So you’ve heard that restrictions on travel to Cuba have been relaxed and you’re thinking about visiting. Perhaps you’re looking for beautiful beaches and a charming, colonial-era ambiance. Or maybe you’re drawn to Cuba’s iconic revolutionary history. Even if you are utterly apolitical, you may be intrigued by those old black-and-white photos of bearded, cigar-chomping guerillas and their stirring slogans. All in all, it seems like a romantic and unusual vacation spot.
Before you book that ticket though, here are four points to reflect on:
- The island’s reality is rather more sordid
It has taken Fidel Castro a fortune, and no small amount of moral dexterity, to amass 20 homes, a private island, a yacht, and an underwater ecological sanctuary. Yet at the same time he has forced Cubans to make personal sacrifices for the revolution since 1959.
According to journalist Michael Totten, in 1958 Cuba had a higher per-capita income than much of Europe. However, that quickly changed. After shooting his way to power, Fidel Castro enacted drastic socialist reforms that gutted the economy and eventually left it heavily reliant on Soviet subsidies. Then the Soviet Union collapsed and the subsidies dried up. During this mellifluously named “special period in peacetime,” the Cuban economy cratered and GDP dropped by 34%. To survive, Fidel Castro was forced to decriminalize the possession of US dollars and self-employment and open the island to tourism in order to pull in hard cash. His arrangements with Hugo Chávez also helped keep the island afloat. But restructuring and openness a lo Cubano has left no question as to who really controls society.
Nonetheless, a bubble still exists in Havana around the tourist sector, making it a sort of Truman Show for foreigners who don’t see what life is like for most Cubans. Many people who go to Cuba, including American celebrities, just want to have a good time and are oblivious to reality.
- The state holds a monopoly on everything from the news media to selling lobster
In Cuba, the private sector is miniscule, consisting mainly of restaurants and bed-and-breakfasts. Even today, over seventy percent of Cubans are state employees, down from over ninety percent during the 1980s.
Much of the country’s tourism infrastructure is directly owned by the military. The state institution most relevant to tourism is GAESA, a military holding company belonging to the Revolutionary Armed Forces and run by General Luis Alberto Rodríguez, President Raúl Castro’s son-in-law. GAESA controls almost all retail chains in Cuba, as well as gas station chains, foreign trade zones, over fifty hotels, fancy restaurants, and the best commercial real estate in Old Havana.
GAESA is already making a bundle from the recent normalization. Chances are, your vacation will be contributing to the bottom line of one of Latin America’s biggest corporations—one that happens to be owned by the Cuban military.
The Cuban regime also controls foreign companies’ dealings within Cuba. Companies from abroad, like the Spanish hotel company Sol Meliá, negotiate with the Cuban government rather than directly with their employees, and must subcontract Cuban workers through a government agency.
Wages, too, are paid through the intermediation of the state, which pockets the valuable foreign currency and then reimburses its own citizens in nearly worthless National Pesos.
The Cuban government estimates that if the thaw leads to unrestricted travel, the payoff will be an extra $2 billion annually. Two billion dollars ought to go a long way for the island’s 11 million, but without real reform—and because of the dual currency—it will result in embarrassingly little for the Cuban people.
- Cuba’s dual currency creates a two-tier economy that strengthens the regime and disadvantages Cubans
Cuba has two currencies: the National Peso (CUP) and the Convertible Peso (CUC). As a tourist, you’ll mainly be using the CUC—especially since US credit cards are not accepted. Used mostly by tourists and apparatchiks, the unit was introduced in 1994 when Cuba was desperate for hard foreign currency. Its value has been pegged to the USD since 2011. But you’ll buy it at a double-digit premium, and the Castro regime will pocket the difference.
While the CUC will be useful for you to spend at hotels and high-end shops, most Cubans are paid in CUP, the official currency. It is basically Monopoly money, at a rate of just $0.04 to the USD. Most Cubans’ monthly salaries amount to about $20 a month, which means that, as Michael Totten reports, “A middle-class tourist from abroad can easily spend more in one day than most Cubans make in a year.” It also means that the modest tips you leave to waiters or hotel staff in CUC on any given day of your vacation can outstrip a medical doctor’s monthly salary, creating perverse economic incentives and punishing professional achievement.
The regime has announced plans to unify the two currencies in the near future, but the opacity of the policymaking process has led to widespread anxiety that CUC will suddenly be declared worthless. Many have tried to stock up on US Dollars in order to insure against the any decision by the Cuban government.
- This moral nonchalance is working out well for the Castros, but not for Cuban dissidents
The Castros waited patiently for an American President who was willing to normalize relations without demanding reforms that might jeopardize their communist dictatorship. But those expecting the change in US policy to be met with a similar change on the part of the Castro regime should know that Raúl Castro has specifically reaffirmed his commitment to communism in Cuba.
There was no uproar in response. So for good reason the Cuban regime anticipates a fast-arriving time when American tourists, oblivious to the principles that guided Cuba policy for the last 50 years, embrace the diplomatic thaw and take their dollars to see vintage cars, smoke Cohibas, and walk in Hemingway’s steps.
The realpolitik in Cuba is lost on President Obama. According to Frank Mora, director of the Latin-American studies center at the Florida International University, and a former Deputy Assistant U.S. Secretary of Defense under Obama:
“Obama is making a bet that this will help make the Cubans the agents of their own change. I think Raúl is making a bet that this will ultimately strengthen the hand of the Party. There will be people making more money, and some may transfer that economic power to a desire for political reform. On the other hand, those same people may help put the brakes on by supporting the regime, so as to protect their investments.”
This reality is not, however, lost on the Cuban youth or dissidents such as Antonio Rodiles or Ángel Moya, whom the Obama Administration is ignoring. “The idea is not to open a market bit by bit to create a middle class, but to create a monopoly for people within the military,” Rodiles recently told a congressional panel. Those considering a jaunt to Cuba should think twice before sending their dollars the way of the Revolutionary Armed Forces.