Cuban economy and politics

US embassy, Havana, blocked by flagpoles erected by Cuban government to block messages displayed on outside of embassy

Because Congress has not confirmed an ambassador to Cuba, our embassy in Havana is led by the Charge d’Affaires, a U.S. Foreign Service officer with long experience in Cuba.  We had the opportunity to be briefed by him and the embassy’s Political/Economic officer about relations with Cuba, the island’s  economy and politics.

bodega--government ration store with minimal merchandise

We also spent an evening, including dinner, with a former official from the Cuban Foreign Ministry (who is a part owner of the paladar where we had dinner), a U.S. Commercial Officer visiting Cuba, and a businessman who consults with U.S. companies interested in doing business in Cuba.

All together, we came away with some fascinating views on U.S.-Cuba relations from different perspectives, and with lots of information about doing business in Cuba.  This requires dealing with the Cuban government, which owns virtually the entire economy, including most of the tourist industry.

restored Edsel for tourists

For the last couple of years, the government has allowed individuals and families to start private businesses in their homes—small restaurants (paladars) and rooms to rent to tourists.  This has resulted in Cuba’s having some excellent restaurants and some very pleasant accommodations in family homes and old villas.  But, recently, the government has begun to tighten restrictions on the private economy, perhaps to ensure that all Cubans have equal economic status, which is very low.  Right now, they are not allowing any new paladars in Havana.  It’s a bit surprising since the tourist infrastructure is generally  poor and experiencing great demand.

privately owned food cart in Sancti Spiritus

Most people in Cuba earn $10 to $25 per month.  The government has just levied a 5% tax on government employees (almost everyone) who earns more than $25 per month.  We talked to a museum guard in one city who told us she worked 8 hours a day, 6 days a week, and earned $10 per month.  Her children live in the U.S. and she is way too poor to ever visit them.  Much less get a visa (which costs $160 just to apply) to do so.

streetside hardware store

We had lunch at a tiny paladar in a city in central Cuba.  Lunch was served in the family’s living room, so we sat at 3 small tables and were served by the family’s matriarch, also the chef, one of her children and a friend.  We used their family bathroom as well.  But, after lunch, they proudly showed us their expanded restaurant, due to open in mid-November, in the adjacent garage that had housed parked cars for the neighborhood.  It’s much less charming, but, they hope, will generate a lot more income.  The owner told us they pay 20% of their revenues to the government as tax for their private enterprise.

No one expects much change while Raul Castro is in charge.  And no one seems to have much insight into the succession—what will happen when the Castros era is over.  Raul is 86 and planning to step aside in 2 years.  Most likely, one of the leaders of the Parliament will be elected.  One person told us that there will be free elections when Raul Castro steps down.

flower shop outside bodega

But, this is as completely Communist a country as you’ll find anywhere in the world, politically and economically, and the leadership wants to keep it that way.  That means that very few people except the political elite are able to live comfortable lives.  Poverty is the way of life.  Those who can participate in the tourist trade, either through private lodging or restaurants or by guiding or working in tourist hotels and resorts, have access to more money through earnings and tips.  That makes a huge difference in one’s lifestyle.  As a result, many professionals with badly-needed skills prefer to work in some part of the tourist industry.

The top sources of foreign exchange are Cuba’s exports of generic drugs and medical personnel.  Cuba has a strong pharmaceutical industry.  Right now, there are 78,000 doctors and nurses working in other countries that pay Cuba thousands of dollars per month for their services.  In turn, Cuba pays these professionals several hundred dollars a month.  The monetary difference is critical to Cuba’s ability to import the food and goods it needs.

horse and buggy are common form of transportation

tobacco farmer in Vinales in his tobacco barn

Doing business with the Cuban government, which includes the entire economy, requires finesse, knowledge and contacts.  Like most countries in the world, building relationships with decision-makers is key to getting things done in Cuba.  As is ingenuity and an ability to figure out how to get around the many regulations and bureaucrats whose success depends on keeping Cuba communist and under tight control.  The result is that people tend not to become problem-solvers, but to wait, instead, for someone to tell them what to do and how to do it.  When Cuba opens up a bit more, I think the economy will blossom because there is so much talent and creativity in the Cuban people.

old Russian tractor used for farming and transport

private, family pottery shop in Trinidad