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Voices: In Cuba, Economic Contradictions Amid Change

The hotel "Ambos Mundos" which means "Both Worlds," aptly captures many facets of Cuba, argues professor Jose Gabilondo, who recently visited the island. Jose Gabilondo

MIAMI, FL -- In Havana last week, I thought about how much its economy had changed since my first visit in college. At that time, Cuba got Soviet subsidies. After they ended, the island entered its periodo especial en tiempos de paz - its special period in times of peace - a campaign of self-imposed austerity, akin to what the International Monetary Fund imposes on some debtor countries.

An island colleague jokes that Cuba is not a socialist country but a surrealist one. She’s right. It’s not just the juxtaposition of a donkey-driven cart next to the Benetton store in Plaza Vieja. Here contradiction is the rule of economic life.

In Havana's Plaza Vieja, a Benetton store is a sign of tourist-friendly modernity. Jose Gabilondo

Take money and prices. The island has two currencies: the national peso and the convertible peso (‘CUC’), which is a ‘hard’ currency pegged roughly to the dollar and worth 24 national pesos. Government wages are in pesos, but people get CUCs from foreign employers, private enterprise, and remittances from abroad. This results in two economies - a peso economy and a CUC one. The state sets some prices for both, while others float based on market factors.

Some pricing is relational: for the same good or service, nationals pay in pesos, but foreigners will pay a higher CUC price. It’s no permanent solution to inequality, but I like it because Cuba is in a unique situation and tourists here are almost always wealthier than nationals. So even though average monthly wages are estimated at 500 pesos (roughly $20 U.S.), this figure probably does not reflect the real income of those who work in the private sector or who get money from abroad.

Cuba has two currencies: the national peso and the convertible peso (‘CUC’) pegged roughly to the dollar and worth 24 national pesos. Government wages are in pesos, but people get CUCs from foreign employers, private enterprise, and remittances from abroad. 1 Euro is around 26 CUCs or dollars, which equals 620 Cuban pesos. Jose Gabilondo

That said, pent-up demand is a fact of life. A stand-up comedian that I saw joked, ‘If we’re an island, surrounded by ocean, where’s my fish?’ Until recently, state rations included fish, but now more chicken has taken its place.

The island works with two currencies; for the same good or service, nationals pay in pesos and foreigners in the convertible peso (CUC) price.

Visiting Cuba can serve as mental floss against hyper-consumerism because - like the prospect of being hanged - scarcity focuses the mind. Without a foreign credit card or a trip to the Western Union in Guantanamo, U.S. citizens and residents can spend only what they bring. A currency tax makes dollars dear, so I took Euros.

For a tourist, staying within the Treasury's spending guidelines is not hard. Many good things cost only 10 pesos, or about 50 cents in U.S. dollars: a hot dog, bizcocho (crispy pound cake), or a ride in a pre-Revolutionary collective taxis known as almendrones from the Spanish word for the almonds that they resemble. Going to the movie theatre costs 2 pesos and the Cuban law books I use in class sell for 15-25 pesos.

What of Raul Castro’s reforms? Pay attention because – though incremental - they matter. Cubans can now apply for a passport, though for some it’s a difficult and uncertain process. They can swap, buy, and sell real property more easily. A local version of Craig’s List charges 1 CUC a day for advertising real estate. Arguably, a real estate bubble is underway in Havana insofar as property values are out of synch with what people earn. My landlady had been offered 300,000 CUCs for her 3 bedroom flat near the Hotel Nacional. She’s holding out for more.

Layoffs of government workers are routine. Independently, more people work for themselves. . As I bit into one of those 10 peso hotdogs, Eduardo – sitting next to me – explained that he nets 600 pesos a day selling pastries on the street and saves $20 a day, more than many of my friends in the U.S.

Drivers of the diesel-guzzling collective taxis (30 liters a day) can take home 500 pesos a day after paying a hefty 800 pesos for their daily leases. These may not rise to the level of small businesses, but they are micro-capitalism.

Economics aside, for sexual minorities things are noticeably better. Last Saturday night I rode in a ’55 Buick to a gay disco located – surrealism again – in the Plaza de la Revolución, site of Fidel Castro’s famous speeches.In a country that sent gay men to work camps for ‘re-education’ as late as 1968 and that later quarantined those with HIV, this openness is important.

Once seen as a form of ‘bourgeois deviation,’ sexual diversity is slowly being mainstreamed, more so in Havana than in rural areas. Much of the credit for this goes to Mariela Castro – the President’s daughter – for her advocacy on behalf of transsexuals and other sexual minorities. Cuba’s legislative branch has considered legalizing gay marriage, but that remains a distant victory.

Once seen as a form of ‘bourgeois deviation,’ sexual diversity is slowly being mainstreamed, more so in Havana than in rural areas.

Expect more changes. Almost certainly the government will suppress the CUC and align the economy behind the peso. There’s talk of further cuts to la libreta, the ration book that provides Cubans with subsidized access to eggs, rice, sugar, beans, chicken, and other staples.

Raul Castro has announced that he will leave the presidency in 2018. I say he means it.

A friend once described the tenure track for academics as ‘bit by bit, then all of a sudden,’ in that little steps add up - until seemingly all at once - the big goal materializes. That’s how I see these reforms in Cuba.

I wish I could say the same about U.S. policy towards Cuba. Sadly, I think that the current U.S. embargo and its policies are as outdated as that ’55 Buick.

Of course, I have a dog in this race. Visiting this surreal country – my country too - helps me to appreciate what Cuba meant to my family (we left in ’67) and to understand my own complex feelings about negotiating between the two worlds of Cuba and the U.S. Small wonder that each time I leave José Martí International Airport for Miami, a part of me stays behind, waiting till I return.