Havana Cuba Business Travel Culture and Politics

Havana Cuba News

Cuba Business News

Posted February 17, 2005 by publisher in Business In Cuba

Email this article | Print this article | Search Havana Journal        

By VANESSA ARRINGTON, Associated Press Writer
Gilberto Sago remembers the time, before the collapse of the Soviet Union thrust Cuba’s economy into crisis, when a pound of pork cost just four Cuban pesos, or about 15 cents.

“Everything was so abundant, and much, much cheaper,” said the retired bus driver, 67.

Today, Sago spends up to 25 pesos - nearly a dollar - for that same piece of meat, and must work an overnight shift guarding a carpentry workshop to supplement his meager pension.

President Fidel Castro says the Cuban economy has climbed out of its decade-old economic slump, but it’s unclear whether new subsidies from Venezuela and China will be enough to improve the quality of life for those in the island’s increasingly state-controlled economy.

In a weekend speech to hundreds of economists at an international conference in Havana, Castro painted a rosy picture of a Cuba with improvements in problematic sectors like transportation and a lessening of the social divisions caused by access - or lack of access - to hard currency.

Castro based his optimism on oil prospects off Cuba’s northern coast and strengthened economic ties with China and Venezuela. China has agreed to invest in the island’s nickel industry and increase involvement in Cuban tourism and telecommunications; Venezuela has promised expanded trade and favorable terms on oil. Cuba and Venezuela recently eliminated all taxes and import duties on each other’s investments and products.

“A new motor named China has emerged, as well as (Chavez’s) Bolivarian revolution,” Castro said.

In his remarks, the Cuban leader contrasted the image of his future nation with the economic suffering of islanders in the early 1990s after the fall of the Soviet bloc ended substantial aid to Cuba’s communist government.

Running out of everything from food to oil to wood for building coffins, and hurt by the tightening of a U.S. trade embargo, the government took measures Castro recalls with distaste: letting U.S. dollars circulate and opening the gates to foreign tourism and investment. The government also had to legalize self-employment in professions from computer programming to auto body repair, and decentralized state decision-making.

Observers at the time applauded the steps pushing Cuba toward a market economy. But Castro viewed the actions as temporary, and waited for signs of economic improvement.

Now he says those signs have come, and he is strengthening the centralized economic system with moves such as last fall’s elimination of the U.S. dollar from circulation and tighter limits on private sector workers.

“The state is reborn, like a phoenix with expansive wings,” Castro said.

Critics, however, say that while Cubans are better off now than during the “special period” of the early 1990s, daily life remains a struggle.

“I do not see real economic recovery,” said Mark Thornton, a senior research fellow at the Alabama-based Ludwig von Mises Institute, which defends the market economy. “Basically, the reason Fidel is optimistic is that ... he’s now found two new sugar daddies: Venezuela and China.”

In Cuba, the government provides free education and health care, heavily subsidized utilities and transportation and a food ration. The island doesn’t have the kind of wretched poverty seen in South American mountain villages or Central American urban slums.

But the monthly food ration lasts most Cuban families less than two weeks, and state salaries averaging less than $15 a month barely begin to cover the high prices of everything from canned food to toilet paper.

Cuban officials estimate some 60 percent of Cubans have access to additional income, primarily through remittances sent from relatives and friends abroad or jobs in tourism that bring in tips and bonuses.

The remaining 40 percent get by on their wits alone.

“They survive, but they certainly don’t thrive,” Thornton said.

In this two-tiered society, a hotel bellhop or taxi driver can make more than a doctor - a contradiction Castro wants to eliminate by regaining state control of the economy and preventing individuals from enriching themselves.

Larry Birns, director of the Washington-based Council on Hemispheric Affairs, said the change could help bring Cuba’s population together, but he expects hard times ahead unless there is an upsurge in tourism and offshore oil discoveries.

“You cannot keep calling on the population to make sacrifices,” he said.

Sago, the retiree, receives a monthly pension of 246 Cuban pesos, or $9.50. His every-other-night custodian job pays 300 pesos, or $11.50 a month. But he also gets help from his daughter, who works for a state tourism company.

Sago lives in a decaying two-bedroom apartment with four others, including his ex-wife. The household has a television, a refrigerator and an old washing machine, but there is no phone line.

Nonetheless, Sago is not dismayed: “Sometimes we want more than we have, but really, we have everything we need,” he said.

For Castro supporters like Sago, the Cuban leader’s enthusiasm is contagious.

“We’re on a road that could bring improvements,” Sago said. In the meantime, he said, “The country is holding itself up. With much difficulty, but yes, we’re surviving.”

Other workers were less enthusiastic, even critical, about the economy, but declined to be identified by name.

“The situation is tough here, people don’t even want to have more children,” said one Cuban, who feared he would lose his job at a tourist restaurant if his name were published. “There is a large percentage of people who don’t have any access to hard currency, and they really have to be inventive to find ways to eat.”


  1. Follow up post #1 added on February 17, 2005 by waldo with 264 total posts

    Above cost of living in Cuba fails to include, evaluate, or compensate for monumental expenses   incured in say the US such as;
    Rent: none
    Home mortage: none
    Property taxes: none
    Fire insurance taxes: none
    Income tax: none
    State tax: none
    County taxes: none
    City tax: none
    Sale tax: none
    Capital gain tax: none
    Social Security tax: none
    Health insurance payments: none
    Dental insurance payments : none
    Optical insurance payments: none
    Senior home payment: none
    School payments: none
    School taxes: none
    Water district taxes: none
    Trash disposal tax: none
    Recycling tax: none
    Whatnot taxes: none
    Whatnot pyments: none

Would you like to add more information?

Only members can add more information. Please register or log in

  • Advertise at Havana Journal Inc
We recommend this AirBnB Food and Drink Experience... Cuban flavors: Food, Rum and Cigars
Images of Cuba
Here on Earth - Cuban art - Painting by Wifredo Lam
Follow Havana Journal
SUBSCRIBE to our Cuba Watch newsletter
LIKE us on Facebook

FOLLOW us on Twitter

CONNECT with us on Linked In

Section Archive
Havana Journal, Inc. BBB Business Review

Member of the Association for the Study of the Cuban Economy