Workplace theft saps Cuba's state-run economy

HAVANA Thu Jun 25, 2009 12:31pm EDT

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HAVANA (Reuters) - In a cramped apartment just behind the renowned Partagas cigar factory in central Havana, the factory worker displayed his wares.

Shiny wooden boxes of Cohiba, Montecristo and Partagas cigars -- considered among the finest in the world -- emerged from a duffel bag as the worker, who gave his name as Jose but asked not to be identified further, offered them at a steep discount to those on sale in the Partagas store.

"This isn't stealing. We do it to survive," said Jose, who explained that his wage in the factory amounted to less than $20 a month. Without slipping cigars out of the state-run business and selling them to tourists, he and his family would not get by, Jose said.

Cuba's communist authorities take a dim view of such "survival" tactics, which have existed for years in some form or other in a society whose citizens often wryly joke "if it's not illegal, it's prohibited."

A popular Sunday night drama on state television highlights the crimes and punishment -- including long jail terms -- meted out to Cubans responsible for "counterrevolutionary" acts such as black market sales of goods, such as beef, cigars and rum.

"I could get in a lot of trouble just for talking to you ... I could go to prison," said the Partagas worker.

He and three fellow workers reaped just 20 percent of the revenues from the "bolsa negra" or black market deals, Jose said. Plant managers and foremen keep the other 80 percent and split it among themselves and police or Interior Ministry officials who turn a blind eye to the illicit sales, he said.

Former President Fidel Castro complained bitterly about theft from the workplace in a speech in November 2005. But he fell ill not long after that, and little seems to have been done about a problem so commonplace that Castro described it as having created a class of "nuevos ricos" or new rich which he said threatened the very lifeblood of the Cuban Revolution.

The government routinely blames many of Cuba's economic problems on the U.S. trade embargo against the island that which has been in place since 1962.

"ESCAPE VALVE"

But the problem of theft from state-owned businesses is an embarrassment for a government that has long prided itself on socialist egalitarianism and a sense of ethical superiority.

President Raul Castro, who took over from his ailing elder brother Fidel last year, has called for more efficiency, austerity and sacrifice as the global recession squeezes the centralized Cuban economy with dips in foreign currency earners such as tourism and nickel.

Nevertheless, many Cubans see themselves as victims of a flawed economy and say workplace theft is one of the things still keeping the Cuban Revolution alive.

"It's sort of our escape valve," said one taxi driver, who asked not to be named. "If they were to take that away people could get pretty angry and things might get out of hand."

Dissident blogger Yoani Sanchez, whose wry comments about daily life in Cuba have won her international acclaim, described pilfering from the workplace as "a socially accepted way of breaking the law" in a website posting this week.

It was also a way of dissuading people from protesting publicly to demand better living standards, she said.

DUAL CURRENCY STRAINS SOCIETY

Many Cuba experts say the widespread theft problem stems largely from the fact that Cuba, which initially legalized use of dollars in 1993 during the economic nosedive that followed the collapse of its old economic ally the Soviet Union, has two currencies.

The local peso currency, which most salaries like Jose's are paid in, is essentially good only for rationed or other items available in drab state-run peso stores.

The government replaced dollar circulation in 2004 with convertible, dollar-pegged pesos called CUCs. Having CUCs provides access to better stores and more goods, and getting them is often through black market sales of goods smuggled out of the workplace.

Hard-currency remittances from family members living abroad are another major source of the CUCs for many Cubans. But some critics have called the dual currency system a form of economic apartheid in the country of 11 million people.

The state still provides free health and education as well as heavily subsidized housing and a small ration of almost-free food items. So the social safety net compensates partially for what officials acknowledge to be low salaries in dollar terms.

But many peso-paid workers or people on pensions have a hard time meeting basic needs, and the solution for many is daily "inventing" -- often just a euphemism for stealing.

(Editing by Pascal Fletcher and Frances Kerry)

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