The Economist: Cuba’s growing divide
My recent trip to Cuba provoked extreme cognitive dissonance. On the streets of Havana Teslas and other expensive wheels sit outside bars. Diplomats dine at places like Otramanera, a top-notch Spanish restaurant. I visited an ice-cream shop that imports its ingredients and equipment from Italy; if not as good as Italian gelato, it certainly came close. But these luxuries are available to a privileged few. Scratch the surface and the vast majority of Cubans are suffering, and badly.
It has become a frequent mantra to say life is worse than during “The Special Period in Peacetime” after the Soviet Union collapsed in 1991, taking with it its subsidies and support. Cuba passed through years of economic hardship. This time the mantra is true, according to the long-time Cuba watchers in Washington, DC I’ve spoken to. Take just one example: a woman I spoke to earns 4,000 Cuban pesos per month ($167 at the official exchange rate of 24 pesos to the American dollar, but around 11 dollars on the black market one that everyone uses) in a country where a carton of eggs sells at around 3,000 pesos. Her government-provided rations have dwindled, with items often missing. Little wonder since Cuba today produces almost nothing; not enough eggs, not enough sugar, not enough of anything. Inflation is high and the absurd exchange rate complicates everything. Tourism, an important part of Cuba’s economy, collapsed during the pandemic and has been slow to return.
The most noticeable thing today compared to my past trips to Cuba (I first went to the island in 2005, when Fidel Castro was still in power) was the growing divide between the haves and the have-nots. For a Communist government, there can be little worse than this. But it is partly the result of its far-too-cautious opening. Faced with protests and a struggling economy, the Cuban government in 2021 went further than its previous concession of permitting micro businesses. Small and medium-sized private firms have since flourished, though they are not allowed to become big. Nevertheless, they are crucial to making sure Cubans have enough to eat. But it’s not enough. By not opening up in a way that all can benefit, the government has exacerbated social divides.
This opening, timid as it was, sparked a backlash from hardliners in the government. They do not want to open more for fear of losing control. But the government is out of other ideas. In March protests broke out over a lack of food and power. Record numbers of Cubans are leaving the country. No one can predict how this plays out.
