Venezuela Embraces Cuba's Military Monopolies

Friday, January 24, 2014
From El Universal:

Venezuela embraces the Cuban state trade model

Military participation ensured the government predominance in Cuba

Top centralization. This is the core attribute of the Cuban economy: the hinge relies on the military who grab 70% of the national trade through businesses that operate as small autonomous republics within the stiff state bureaucracy.

The Cuban national armed forces (FAR) have lately striven to grasp finances and inherit power in the stead of civilians, considering that the theoretical heir apparent in the post-Castro era would be Miguel Díaz Canel, a 55-year-old civilian promoted to the rank of Vice-President of the State Council in 2013.

In Venezuela, upon the setup of the Venezuelan Foreign Trade Corporation (Venecom), the Venezuelan State may import and supply goods and inputs needed by public and private companies for production. Such macroeconomic vision was rigorously implemented in Cuba without the stake of the private sector.

Whereas private entrepreneurship is absent in the island, the Cuban State takes hold of imports and exports through several agencies, including the Ministry of Foreign Trade and Foreign Investment, and a certain number of high military officers manage over USD 11 billion of the income through 58 national corporations.

"In the Cuban case, the FAR controls important economic sectors through companies which, per each sector, have positioned allied military," highlights Cuban economist José Azel, a scholar with the Institute for Cuban and Cuban-American Studies at the University of Miami (Iccas).

In the Cuban case, there are not private exporters, except for joint ventures with Canadian and other firms, Azel added.

All of the 58 state-run companies are in charge of exports. Meanwhile, the Cuban government centralizes profits and works on imports through government agencies. Take, for instance, 80% of foodstuffs, up to USD 1.5 billion in 2011.

The stiff state trade apparatus tracks the incoming and outgoing foreign currency. The foreign currency is apportioned through a number of government companies which move the economy and pool most of the manpower (over 80%).

The policy of price and market controls signified a social-style strategy subsequently turned into scarcity of bare essentials.