shortages on the official ones); and other
    more serious infractions, such as tax evasion, money laundering, and
    even prostitution and drugs. There are also aspects that date all the
    way back to the “Special Period,” and that have become structural due to
    the dynamics of the regime.

    Castro’s laws limit private restaurants to 50 seats or fewer, and they
    are required to buy their supplies at State stores, despite the
    permanent shortages at them and the high prices of their products.
    Despite the obstacles these establishments face, Havana has seen a great
    number of paladares appear and succeed recent years. These are
    businesses that have competed with State restaurants and those located
    in hotels thanks to their ability to offer customers good values.

    Some analysts believe that the toughening of the regime’s policy towards
    the paladares is an example of how Raúl Castro is prioritizing certain
    expenditures to the detriment of others. And, unlike during the “Special
    Period,” when blackouts and restrictions wrought widespread suffering
    among the population, now the aims is for economic activity, private and
    State, to pay for the adjustment to the very difficult scenario the
    Castroist economy is suffering through today, as oil from Venezuela
    wanes, loans are not paid back, and cash and liquidity are scarce.

    And yet, impervious to discouragement, they are quick to announce the
    fusion of currencies by 2017. Unbelievable.

    Source: The war on Cuba’s ‘paladares’: The regime’s campaign against
    private initiative grows more sophisticated | Diario de Cuba –

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