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Cuba bets heavily on tourism to lift economy

In an effort to boost its economy, the Cuban government is converting the nation of 10 million people into a tourist haven.'s Sean Federico- O'Murchu reports.
The river pools at the national park in Moka are a draw to Cubans and international tourists alike.
The river pools at the national park in Moka are a draw to Cubans and international tourists alike.Roberto Leon / NBC News
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Two wind-surfers caught the breeze on the gorgeous green waters of the Caribbean while couples shed life’s stresses on the silky soft sands, soaking in the 90-degree sun a mere 90 miles from the Florida coast.

About 20 feet back from the miles of uncrowded beaches, elegant hotels catered to visitors’ every whim.

If it wasn’t for the flag fluttering over a nearby naval base — soon to be converted into a pier for private yachts — it could be mistaken for any resort area in Latin America or the Caribbean.

And that is the intent. From Varadero — the crown jewels of Cuba’s beach resorts — to an ecofriendly national park in Moka and the meticulously restored Old City of Havana, the Cuban government is converting the nation of 10 million people into a tourist haven.

Visitors can fly directly into Varadero airport and never experience the harsher aspects of Cuban life, the poor roads, dire public transportation and electricity blackouts. But hardier travelers who do venture outside the resort areas can be assured a warm welcome across the island, where conditions are no worse than many other Caribbean nations.

Betting on tourists
It’s all part of a decade-long shift in Cuba, born in the wrenching aftermath of the breakup of the Soviet Union in 1989 and the end to Havana’s lifeline of subsidies from Moscow.

After five years of economic distress, when the country’s gross domestic product plummeted at least 35 percent, the government of Fidel Castro reluctantly opened the door to tourists.

“In 1992, Cuba had 12,000 rooms for international tourism,” said Oscar Gonzalez, the vice minister for tourism. “Now it’s 41,000. In addition, we have improved in terms of quality as well as quantity as 70 percent of the hotels are now four- and five-star, up from 30 percent.”

The transformation has been a boon to the government, which has little access to foreign currency due to the economic blockade imposed by the United States in 1961.

Tourist traffic has risen at least 10 percent annually and the government expects a record 2 million visitors this year. In dollar terms, tourism now ranks with the oil and mining industries as the country’s biggest earners.

Dollar economy
But in a communist nation that aspires to banishing the income inequalities of capitalist systems, tourism is also a political headache for the Castro government.

As gleaming hotels sprout along the Varadero beachfront, it has been accompanied by a top-to-bottom reordering of priorities: agricultural workers have been retrained, quality-control standards raised, services enhanced to cater to discriminating visitors.

And, more significantly, it has forced Castro’s administration to introduce a dollar economy to service visitors, offer incentives to workers and replenish government coffers.

But the two-tier income system that has resulted also has stirred resentment and a transformation in the workforce. While medical degrees are prestigious, dollar jobs are more useful.

Nowadays, trained veterinarians work as tour guides and mechanical engineers and architects can be found driving cabs in Havana, where they can pick up tips in dollars to supplement their salaries.

They can then shop in the dollar-only stores, usually filled with the same grocery products found in the United States or Western Europe, instead of depending on the ration cards and poorer-quality items in the peso stores.

Some Cubans, even those who back Castro, are upset. “It’s not true that people are starving because they would be dropping dead,” said Eliberto Portades, a 58-year-old who gets about $20 a month from a relative in Florida. “But what happens is that those who have not enough food outside of the ration cards have a hard time.”

Additionally, there are the unique Cuban paradoxes, including that Cubans with dollars to spend are banned from staying in the sleek hotels built in Varadero, Moka and elsewhere. The government says the prohibition is needed to prevent further inequalities in society.

What about Americans
For all the upheaval, Cuba is barreling ahead with tourism development. Tourism Vice Minister Gonzalez notes that tourism generates 200,000 jobs and has boosted other industries that supply the sector.

And he believes that with 41,000 hotel rooms, Cuban has only reached a quarter of its potential.

What’s uncertain is whether the sector can expand much further without American tourists, who are banned from visiting Cuba.

“Some research in United States shows that among the millions of Americans who travel to the Caribbean each year, about 5 million would consider coming to Cuba,” Gonzalez said. “Obviously, that would have a big impact on Cuba if they were coming.”

At the moment, Canada supplies most of the visitors, around 500,000, while the rest are from Europe and other Latin American countries.

Until the Bush administration toughened sanctions on Castro in June, some Americans visited the island, on legitimate educational or cultural exchanges, or surreptitiously on yachts or via flights from Mexico or Canada.

Nowadays, travel licenses are tougher to come by and the Treasury Department is actively pursuing prosecution of Americans who have visited the island without authorization.

The result is that Americans are as rare as Bacardi rum in Havana and even Cuban Americans — who were permitted once-a-year visits home — are only permitted to travel every three years. The administration also has cut back on the amount of money they can bring or send to relatives.

The measures have angered Cuban officials, who say the U.S. embargo has been the biggest stumbling block to economic development over the past four decades.

On Oct. 28, the United Nations will again debate and vote on a Cuban resolution that condemns the American sanctions as inhuman. The United States insists the sanctions are necessary to force the Castro administration to abandon its totalitarian system.

Changes to that approach seem unlikely. Both President Bush and Sen. John Kerry have similar policies toward Havana, although the Democrat has backed easing the curbs imposed on Cuban Americans last June.

But neither has indicated any willingness to allow American tourists discover Cuba for themselves.