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- After months of escalating US sanctions in a fuel blockade, Cuba's communist government has turned an unlikely place for help, private enterprise. - The entire system is looking at the private sector in a different way. - A series of sweeping reforms has opened up Cuba's economy more than at any time since the revolution, and that's creating opportunities for entrepreneurs both on the island and in the US. - We are in the middle of a booming moment. Right now, the private sector has not limit to grow.
- For the first time in a decade, the Wall Street Journal was granted visas to report in Cuba. So it used to be a state-run bakery is effectively turning into a private business. What we saw was an economy changing in real time and creating two divergent realities, one for people who have enough money and connections to capitalize on the moment, and another for those who don't. - This place is a state-owned company, just renting us a piece of land, and we are building here the first Cuban factory to produce dry fruits for the exportation markets.
- Oscar Fernandez's plans to be Cuba's largest exporter of dried fruit have been frustrated by US sanctions and Cuba's economic collapse. How much more difficult is it to do all of this when you can't rely on electricity? - It's crazy. This factory should be finished one year ago, but in this place, we don't have electricity since six months. - But new economic reforms, which have greatly expanded what business owners like him can do, have made him a lot more optimistic about his company's future. From outside of Cuba, they question how private the private sector is here.
- It's very simple. I'm the owner. - Right, but you rent land from the government. - Okay, what else can I do? I mean, in the past, we are coming from an economy that was 100% state-owned, right? And we were not allowed to buy land to build our own facility. So no choices. You need to go to a state-owned company and to pay rent. That's what we are doing. But it doesn't belong to my company so far because- - You hope to change that? - Of course, it's gonna change. We are going to be the owners of all this company. - Why do you say that? - Because I know, so I have a feeling now things are changing, big changes, 180 degrees.
- Things are changing. The sweeping reforms announced in June touch almost every sector of the economy and are meant to lessen the pressure created by the US blockade. - Industries and businesses that have long been controlled by the state, like banking, pharmacies, and gas stations are at the very early stages of opening up. The government also relaxed restrictions on the country's thousands of micro small and medium-sized businesses, or MIPYMES.
Today, entrepreneurs can operate more than one company and employ as many people as they want. The reforms have lit a fire under the island's small but committed business community who regularly get together to discuss how to navigate the rapidly changing economic landscape. - All of this is happening amid extreme conditions on the island where the government is struggling to meet even the most basic needs.
- But these same conditions are also creating new opportunities. I'm in the middle of Havana where the light just came back on. Behind me is what used to be a state-run bakery. About two weeks ago, the state stopped providing the ingredients to make the bread. People used to be able to buy it for about one peso each and they could only buy one. But the manager, instead of closing it, decided to procure the ingredients himself and continue to sell bread.
Now at 50 pesos a piece, but people can buy as many as they want. So it used to be a state-run bakery is effectively turning into a private business. - It might sound contradictory, but no matter or despite the worst context we're living, we're seeing a lot of opportunities. - Oniel Diaz Castellanos runs a consulting firm for businesses on the island. - The thriving sectors right now in Cuba are related with imports of goods, basic goods that five years ago, 10 years ago were basically imported by the government.
Right now the private sector is providing food, electric appliances, batteries, solar panels. Everything that is demanded in the economy, the private sector is providing, despite the embargo, despite sanctions. If you look to the numbers, probably this year, the private sector is going to import more than $1 billion of products directly from the United States. Right now, the best example was importing gasoline and diesel. We receive a lot of requests from South Florida companies, some owned by Cuban Americans that saw an incredible opportunity to provide products to the private sector, and that's happening a lot.
- US exports to Cuba are at an all-time high. Fuel exports in particular have spiked since earlier this year when the US government made it easier for US companies to export to Cuba. It's a contradiction that isn't lost on Cuban trade officials. Isn't it a little ironic that the US has ended up filling some of that gap in the supply of fuel here? - It's not just fuel that's been coming in from the US. US imports have almost doubled this year.
- US regulations allow American companies to export goods only to private Cuban entities, but that can be hard to enforce in Cuba where government and enterprise are deeply interconnected. Earlier this month, US officials seized $3 million worth of fuel they said was being funneled to a state-owned enterprise, something the Cuban government has denied. The US has made it clear that it isn't convinced by the island's economic reforms. - No one is going to invest in Cuba under their current governance model.
They're just not going to do it. - But Cuban officials are on a campaign to convince investors otherwise. - Have you seen new interest in investing in Cuba since announcing the new reforms? - What about from the US? - So far, US authorities have not backed down. Instead, their aggressive expansion of sanctions have pushed out several major international companies, but it's no secret that there would be a lot of business interest in Cuba if the US's posture were to change.
Is there any fear amongst businessmen here on the island that if, when things open up fully, they're gonna struggle to compete with the sort of money that will come from places like Miami? - The smartest guy in the private sector have that fear. And now we have been operating in a kind of a bubble where we are alone in Cuba, competing with state-owned companies, so that gave us a lot of advantages. We are going to be forced to compete with new actors arriving to Cuba, probably with more expertise, with more resources, trying to quickly seize opportunities in our country.
- In the meantime, the economy is stuck in a period of uneven growth, opportunity for some and an increasingly harsh reality for others. There are long lines outside of basically every single bank in Havana. It's a cash-based economy, but people wait sometimes all day long with no guarantee they'll actually be able to take out any cash. Right now, there is no electricity. There's been no electricity since midnight. People are still out here waiting just in case it turns on.
Fernando Perez Hernandez used to be an industrial engineer. Now he sells cigarettes and coffee to people waiting in line at the bank. - On a good day, he can make as much as $10. - The growing private sector is helping stock the shelves with food and basic goods, but in Cuba, where salaries have long reflected artificially low prices, it's also doing it at a cost that plenty of people simply can't afford,
and it's aggravating tensions between the government and people who struggle to access basic goods. - Many Cubans are left reliant on state-run bakeries and soup kitchens like this one. On the day we visited, there was no electricity, so staff made food in the dark. - Blanca Lopez Chavez comes here for most of her meals. Between her pension and some extra cleaning work, Chavez takes home 10,000 pesos a month, about 13 US dollars.
