On December 5, 2024, the Official Gazette published Resolution 56 from the Ministry of Domestic Trade. Among other provisions, it mandates the cancellation of all commercial licenses granted to cooperatives and small and medium-sized private businesses that had authorized wholesale trade as a secondary activity within their main activity. Furthermore, similar commercial licenses issued to self-employed workers are also revoked.

The regulation requires private businesses, including cooperatives, and self-employed workers affected by the provision to liquidate “their inventories and goods in transit and on hand, intended for wholesale trade or bulk sales, within a maximum period of 120 business days from the resolution’s effective date.” This deadline extends slightly beyond the first quarter of 2025.

Is the measure really surprising? The answer is a resounding no.

In December 2023, Cuban Prime Minister Manuel Marrero Cruz announced during the sessions of the National Assembly that a series of measures would be implemented to “correct” what his administration considered “distortions” in the private sector of the Cuban economy.

At that time, I wrote an article stating: “The prime minister’s statements suggest that the government, without the same popular pressure as after the July 2021 protests, believes it can control inflation (the main economic issue at the moment) its own way — by imposing restrictions.”

Back then, some optimists told me I was exaggerating and that Marrero’s words were merely a strategy to appease the regime’s more reactionary factions, rather than a genuine intention to roll back the gains made by private businesses.

Just eight months later, in August 2024, the regime published a regulatory package that made the restrictions announced in December concrete. Within this regulatory framework, expressed through various legal provisions, Decree 107 stood out. This decree clarified in its annex that the wholesale trade of products authorized in the list of permitted activities “could only be carried out by micro, small, and medium-sized private enterprises and non-agricultural cooperatives as a primary activity and through contracts involving state entities.”

It was thus made clear that neither private businesses with wholesale trade authorized as a secondary activity nor self-employed workers could perform this function. Additionally, Decree 107 stipulated that private economic actors could not market goods “imported for non-commercial purposes or acquired through the retail trade network.”

In this context, Resolution 54 regulates what had already been outlined in August 2024. However, the regulation provides elements that reveal the extent of the rollback disguised as a “correction of distortions.”

One of the aspects established by Decree 107 is that private businesses authorized to conduct wholesale trade as a primary activity could continue doing so, but only with the “participation” of state-owned enterprises through “contracts.” This implied that the Cuban regime intended to involve itself, in a manner not yet specified, in a market it had always monopolized but that private actors were beginning to compete.

Resolution 54 defines how Cuban authorities intend to participate alongside private businesses in wholesale trade. They do not approach this as strategic partners who might intervene through various contractual modalities, but rather as mandatory intermediaries monopolizing wholesale trade.

The regulation is explicit in its third section, stating that private businesses and cooperatives authorized to conduct wholesale trade as a primary activity can only do so “directly with state entities or through state-owned wholesale trading companies.” This decision delivers a blow to the supply-and-demand system — which considers real costs, risks, and market conditions — that had fostered the development of various private businesses importing products and supplying goods in bulk to small businesses and self-employed workers.

The mandatory state intermediary model established by Resolution 54 appears to align with the logic, previously defended by the Cuban regime, that only state intervention can curb inflation. They argue that inflation is a result of the private sector’s unbridled profit-driven motives.

In December 2023, Marrero stated that the liquidity and access to foreign currency held by private businesses — partly because they obtain it in a market his administration deems illegal — alongside their ability to freely import, “instead of solving a major problem for the people, has been a difficulty that has not allowed for the reduction of inflation or prices.”

For this reason, the resolution grants a 90-day period for private businesses authorized to conduct wholesale trade as a primary activity to decide whether they will continue operating under the new conditions established by the regulation.

However, according to professor and economist Pedro Monreal, the measure reflects an excessive confidence on the part of Cuban authorities in the ability of “restrictive state regulations” to control the private sector. Monreal suggested on social media that private actors have liquidity in foreign currencies and are not defenseless, so they may take measures to “mitigate risks, including moving their funds elsewhere.”

Monreal also stated that Resolution 54 appears designed to “oxygenate” the state wholesale sector by suffocating the private sector. In his view, the regulation exposes “the fallacy of ‘equality’ among economic actors” because it “discriminates against the private wholesale sector by stripping it of its market.”

This article was translated into English from the original in Spanish.