Entrepreneurs in Cuba Dive Into Capitalism

ALBERTO PAUSTE RUIZ is among the new breed of Cuban capitalists.

In the fairly common slack periods when there is no work for him as a set designer at the state television network, Mr. Pauste Ruiz makes wooden souvenir doll houses, tiny guitars, and miniature galleons for tourists.

On weekends, he hawks his goods at a crafts fair here. The houses go for $1 or $2 and the galleons for $5. Pauste, who lives with his parents, three bothers, and two nephews in a third-floor walkup apartment, makes about $12 a month, or about four times his salary in Cuban pesos. ``It helps make ends meet,'' he says, pointing out that soap is rationed and to get a bar on the black market costs $1, or about 70 pesos.

Officially, Pauste has only been in business about a month, since free enterprise has only been legal on the socialist isle since Sept. 9. But Pauste, like many Cubans, gives the impression that he has been supplementing his income for some time.

Pauste is the kind of person the Cuban government is trying to draw in from the underground economy. By legalizing private enterprise in more than 100 trades and services (from plumbers to music teachers), the state hopes to recover taxable income from the black market. It is also trying to reduce hunger and political tension by allowing the unemployed and the underemployed to be usefully occupied.

Many state factories have stopped operating because of the lack of spare parts and materials brought on by the end of support from the former Soviet Union and Eastern Europe - Cuba's principal trading partners.

To date, an estimated 60,000 people - including 19,000 here in Havana - have applied to set up their own businesses. Entrepreneurs can apply at their local labor ministry office by filling out a single page form. They state their name, current employment status, and proposed business. Depending on the business, there is a relatively modest monthly tax of up to 60 pesos (85 cents).

``We're granting about 40 to 60 new licenses a week,'' says Angela Medina Perez, head of the Plaza de la Revolucion municipal labor office. ``I haven't denied a license yet. We'll probably start doing some checking up on the new businesses in December.''

She says the most popular new businesses in her district are crafts, food sales (drinks, restaurants, cakes), taxis, and manicurists/hairdressers.

The list of permitted businesses is expanding as people arrive with ideas not yet sanctioned. Last week, the government announced that showing videos, making soap, and guarding vehicles will be included among the permissible new businesses.

``We are quite open to suggestions,'' says Carlos Lage, secretary of the Council of Ministers. Government officials, directors of state enterprises, professionals, and academics are not allowed to participate in private enterprises.

Some observers here say that given Cuba's labor force of 3.5 million, there should be more people seeking licenses to start their own businesses.

But some here are concerned that the state is more interested in finding out who is participating in the black market and arresting them than encouraging free enterprise.

Many entrepreneurs get their supplies on the black market. Take Tanya, for example, who runs a modest but illegal takeout lunch service from her one-room apartment in a decaying building in central Havana. She sells box lunches of rice, pork, and avocados for 40 pesos. A cheese sandwich goes for 10 pesos. And a glass of juice, five pesos.

``Business picks up after the fifteenth of the month when everyone has used up their monthly rations,'' Tanya says. The bread, cheese, rice, and pork are bought on the black market. But because it is diverted from state enterprises, she says she probably will not be seeking a restaurant license.

Some Cubans are concerned that the state will take over their businesses in a year or two, just as was done in the late 1960s.

``This is not a way to crack down on the black market,'' says Raul Taladrid, director of the State Committee for Economic Collaboration. ``The purpose is to reopen new forms of production, to provide jobs.'' He says the Cuban government went through an ``adolescent crisis'' trying to nationalize. ``We overdid it. No state in the world can provide all services. We've learned our lesson and are adapting the economy to the present conditions.''

Pauste says the effects of competition are already showing at the weekly crafts fair. ``Quality is improving and prices, in some cases, are coming down,'' he says.