Cuba loosens Communist control of some restaurant cooperatives

Cuba loosens Communist control of some restaurant cooperatives
HAVANA | BY MARC FRANK

Cuba announced on Tuesday that some cooperatives offering food and other
services will be able to buy supplies directly from government producers
and wholesale outlets for the first time, part of a wider but so far
cautiously implemented market reform program.

The new rules mean some former state-run companies turned into
cooperatives on the Communist-led island will no longer have to buy from
more expensive retail outlets.

Odalys Escandell, first vice minister of domestic trade, said on the
government's evening news broadcast the move was "transcendental", but
Tuesday's measures do not fulfill an earlier promise to let private
restaurants do the same, leaving in place a key constraint on their
business viability.

The steps, which go into effect on May 2, come just four days before a
Communist Party Congress which is expected review market-oriented
reforms begun five years ago.

The news report said wholesale outlets will be gradually established for
the cooperatives. Over time, a series of products will be made available
to them at lower prices, along with a tax cut, in exchange for setting
price controls on the retail offer.

"Why are we establishing maximum prices? Because it is a system to
protect the consumer," Escandell said.

Cuba recently reversed an experiment to end state control of
distribution of farm produce, after food prices rocketed above their
previously subsidized levels.

Cuba has turned over to employees thousands of small state-run
establishments, from coffee, snack and barber shops to locksmiths and
shoeshine kiosks. The workers rent the premises and compete with private
businesses on the open market.

The government has also ordered some 500 larger state-run
establishments, from beauty salons to restaurants, to become
cooperatives as a pilot project before thousands more follow suit.

Economy minister Marino Murillo made clear upon announcing plans to turn
state-run businesses into cooperatives two years ago, that they would be
favored over private businesses.

"They are a more social form of production," he said at the time.

(Reporting by Marc Frank; Editing by Frank Jack Daniel and Edwina Gibbs)

Source: Cuba loosens Communist control of some restaurant cooperatives |
Reuters - http://www.reuters.com/article/us-cuba-economy-idUSKCN0XA06T