The Economy

The Cuban economy ranks 66th in the world with a GDP per capita of $10,200.  At one time, the Cuban economy was quite robust.  In the 19th century, Cuba grew and sold one-third of all the sugar--white gold--consumed in the world.  They have long distilled rum and rolled cigars.   The economy was also quite uneven, at that time, with very wealthy landowners and astonishingly poor field workers.  Corruption in government was endemic.  

Following the Revolution, the state took on the ownership of all means of production, all lodging, all livestock, all buildings, all cars...in short, everything.  Citizens were assigned jobs, provided lodging and food, as well as, free education and healthcare.  Today the state owns 76% of all enterprises and limits the ownership of personal property, yet has introduced reforms that now allow citizens far greater freedoms.  

Cuba pays state workers with the Cuban peso.  The average Cuban worker makes the equivalent of $20US/month.  There is some variation between manual workers and surgeons but very little.  In 1995, Fidel Castro supported the beginning of a dual currency by agreeing to allow US dollars as currency, to be used only by foreign visitors.  The US dollar was subsequently replaced by the Cuban convertible peso or CUC.  One CUC is worth about 24 times a single Cuban peso.  CUCs must be used by visitors.  Hence, if you are a worker in the hospitality industry--a housekeeper; a waiter; a taxi driver, a guide--you are tipped by foreign travelers in CUCs.  A taxi driver, consequently, can make significantly more than a state paid physician.  With few exceptions, goods for sale are priced in CUCs.  This makes certain items completely unattainable for the average Cuban.  The dual currency has had the effect of creating inequality in a society that prices socialism.  It is a significant problem for Cuba and is a problem that must be solved.  Short of a loan from the IMF, which would support the transition to one currency, it is hard to say how the problem will be resolved.

All Cubans receive monthly rations from the bodega, which were quite generous in the years of Soviet partnership but were severely restricted with the Soviet Union collapsed and Cuba had to go it alone.  Milk, for example, is provided only to children, seven years of age and younger, in a powered form.  Each citizen receives seven pounds of rice each month.  There are a few "general stores" which offer one style of basic black work shoe; jeans; tee-shirts, blots of fabric and a range of dry goods.  Most are priced in CUCs.  Produce is sold on the street side or in a community farmer's market.

While the visitor can buy fine art, rum, cigars and trinkets, there is virtually nothing else for sale.  Hotels were run by the state for decades.  Under recent reforms, Cuban is now entering into a number of business partnerships.  Our Havana hotel was owned 60% by Cuba and 40% by Iberostar, which hires Cuban employees who they train.  

The Cuban people are hoping that Raul's reforms will lead to a more stable economy and one where all its citizens can grow economically.