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How Cubans heal their economic
ills
By Robert Plummer. Business
reporter, BBC
News. 3 January 2007.
My defining experience of Cuban economics
came during a visit to the island in 1999.
I was following the Havana tourist trail
by visiting the Floridita bar on the Avenida
Belgica, where American author Ernest Hemingway
used to go for his regular double frozen
daiquiri with no sugar.
Suddenly an old man came into the bar carrying
a stack of copies of the official newspaper,
Granma.
I offered him the cover price, a mere 20
Cuban centavos, but he angrily demanded
more.
I assumed he was charging over the odds
because I was clearly not a local, and went
away thinking that if a Cuban was trying
to cheat a tourist over the price of the
Communist Party newspaper, revolutionary
idealism was definitely dead.
I later discovered that I could not have
been more wrong - about the cheating, at
any rate.
It is established practice in Cuba for
elderly people on low state pensions to
buy copies of the newspapers and re-sell
them to the public for one peso each.
It helps them to make ends meet and allows
their fellow Cubans to assist them without
compromising their dignity.
Chicken tonight
A visitor to Cuba can easily find more
such examples of how ordinary people have
found ways to raise their low standard of
living by operating below the radar of an
inflexible, centralised state planning system.
Many of these dodges do centre on tourism.
For instance, you may wonder why the Saturday
breakfast buffet at your hotel in the holiday
resort of Varadero often includes mountains
of fried chicken - not normally something
you would eat first thing in the morning.
The likely explanation is that the staff
are not expecting you to eat it.
Anything that is left over, they are allowed
to take home - and with the weekend about
to get under way, they are preparing to
go back to their families with enough food
to satisfy a houseful of relatives.
Likewise, if you talk to the young woman
who plays the piano in the hotel bar, you
will probably find that she is a conservatory-trained
musician who realised she could make more
money playing for tourist tips than she
could in concert halls.
Still, at least she has a legitimate skill
to sell, unlike many of her contemporaries
who have resorted to prostitution in an
effort to obtain money from tourists.
'Special Period'
Conditions in Fidel Castro's Cuba were
not always as bad as this, although people
have been subject to food rationing ever
since the US economic embargo was imposed
in 1962.
What really caused Cubans' living standards
to plummet was the collapse in 1991 of the
Soviet Union, which had bankrolled the country's
inefficient economy as a means of irritating
Washington.
The end of the Cold War brought a halt
to plentiful supplies of cheap crude oil
in exchange for Cuban sugar, as Russian
President Boris Yeltsin served notice that
he was pulling the plug on Soviet subsidies.
The rest of the 1990s were known as the
"Special Period" - a time marked
by widespread food and fuel shortages.
The country was forced to come up with
some creative solutions to its problems,
including the creation of the two-humped
"camel" buses - immense tractor-trailers
that can carry a couple of hundred people.
Under pressure, President Castro authorised
a few tentative steps towards a more market-oriented
system. In 1993, the US dollar was allowed
to circulate, while opportunities sprang
up for the small-scale entrepreneur as tourism
became the country's biggest industry.
Turn and turn again
But this modest liberalisation was never
intended to be permanent - and as soon as
Mr Castro felt more confident, he went into
reverse gear.
Since 2000, subsidised Soviet oil has been
replaced by subsidised Venezuelan oil, as
Havana looks to Hugo Chavez to prop up its
tottering economy.
Hugo Chavez visits Fidel Castro in hospital
in Cuba, August 2006 Cuba is now relying
on Venezuelan largesse
China, too, has been providing support
in the form of trade credits, technology
and investment capital.
This change in Cuba's fortunes soon led
the regime to reassert its economic supremacy.
In 2004, US dollar transactions were banned
and a 10% tax imposed on dollar-peso conversions.
As for the self-employed Cubans who run
restaurants in their homes ("paladares")
or rent out rooms to tourists, their numbers
have fallen dramatically.
In 1995, more than 200,000 of them were
officially licensed, but a decade later,
fewer than 100,000 remained.
Cuban officials have stressed that Fidel
Castro's death - which the US has said may
come within months - will not bring any
changes to this rigid system.
Mr Castro's brother Raul, his designated
successor, is just as fiercely opposed to
the free market, and any easing of policy
will not come without a fight.
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