Cuba opens up to public‑private enterprises for the first time in nearly 70 years

The Cuban government, after decades of treating the private sector as an internal adversary, appears to be easing its stance for the first time in nearly 70 years. Facing a deep economic crisis, Cuba’s Official Gazette has published a new decree‑law allowing the creation of public‑private enterprises. These partnerships between state and non‑state actors would have the authority to decide what goods and services to offer, and to set prices and wages.

The announcement came just one day after President Miguel Díaz‑Canel urgently called for transforming the country’s economic model as the island grapples with U.S. sanctions.

“We must focus, immediately, on implementing the urgent, most necessary transformations that must be made to the economic and social model,” Díaz-Canel said Monday during a meeting of the Council of Ministers.

The comments come after several weeks in which the Trump administration has insisted that change in Cuba will begin with an economic transformation. Díaz-Canel also spoke of the importance of “leveraging economic partnerships between the state and private sectors, especially at the municipal level; and promoting business with Cubans residing abroad.”

The Cuban president was effectively acknowledging that there is no way for the country to stay afloat without forming an alliance with its private sector. By Tuesday, the government had already made public Decree‑Law 114/2025, titled On the Association between State and Non-State Business Entities, a measure that marks a turning point in Cuba’s economic model. The decree provides cooperatives and micro, small, and medium‑sized enterprises — known as MSMEs — the legal framework they have long been requesting in order to operate. The government has now created a new structure: the mixed Limited Liability Company (mixed LLC), which allows a state‑owned enterprise and a private one to join forces and, among other things, operate bank accounts, decide what to export or import, and gain greater management autonomy.

For years, the Cuban government has restricted private property under the principle that the socialist state‑owned enterprise must remain the central actor in the national economy. Even during earlier crises — such as the so‑called Special Period of the 1990s — when the government was forced to rely on private activity to survive the economic crisis, it avoided acknowledging the existence of a true private sector. Instead, it used terms like “non‑state sector,” “entrepreneurs,” or “self‑employed workers.” It was not until a month after the anti‑government protests of July 11, 2021 — when people took to the streets shouting “hunger” and “freedom” — that the government announced the creation of MSMEs, though only after issuing a long list of prohibitions.

Even so, it was a significant shift for the Constitution to mention “private property” for the first time. Last year, the island had around 9,900 private companies, employing more than 30% of the population. For some time now, these MSMEs have been filling many of the gaps the government is unable to cover. Although their prices are out of reach for part of the population, they are currently the only actors capable of supplying essential goods in a country where basic items are largely unavailable.

Although it remains to be seen how the new measure will be implemented, and even if the decree‑law does grant businesses greater room to operate freely, this does not mean the state will loosen its oversight. Every step taken by these new partnerships will still be monitored by the Ministry of Economy and Planning, which will have control over their every move.

Economist Ricardo Torres, a former researcher at the Center for the Study of the Cuban Economy and now a professor at American University in Washington, warns that the new measure still operates within a “framework of centralization and bureaucracy.”

“These new joint ventures will have to be approved by the Ministry of Economy,” he explained. “Any state-owned company that wants to propose a partnership must receive approval from the corresponding agency.”

The economist also sees “a clear intention on the part of the government to continue dictating the timeline for these processes.” The government, which could now leverage the advantages of private entities, such as their capital or contacts, will decide which companies are established under this law.

“They want to take advantage of the private sector, but without relinquishing their position within the economy,” said Torres.

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