Cuba authorizes private retail and restaurant chains

Aug. 31 (UPI) — The Cuban government has formally authorized private businesses to operate retail and restaurant chains across the country, expanding the role of the private sector as the island struggles with a severe economic crisis marked by shortages, inflation and widespread power outages.

The measure allows micro, small and medium-sized enterprises, as well as cooperatives and foreign investors, to register a single brand and operate multiple locations across different provinces.

Transactions can be conducted in Cuban pesos and foreign currencies, the state-run newspaper Granma reported.

The reform seeks to restructure Cuba’s retail sector amid a severe economic crisis. It also puts into effect part of a package of 176 economic reforms announced in June by President Miguel Díaz-Canel’s government in an effort to pull the country out of its economic collapse.

The government said the 176 measures are intended to modernize production structures, diversify forms of management, strengthen the financial system, boost productivity and eliminate bureaucratic procedures affecting both state-owned and private businesses.

The new commercial framework for micro, small and medium-sized businesses also allows state-owned spaces, premises and establishments to be leased through competitive bidding. It promotes public-private partnerships, greater participation by non-state actors and increased foreign investment, while maintaining strict price controls and government oversight demanded by the Communist Party to preserve its political monopoly.

The opening, however, is widening a deep social divide between Cubans who receive remittances or earn foreign currency from tourism and much of the population, which relies on devalued state salaries.

The economic divide is reviving class divisions on the island.

The growing inequality has been acknowledged even within the Communist Party’s ideological apparatus. Eugenio Ramos, a professor at the Communist Party of Cuba’s school in Las Tunas, recently acknowledged that the current package of economic reforms “implicitly carries the concept of class differentiation” and that this “means the reappearance of the rich in Cuban society,” Diario de Cuba reported.

Ramos warned of official concerns that successful entrepreneurs could form a “proto-bourgeoisie” that could begin demanding political changes and challenging the Communist Party’s traditional control.

While government officials debate how to contain this emerging economic elite through taxes and price caps, independent economists such as Pedro Monreal have pointed to what they describe as deep contradictions in the government’s policies.

At a meeting with private business owners last week, Díaz-Canel said the measures are intended to promote Cuba’s growth and establish an appropriate balance between the aspirations of entrepreneurs and those of the country, Cubadebate reported.

At the same meeting, however, Díaz-Canel criticized what he called illegitimate profits and said the private sector should not become a space for illegal activity, tax evasion, speculation, corruption, hoarding or prices disconnected from economic reality.

Monreal said on X that the government is undermining its own economic reforms by describing private-sector prices as “abusive” and responding with sanctions while simultaneously saying it wants to expand markets, private ownership and foreign investment.

“Products that the state retail network fails to put on shelves appear thanks to private initiative, obviously at prices that reflect actual market conditions, not the preferences or conjectures of the bureaucracy,” Monreal wrote.

Cuba is thus moving into unprecedented territory, with its socialist system accepting capitalist economic relationships to survive while fearing the potential loss of its political monopoly to the affluent class it is being forced to create.