The Cuban government, controlled exclusively by President Fidel Castro’s Cuban Communist Party (PCC), has allowed some market-style reforms in an attempt to control an economic crisis that has plagued the country since the Soviet Union’s collapse in 1989.
The USSR’s fall eliminated the sizable subsidies that Cuba had received from its communist benefactor. Between 1989 and 1993, the country’s gross domestic product declined by 35 percent. The health care system, long praised for providing universal coverage, has suffered as medicines and basic supplies became scarce.
Since 1993, the economy has expanded 26.2 percent, but living conditions remain well below 1989 levels. The unemployment rate was down to 5.8 percent in 2000, the lowest in ten years, and the average monthly wage climbed by six percent. Seventy percent of employees on the budgeted payroll received wage hikes of between 15 and 50 percent, and labor productivity rose six percent.
Among Cuba’s recent economic reforms was official dollarization in August 1993, legalizing the possession and use of American currency. But the move widened the economic gap between those with access to dollars and those without. When the government set up state-run dollar stores to sell food, clothing and household items, the amount and variety of goods available at state-run peso stores declined.
The new reliance on dollars has caused people to covet jobs that earn dollar salaries or tips. It is not uncommon for doctors, engineers and other professionals to work for restaurants or as taxi drivers, because such occupations can be more lucrative than their peso-based professions. Dollarization has also reportedly caused growth of the informal dollar-based economy — a flourishing black market and an increase in workplace theft and prostitution.
Investing in Cuba
The opening of the Cuban economy has prompted a significant investment, particularly in the tourism industry. In 370 joint ventures, businesses from countries such as Spain, Canada and Italy have invested over $4 billion in international tourism, nickel and oil production and telecommunications. The U.S. maintains its 40-year-old embargo on trade and financial transactions.
In 2000 there was an 11 percent increase in exports of goods and services, mostly due to larger sales of traditional sugar and nickel products and to the growing popularity of tourism. There were 1.6 million visitors to Cuba in 2000, up 10 percent from the year before.
But investors are constrained by the 1996 U.S. Cuban Liberty and Solidarity Act, more commonly known as the Helms-Burton Act. One of the act’s components provides sanctions against those businessmen who traffic in property once owned by American citizens, but federalized when Castro took power. Over a dozen companies have pulled investments out of Cuba due to threatened action under the Helms-Burton Act.
Yet still investment grows, and so does the number of legally registered self-employed individuals. Artists, real estate lessors, small-scale sugar producers and tobacco farmers are among the 150 occupations that the government has allowed people to pursue privately. For example, 90 percent of Cuba’s tobacco is now grown by 30,000 private farmers.
Despite the legality of private enterprise, the government maintains certain controls. Castro’s government sets monthly fees that must be paid regardless of income and conducts frequent inspections. Critics of the government say they use these efforts to squeeze people out of private business and back to the public sector.
Three quarters of the labor force is still employed by the state, and social expenditure continues to be a large share of total spending. Twenty-three percent of the GDP goes to funding welfare programs, education, housing, community services, defense, and public order.
Despite the government’s dedication to social services, little new housing has been built in Cuba since the 1960s, when Castro solidified his control over the island. Often, three generations live in one apartment, and multi-family occupation of unsafe housing is common. It is believed that these housing shortages may contribute to the remarkably high divorce rate among Cubans.
Transportation has reportedly suffered similar neglect. Few new vehicles have been brought into Cuba since the 1960s, so most people who have cars drive pre-Castro American relics or build cars from old parts. Old buses, called guaguas, and new buses, called camellos, navigate the island crammed with passengers. Bicycles and taxi-bikes are common, and in the cities some people still use horse-drawn carriages. The 30 percent of the population that lives in rural areas usually ride oxen, donkeys or mules. And 100-year-old steam trains carry sugar cane between towns.
Ideology and Education
Success in Cuba often depends on an individual’s devotion to the Castro government. High-level official positions are typically reserved for those who demonstrate a loyalty to the Communist Party, the sole legal party.
The Cuban constitution states all legally recognized civil liberties can be denied to anyone who opposes “the decision of the Cuban people to build socialism,” while the Ley de la Peligrosidad, or Endangerment Law, says anyone who poses a threat to the system can be arrested and incarcerated without due process. There are reportedly between 300 and 500 “prisoners of conscience” currently being held in Cuban jails.
The government routinely monitors people’s level of “ideological and political integration.” Groups organized by city block, known as Committees for the Defense of the Revolution, supervise such socialized tasks as recycling, health campaigns and street night patrol.
Men are required to perform two years of military service between the ages of 16 and 30, although he government has recently added the option of doing agricultural work instead. Throughout their lives, Cuban citizens are encouraged to join government organizations that require them to perform voluntary work in the fields.
The educational system, long hailed as a great advancement of the socialist society, provides universal education and boasts a 95 percent literacy rate, the highest among the Latin American countries.
In addition to evaluating students according to traditional academic standards, teachers assess students and their parents according to their level of political and ideological integration. Any blot on the Cumulative Academic Record means they can be refused access to higher education or the right to freely choose a career.
The government also monitors the population through a Labor Record, which documents ideological conduct, and through mandatory identification cards. Citizens must obtain government permission in order to change homes or jobs.
Exiting the Island
Many people who are unhappy with the government’s tight control over their daily lives have tried to flee the island. Since Castro overthrew dictator Fulgencio Batista in 1959, over one million Cubans have gone into exile legally.
Many have tried to make the journey to the U.S., just 90 miles across the Florida Straits, in makeshift boats or rafts. Thousands have died in the shark-infested waters, been recaptured by the Cuban government, or turned back by the United States. Between 25 – 33 percent of people who have tried to escape have succeeded.
In August 1994, Castro gave his consent to allow anyone to leave the island. Thirty-five thousand people attempted the trip. In the summer of 1999, the de facto U.S. embassy in Havana held a lottery to provide 15,000 people with immigration visas for the United States. Over 540,000 people, out of a population of 11 million, applied.