The Land is our Land: Complicated Economic Situation

By Leonor Hurtado

Complicated economic situation

 It was interesting to note that the majority of the members of the cooperatives we visited were older persons, retirees. They explain that most of the younger generation do not want to work the land now, they try to move to the cities, they have academic degrees  and aspire for another way of life.  They also comment that many of the youth want to work in tourism or commerce where, so they think, it is easy to make money.

On the other hand, I learned that recently there have been a lot of economic changes made in Cuba; for example, any person can set up a private business—something that was prohibited before—and the private businesses catering to tourists are very popular.  Another change is that starting in 2008, the dollar and the euro circulate freely and there are two kinds of national currency: the people’s Cuban peso—CUP, and the Cuban convertible peso—CUC (25 CUP = 1 CUC = US 0.86).

#8smll buisness Havana by ET

Private business in Havana

The creation of the two currencies was a government measure to unite (and manage) the foreign currencies circulating on the island. Before 1991, Cuba enjoyed favorable, subsidized trade with the Socialist Bloc. With the fall of the Soviet Union, Cuba found itself with a deficit of foreign currency which forced the government to carry out profound economic, currency and market reforms. To protect its economy, the government created two forms of money and exchange.  It keeps the CUP for salaries and the internal economy and uses the CUC for external commerce and tourism.  This monetary reform complicated the economy overall, and Cubans without access to CUCs (or remittances in foreign exchange) are unhappy with it.  Presently, the government is said to be working on a transition to unify its currencies.

#8asmll venta helad by Leonor Hurtado

Private business in Havana

Cuba has a planned socialist economy, the State possesses most of the means of production and employs 76% of the labor force (Prensa Latina, 2000).  All capital investments are approved and regulated by the government.  These measures —and free health, education and welfare services—erased the enormous economic disparities that existed before the Revolution.  Cuba’s indices of human development (health, education, income, UN 2014) is superior to most Latin American countries, and surpass those of the US’s southern states.  This has taken intense work and sacrifice on the part of the Cuban people. They have had to struggle against the US’s economic and financial blockade since 1960.

Any foreign product can be bought in the supermarkets with dollarized CUC; but you won’t find even basic products like a toothbrush in neighborhood shops.  The regular salary of any worker is paid in CUP, but production incentives are paid in CUC.  Agricultural producers have a production contract with the State that is paid in CUP, but they can sell their excess production in CUC.  I confess I still don’t understand the economic situation. Some aspects seem contradictory to me.

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