Havana Cuba Business Travel Culture and Politics

Havana Cuba News

Cuba Politics News

Posted August 30, 2005 by Cubana in Castro's Cuba

Email this article | Print this article | Search Havana Journal        

August 25, 2005

By Bruce Edwards, Rutland Herald

HAVANA ó The old Woolworth’s name remains embedded in the sidewalk on Galliano Street in what was once this city’s bustling commercial district. But that’s about the only vestige of the store ó an icon of American capitalism ó that remains intact from the pre-Castro days 46 years ago.

Inside, the former five-and-dime store would never be confused for a Wal-Mart. Like much of Cuba, the store is frozen in time and in a state of disrepair: cracked floors and mirrors, missing ceiling tiles and escalators that long ago stopped running. Slow-moving ceiling fans have replaced air conditioning.

Now a peso store ó one that accepts only the local currency ó its shelves and display cases are mostly empty. Much of what’s for sale is a grab bag of used merchandise ó from clothes and toys to plumbing fixtures and lawn furniture. People line up at the food counter at the back of the store to buy chicken and bread. The old lunch counter remains in business with Cubans occupying almost every stool on this particular Friday ó a typical sweltering August afternoon in the capital city of 3 million.

At another peso store across town, a long line of shoppers reportedly queued up early that day when word spread that eggs ó a rationed commodity ó would be going on sale.

At a small Havana pharmacy, aspirin and condoms were in stock but not ibuprofen or Vaseline.

In a country known for its 1950s vintage American cars, few Cubans can afford to own one ó or, for that matter, any kind of vehicle. There’s little traffic congestion but plenty of the human kind. Hitchhiking for men and women is a necessary mode of transportation from one end of the island of 11.3 million people to the other. Others wait in long lines or sit on curbs at all hours of the day and night for buses that are packed to the seams.

“You spend half the day standing in line,” said one American observer of Cuba.

Such is life in an economy that still clings to a Soviet-era system of government control over all things.

The economy here operates on two levels: the peso and hard currency.

Cubans receive their housing, health care and education for free. A monthly ration book provides each citizen with about a two-week supply of basic food items (depending on availability).

Among the items included on each person’s monthly ration card: 5 pounds of rice, 6 ounces of beans, 5 pounds of sugar, six eggs every 15 days and 6 ounces of chicken every 20 days.

Cuban workers are paid an average of $12 a month in regular pesos with 24 pesos equal to about $1. The government also issues what’s called convertible pesos that tourists exchange for their foreign currency. Currently, Cuba has pegged the value of each convertible peso at $1.08.

For several years the U.S. dollar was Cuba’s unofficial currency. Walk off the plane and you could use your dollars without exchanging them for convertible pesos. But Cuba dropped the dollar in November and tacked on a 10 percent penalty on the exchange. That penalty is now 20 percent, making the dollar an undesirable currency in Cuba. (Because of the trade embargo, U.S.-issued credit cards are not valid in Cuba.)

Access to the convertible peso, or hard currency, is the lifeblood for many Cubans, who would find it hard to subsist on their rations and regular peso pay alone.

Many receive money from relatives abroad, especially from those living in the United States, though the legal amount that can be remitted has been cut by the Bush administration to put pressure on the Castro regime.

The tourism industry ó Cuba’s No. 1 cash cow ó is also a source of convertible pesos. Chambermaids, waiters, bartenders, tour guides and taxi drivers, who make their living on tips, are the highest-paid workers in the country, far surpassing the wages earned by most professionals like doctors and lawyers. As a consequence, jobs in the tourism industry are the most sought-after in the country. That’s the flip side in the United States, where many of those jobs are shunned as low-paying and undesirable.

Cubans use those convertible pesos in the hard currency or former dollar stores. These government-run stores carry a variety of food and other merchandise unavailable or hard to find in peso stores. But they come with a hefty price tag.

Food imports from the United States are especially welcome, though pricey.

“It’s not as expensive as it may be from other countries, the quality is wonderful, but most of the things are sold in stores that are very, very expensive,” said one Havana resident, who asked not to be identified.

When items can’t be found in the hard currency stores, Cubans with cash can turn to the black market for their needs at even higher prices.

Life isn’t easy on the island, which is slightly smaller in area than Pennsylvania. That’s especially true since the collapse of the Soviet Union ó which pumped $6 billion a year in aid to its communist ally. But many Cubans will tell you they get by and that the 43-year-old U.S. trade embargo ó designed to topple Castro’s rule ó has only made things worse.

After a devastating hurricane in 2000, the United States eased the embargo to allow food and agricultural sales to Cuba on a cash-only basis.

Since then, Cuba has paid $1.3 billion (including shipping and banking fees) for 4.5 million tons of food and agricultural products from this country.

Food imports from the United States have dropped significantly this year since the Treasury Department reinterpreted the definition of cash payments. Instead of a letter of credit prior to shipment, Cuba must pay in advance before ships leave U.S. ports.

From January through June of this year, U.S. exports to Cuba were down 24 percent to $190 million (excluding shipping and banking fees) when compared to the same period last year, according to the U.S.-Cuba Trade and Economic Council in New York.

Food imports and who benefits from them can be a touchy subject.

Pedro Alvarez, the head of Alimport, the government agency that oversees foreign imports, recently took a reporter to task for a story that quoted a high-ranking U.S. diplomat alleging that most food imports go to feed tourists. Alvarez bristled at that suggestion, countering that given the volume of imported food, it would be impossible for the 2 million tourists who visit the island each year to consume that much.

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
Almendares Tunnel in Havana Cuba 1
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