A report from Cuba

by Jack McMullen

I traveled to Cuba in November 2013 under a Treasury license granted to the charity, Caritas Cubana, which serves the poor, the elderly, autistic children, children abandoned by their parents or whose parents are in jail. Its directors are Cuban-Americans either born in Cuba or born to Cubans who fled Cuba shortly after their arrival in the US. A group of 19 went on this trip, including the 5 directors of Caritas Cubana.

The charity has a number of facilities throughout Cuba and also operates in the US (mainly to raise funds for the Cuban mission). The government of Cuba tolerates its activities because people with a calling to help the less fortunate do a better job than government bureaucrats. So this Catholic-affiliated organization fills a need the socialist government finds difficult to meet.

The trip to Cuba was wonderful, especially as it was an insider’s view made possible by all the work arranging the itinerary done by Consuelo, the Cuban-American wife of a law school classmate of mine.

On the plus side was the beauty and culture of Cuba, especially the art and music that seems to permeate the country. Also on the plus side the positive and friendly nature of the Cuban people and the congenial group of people assembled for our trip there. I enjoyed meeting and speaking with them all.

On the negative side, here are my notes on the economic and political situation there.

It’s even worse than I thought. Cuba had the highest GDP per capita in the hemisphere save the US and Canada — mainly due to massive US business and infrastructure investment (though proceeds were not well distributed by the Batista regime) in the run-up to the revolution. Still everyone in the cities were semi to very prosperous.

Fidel and the boys outlawed private property and private employment in 1968 — and in record time the distortions introduced turned Cuba into a fourth world hell hole. Three generations often must live together because new housing construction, especially in Havana, was virtually nil. The World Heritage site of Old Havana which in 1940s and 50s looked like renovated Miami does today is crumbling faster than socialist resources can restore the buildings. Many have just collapsed, others are shells.

Teachers now make the equivalent of $15 per month and cannot live on that so leave the classrooms early each day to scratch out a survivable existence (noon instead of 4 PM) — if they show up at all. Everyone must steal from their employer (the gov’t) to barter for their needs. etc. etc. The internet is outlawed and replaced with an intranet which very few have access to and which is constantly monitored. There are government-inspired committees on each bloc which spy on their neighborhoods — just like the Stasi did in East Germany.

Cuba, like Rhodesia (now Zimbabwe), used to be a food exporter. Now, after collectivizing all farms, it must import 80% of its food, almost all of which comes from the US under a humanitarian exception to the embargo. They must pay cash upfront since we don’t trust Cuba for credit. This reality drives a real need for hard currency so they can feed their people who, even with the imports, often cannot find enough food.

The official exchange rate is $1 = 1 Peso. The unofficial rate is $1 = 25 Pesos. The Peso is worthless outside of Cuba. After the Soviets withdrew support with the collapse of the Soviet Union, the dollar became the real currency of Cuba in the 1990s up to about 2002 to the dismay of Castro since it was the enemy’s currency.

The Cubans wanted a cut so created a parallel currency called by the acronym, CUC. Every tourist and visitor must convert hard currency, mainly Euros and dollars, to CUCs. The CUC is also worthless outside of Cuba.

Dollars were then outlawed and Cuba has set the rate of exchange at $1 = .87 CUC. 1 CUC = 25 Pesos. So, in effect, Cuba is taking a 13% commission on every conversion — and takes another cut if you must convert back.

There is much more to relate but Cuba joins North Korea as the last remaining true believers in the Communist model. Cuba is in effect our hemisphere’s Zimbabwe — not quite as bad but only because the regime rules with an iron grip and because tourism and Venezuelan oil have stemmed the hemorrhaging.

Raul is more pragmatic than Fidel (though both came from an academic Marxist background with no real world experience before the revolution). He has begun to introduce very limited market reforms (you can now own a house and a car but only one each), small private businesses (like hair dressers) were just allowed last year, etc. But if the business gets too big, the gov’t gets nervous and usually shuts it down — creating a disincentive for entrepreneurs. Despite that there have been 500,000 new business started since that reform was introduced.

The regime knows its policies have failed (hence the limited reforms) and knows its 11,000,000 citizens also know. They realize they have limited time to improve the economy but they don’t really know how. The 80-somethings ruling Cuba are the same 20- and 30 somethings still in place from the dawn of the revolution in 1956-59.