Average salary: R400pm. Seven year old VW Polo: R260 000. That’s Cuba.

Cuba remains a gift to economic theorists. A living monument to the folly of a closed economic system built on the socialist fallacy that the State knows best. With a regulated average wage of under $40 a month, Cubans no possess no financial incentive to produce anything more than the minimum. So the country is stuck in a time warp where snails progress more rapidly than the economy. A pal who visited recently said Cubans are a nation of hitch-hikers. Apart from car hire firms servicing the tourist trade, the few cars that are around date back to the 1950s and 1960s. Some light appeared when 82 year old President Raul Castro promised to expand car imports. But the result is turning out to be another lesson in the impossibility of treating the symptom without addressing the cause. Unless less, that is, you fancy buying a seven year old Polo for R260 000. On a monthly salary of R400? – AH

cuban-carsBy Isaac Risco of DPA:

HAVANA: “Outrageous!” “A scandal!”: Cubans are furious about the liberalization of the sale of cars on the island, which went into force Friday. That’s because of the extremely high prices posted by state-operated dealerships – ranging up to 200,000 dollars.

From Friday, Cubans and foreign residents of Cuba no longer need a special permit to buy imported cars. As many potential customers had feared, however, prices for new cars and used cars of recent vintage shot through the roof on the communist island when the authorities eased restriction on access to them.

The latest economic reform, announced by the government of Cuban President Raul Castro last month, said imported cars would go on sale at prices “similar” to those set by the market. On Friday, however, cars by the French manufacturer Peugeot, one of only a few whose products are regularly imported into Cuba, went for 90,000-200,000 dollars at the current exchange rate in some state-operated dealerships.

Cubans working in the island’s state sector earn 30-40 dollars a month at the current exchange rate.

“Which workers have that money here in Cuba?” complained Diego, who did not give his full name. Diego, 68, an officer in Cuba’s merchant navy, had for two years held a permit to buy a new car for just over 2,600 dollars. Now he no longer needs the permit.

However, the cheapest modern car available at the dealership he visited in the Havana neighbourhood of Miramar, a used 2007 Volkswagen Polo, went for 25,000 dollars. “Many years saving money in the bank, which was the requirement they set (…) and now they impose on workers the price they are imposing,” he told dpa. “It’s a scandal!” others complained before the same dealership.

The new rules allow Cubans to buy new cars and used cars only a few years old from state-run dealerships. That’s a change from the 2011 reform that allowed them to freely buy used cars from other individuals. When the authorities announced the change in the rules, they said they would grant new-car purchase “priority” to people who held one of the outstanding permits.

But things are no longer that easy. Mayte Escalante, 42, a housewife, also rules out buying a new car under the new scenario. Her permit allowed her to buy a 5,300-dollar car, which she had planned for – but which will not take her very far now. “It’s outrageous,” she complained.

“The price of none of those cars is within a worker’s reach,” said Gabriel Orta, 57, a civil aviation engineer whose prior permit was for a 6,000-dollar car. The official car dealership firm CIMEX declined to give details of the prices. Shortly after the 1959 revolution, Cuba largely banned the sale of cars.

Over the years, a booming black market developed for hard-to-get permits to buy cars, which the government often granted to its employees or to doctors, and they often went for several thousand dollars. The October 2011 reform allowed private individuals to buy and sell cars from each other, which until then was only allowed for pre-1959 models.

Havana is popular among visitors for its streetscapes marked by US models that date back to the first half of the 20th century, and by the Soviet-style Lada and Moskvitch cars that arrived during the Cold War. More recently, China’s Geely models have joined the fray.

State dealerships are now in charge of importing new vehicles, in a move that seeks among other to improve the efficiency of public transport. Cuban President Raul Castro, 82, has for several years been implementing modest reforms to partially liberalize the economy in the island’s state-controlled system, opening up space for more private initiative. – SAPA-AP

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