Cuban Prime Minister Marrero Cruz Exposes Alleged Strategy Behind Deterioration of State-Owned Enterprises

During a recent visit to Cienfuegos, Cuban Prime Minister Manuel Marrero Cruz revealed an alleged scheme by corrupt officials to intentionally let state-owned service companies deteriorate to justify their privatization. The revelation came last Saturday, as Marrero Cruz called for stricter measures against those committing crimes and illegal activities. He also criticized certain private micro, small, and medium-sized enterprises (Mipymes), accusing them of becoming "millionaires" at the public's expense and spreading corruption across the country.

In his address, Marrero Cruz highlighted a supposed strategy by corrupt officials in Cienfuegos to leave state-owned companies underfunded, thereby justifying their privatization due to poor performance and inefficiency. He referred to the "decommercialization" suffered by what was once some of Cuba’s finest culinary establishments, which ended up being leased to private tenants.

“We let them deteriorate under the excuse of limited resources, despite all the self-management policies we've approved. This is a deliberate strategy to later justify the need for privatization,” said Marrero Cruz, as captured by Noticiero de la Televisión Cubana (NTV). The broadcast showed only a brief segment of the Prime Minister's remarks, without providing further details, investigations, suspects, or convictions related to these actions. Marrero Cruz cast a shadow of suspicion over officials and "new economic actors" in the country.

“What has been done? What has been done? Those who made mistakes must take responsibility, whoever they are. That has always been the government's policy,” emphasized the Prime Minister of Miguel Díaz-Canel’s administration.

The Opaque and Growing Process of Privatizations in Cuba

The rise to power of General Raúl Castro marked a gradual transformation of Cuba’s communist model, allowing minimal private initiatives and market logic in state enterprise operations. However, Raúl's reforms did little more than lease a small percentage of idle lands to tenants, mostly linked to the Revolutionary Armed Forces, and permit new forms of self-employment, usually in modest trades and services.

In late May 2014, the Cuban regime approved a development program until 2030, maintaining "social ownership over the fundamental means of production" and ruling out privatizing companies during that period. Marino Murillo Jorge, known as the "czar" of Raúl Castro's economic reforms, outlined the 2016-2030 plan, emphasizing the intention to “maintain social ownership over the fundamental means of production and achieve a socialist development model with efficiency.”

A decade ago, the Cuban regime spoke of promoting science, technology, and innovation; transforming the energy matrix with greater renewable energy participation; and modernizing the country's infrastructure—goals still echoed by the current administration.

The "Continuity" of Díaz-Canel and the Privatization Process

In December 2019, with over a year as Cuba's leader, Díaz-Canel insisted that privatizing companies was not the solution. “We will remove obstacles to strengthen state enterprises,” he said at the time. Meeting with his Council of Ministers, Díaz-Canel asserted that 2020 should be the year to implement necessary measures to unleash productive forces, though he stressed this should not be confused with privatization.

However, by March 2021, the Ministry of Domestic Trade (MINCIN) approved regulations allowing the privatization of state-owned trade, gastronomy, and service establishments, whether active or not. The requirements for private individuals aiming to manage state properties were outlined in Resolution 48/2021, published in the Official Gazette of Cuba on March 23 of that year.

Initially, the regulation governed the leasing, not transferring, of a property, open only to residents of the province where the restaurant, cafe, or any other establishment was located. Raúl Castro had converted 258 state restaurants into cooperatives, a fraction of the 1,900 establishments under state control at the time. By November 2020, Reuters reported the regime's plans to privately manage most of the 7,000 state restaurants, leaving only a dozen under MINCIN management.

The decision to privatize state restaurants had been made during the 2011 Communist Party Congress and its "Economic and Social Policy Guidelines of the Party and the Revolution," but by 2021, a decade later, it had yet to be fully implemented.

By February 2023, state media celebrated the opening of a soda and burger joint at the Zapata y 12 Complex as an example of the "productive linkage" between the state-owned Provincial Food Industry Company (EPIA) and a private firm. By then, the privatization of gastronomy establishments was commonplace and almost completed. The so-called "productive linkages" began to proliferate in Cuba's service sector, driven by the government's economic policies, which further opened the door to the privatization of goods and services.

The "Yes but No" of the "Continuity"

“Those who accuse us of being neoliberal should get informed,” said Díaz-Canel in October 2023. “For someone like me, committed to building socialism based on the greatest possible social justice, defending sovereignty, and seeking prosperity for all, it's offensive to hear such accusations.”

Indignant at the "manipulation" from adversaries, the leader appeared on Mesa Redonda to reaffirm that his economic policies were socialist and continued to aspire to communism. “We still share a basic basket with everyone… We have continued to maintain and develop social programs designed by the Commander in Chief during another phase of the revolution,” he defended.

Interviewed by journalist Arleen Rodríguez Derivet, Díaz-Canel argued that applying neoliberal formulas would have solved the problems of 1% of the population while leaving the rest to fend for themselves. “No, we are in a very difficult situation, but we continue to share a basic basket with everyone, even those who don't need it.”

“How can anyone think that what we are doing is neoliberalism?” Díaz-Canel questioned critics of the government's measures, describing them as efforts to perfect socialism and build it within current circumstances without compromising the future of socialist construction.

“Here, the fundamental means of production remain owned by the people, represented by the state. The main means of production are not in the private sector nor managed by it. They are managed by state companies, owned by our people, and there will be no privatizations of these fundamental means of production,” he concluded.

Meanwhile, Gil Fernández...

“Planning for losses is a strategy that cannot continue, as the design for the state enterprise system requires it to be profitable, efficient, and operate with reasonable, fair profits,” stated former Economy and Planning Minister Alejandro Gil Fernández in March 2022. Without specifying if Díaz-Canel's government had a plan to privatize inefficient state companies, the minister insisted that loss-making enterprises must change for the better.

“For the socialist state enterprise to shake up and produce favorable results for the economy,” decisions must be made, particularly related to reducing indirect expenses, cutting costs, and seeking greater efficiency,” proposed the minister, who was later dismissed by his doctoral thesis advisor.

In August 2020, following the news of an Anglo-Cuban business merger that gave rise to BioFarma Innovations, economist Elías Amor opined, “The necessary privatization of the Cuban economy and the creation of a stable legal framework to protect property rights is a path that must be taken for the country to function again.”

“Therefore, privatizations must be conducted through open, transparent, and informed procedures, and should never rely on cronyism and buddy capitalism,” he concluded.