#CubaDiaries: Where's the Money in Havana?
Before we dive in,
I need you to hit play on that video below.
Dance, sing, belt it out.
Let all the tension go.
Now that you’re feeling fluffy… let’s get down to business.
By the end of this article, the ONE thing you will walk away understanding is this:
The Cuban government has mastered the concept of macro-economics, and is using that knowledge to manipulate their micro-economic climate to keep government entities rich, and the private (public) sector poor.
You’re probably thinking: “Wow, this just got hot and heavy. I thought I was reading a light travel article that would be stacked with colorful pictures, and fluffy images.”
This isn’t you talking, this is your ego talking—so, please ask your ego to get out of the room. It can come back to you after you’re finished reading.
Disclaimer: I don’t care about governmental entities. I care about people, and their ability to get the most out of life. I have the gift of being able see trends and concepts that the average person is blind to perceiving (four eyes closed). This article addresses common blind spots for most minds, and as your eyes hit this page, your mind ceases to be part of that group—even if it’s just for a few minutes.
My wish for you is that by reading this, you increase your ability to connect with the pulse of Cuba in ways that you wouldn’t be able to if you didn’t read this article. Say “yes” if you’re up for it, or say “no” if you’re not—it’s a freewill choice, all your own.
et’s dive in.
Whoever developed the 99% and 1% mental division in 2009 got their facts WRONG, BIIIIITCH ;)
Do you know how much money you need to make to be in the top 1% of the world’s richest?
Thirty-two-thousand, and four-hundred dollars per year, according to this Investopedia article published in 2016.
I’m pretty sure everyone chanting (and throwing eggs) outside of the doors of Wall Street met the collective household income levels to be included in that top 1% of the world.
So, let me tell you: In places like America—relative poverty can be real in the eyes of the experiencers. However, relate it to dyer poverty seen around the world, and it’s just an illusion. It’s just an illusion: Be thankful for what you have. I mean it.
I know, you’re looking at this, you’re scoping my blog, you’re looking around you, possibly saying: how can this privileged white woman say this shit?!
Well, bitches, I’m not white, and I’ve been to the dark places around the world where children hyped up on drugs bang on the window of your car begging you for food. You stare at their starving bodies, and you don’t know where your money will go once it passes into their hands. You can hand them food, but is that solving the problem? It may just be perpetuating it.
To my surprise, a similar (less extreme) level of poverty was prevalent in CUBA. However, there was no rich faction to contrast the poverty, or perpetuate it! There were just tourists. So the drugs, begging, and starvation weren’t aggressive or even present in the streets of Havana. The people, more or less, are all in the same boat—they are living in poverty, together.
“Where do the rich people live?!” We saw no evidence of there being money, anywhere (even in our overpriced ‘luxury, moderna hotel’).
Seriously, where was all the money??!?!?!?!?! No one could answer this for us.
We spoke to everyone about their financial situations. They were so open, and so happy to share. It’s like they had been waiting for someone—or anyone--to ask. Here we were, ears wide open, ready to re-share their story with the whole wide world.
There are two different currencies that run through Cuba.
One for exchanged foreign dollars (CUC), and one for the local people (CUP).
The CUC, or Cuban Convertible Currency, is for the exchange of foreign money only. Locals do not use it.
The CUC is stronger than the U.S. dollar (the exact exchange rate in January 2017 was $0.87 CUC = $1 USD).
The CUC has a similar strength to the Australian dollar.
The Australian dollar is so strong that it wasn’t negatively affected during the Global Financial Crisis of 2008 (which is insane, every other economy was negatively affected by the GFC).
Outside of the small Aborigine population, there’s almost no poverty within the confines of Australia—but there is extreme poverty in Cuba. What gives?
How could Cuba maintain such strong currency strength on paper, but then exhibit such extreme poverty for the average citizen?
A double currency standard (which is a financial double standard within the confines of a micro-economy).
Locals purchase items based on the value of their own isolated currency, called the Cuban Peso (abbreviated as CUP, or commonly referred to as peso).
Right now, the exchange rate between the two currencies runs as this: $26.5 CUP = $1 CUC.
To put it into perspective, the CUP is the to the CUC as the Mexican peso is to the U.S. dollar.
So many CUPs to one CUC, so many Mexican pesos to one American dollar.
If you look like you ‘could be local,’ you’ll be getting prices in pesos. Listen to the vendors when they speak: are they asking for pesos, or CUCs? If they ask you for pesos, just pay them in CUC.
You make a good living.
You have money in your pocket, and the Cuban people are struggling in ways you and I can barely even understand.
Paying them generous sums, which in their eyes is even just $1 CUC for tip, is a real-time charity donation.
In Cuba, an average worker with a 40-hour work week will make anywhere from $10-20 CUC per month.
They are allowed to keep their own tips, but they are not allowed to keep baseline costs of goods and services (this means, feel free to negotiate with your driver to get a lower rate, but TIP them well!).
Housing prices for a standard apartment in Cuba range from $20-30 CUC per month, which can be three times the average person’s monthly pay.
Think about it: How can a person pay their rent? Multiple workers in the household all working full-time jobs?
And after rent, is there anything left for food? Clothes? Health Care? Personal maintenance?
As reported by the Cuban people during in-person discussions: Their pay doesn’t support them, or their families. There’s barely enough to take care of a portion of their basic needs.
They can’t buy food from government stores, or clothes, or other necessities—like bath soap—because the government has priced consumer goods so high that no local will be able to buy shampoo, let alone shoes!
This double currency is the implementation of economic concept designed to keep the people poor, with minimal food, minimal resources, and only enough available brain power to focus on survival.
It keeps their mind focused away from governmental policies, and away from things that don’t fit within the socialist (but really communist) constructs imposed on the Cuban people.
The government runs restaurants, institutions, and shops that charge obscene prices in comparison to the wage of the average worker. Then, there’s an influx of foreign money from tourists that keeps these shops and restaurants alive.
You would think that this influx of foreign cash would boost the overall economy, helping the average worker increase their earning potential, but there have been a few things set up to prevent that:
1. Limited currency can be brought into the country. You must declare any amount of money brought into the country in cash if it is over $5,000 USD. The standard declaration amount in other countries, is typically $10,000 USD.
2. Currency exchange isn’t so simple.
- ATMS work for accounts that are not American. Sorry bae, if you’re money is in an American account, you can have access to it after you return from Cuba.
- BANKS Banks close at 2:00 p.m., and have massive ques. Banks demand that you use a passport to verify your identity while exchanging money. Your standard Driver’s License may work in other countries, but not this one. When you get to the bank, go to the concierge desk, grab a number, wait for your number to RANDOMLY be called (there is no orderly fashion with this—stay alert). Be careful of which currency you’re trying to convert: One Cuban bank literally refused to convert our Mexican Pesos. They said the quality of our Mexican pesos did not live up to their standards. However, this made no sense. The bills we had were brand new, no scratches, nothing—we even used these same bills with no problem when we returned to Mexico. USD, Canadian Dollars, and Euros are the only bills they are happy to exchange in Cuba. Keep them handy.
- Currency Exchange Offices: Closed at random times. Privately run by hotels. Exchange rate is standard, $0.87 CUC = $1 USD. These places also refused to exchange currency from developing countries, like Mexico.
Is this lack of financial flow all because of disorganization, or is it all by design?
Do you know what happens to people who feel like they are about to run out of money?
Fear kicks in—deep, deep fear. They stay inside. They stop spending money. When they do spend money, it’s only in close proximity to where they are staying. They are afraid of venturing too far out because they are afraid that they will not be able to make it back to home base without running out of money.
Americans live in the lap of luxury (relatively speaking). They rarely experience the feeling of “I cannot buy this due to lack of access to funds.” If they don’t have the cash, they do have a credit card to rack up excess debt.
The access point for purchasing power never runs out… Until you’re in a country where no credit cards are accepted, and it’s a cash-based economy where you can’t access your debt streams (like Cuba). Then, that fear we just spoke about gets amplified, to extreme levels.
When you’re in fear mode, you won’t go anywhere—and the Cuban government knows this. They make tons of money off of you based on this simple psychology!
Don’t fall into this trap. Hotels, and their “recommended places to go” are much more expensive (and less cultural) than the local hot spots. If you stay on that track, your money will run out in a heart beat due to a “tourist pricing” strategy.
Let’s use the example of food:
One light meal for three in the Iberostar Parque Central Hotel was $40-50 CUC, or $45-57 USD.
This meal includes one alcoholic beverage that tasted like it was made with rubbing alcohol, garlic fish that tasted like rubber, and shrimp that still had the intestinal lining (or poop) on its back.
It was fucking nasty, and it was fucking expensive.
We were so disgusted by the hotel, that we HAD to get adventurous (I mean seriously, we can’t eat that shit. We don’t even eat processed food in America).
And guess what—when we ventured out, we found out that local restaurants are the fucking bomb.
There are two types of businesses for locals: privately run businesses and government owned businesses.
If it’s privately run, you’re in luck.
In a privately run business, we ordered the identical meal to what we ate in Parque Central’s restaurant—and guess how much it cost? $14 CUC, or $16.09 USD.
The portions in the privately run business were significantly larger. The food tastes natural, and your alcoholic poison of choice will have no trace of rubbing alcohol.
(While I don’t remember the name of this place, I do remember the directions: Go to the corner of Teniente Rey and Avenida Belgica in Old Havana. Walk three to four blocks down Teniente Rey, passing calle Bernaza, calle Cristo, and calle Villegas. There will be a restaurant on your right hand side. Wooden accents on the inside. That’s your spot!).
on’t get too excited, though, privately owned businesses are regularly targeted by the Cuban government. They watch their profits like a hawk, and when they get too prosperous, they are shut down with no notice, and no reason.
A driver of ours stated, “A restaurant was making so much money after Obama ate there, the government shut them down… Money is power. The Cuban government does not want us to have power… they want to restrict the money of all of us.”
So what will happen if you attempt to go to a privately run businesses, and find out it’s shut down? A government run business will likely be right next door to take its place, and all of its business.
The government employees who run these places will tell you the prices are exactly the same as the privately run business they just shut down.
However, in my experience, I saw an 83% increase in price when compared to prices in a privately run business.
In governmentally controlled restaurants, the food will still be better quality than hotel restaurants—but expect key items like “fish” to not be available--randomly.
On a personal note: If you look even remotely “Cuban,” definitely, definitely don’t display any forms of wealth if you’re dining in governmentally controlled establishment (from your clothes to your make-up, hair, and jewelry). You’ll be interrogated about who you are, where you came from, and why you’re able to enjoy such a luxurious, nice meal.
Restriction is real.
The monetary climate is strange.
Speak to the locals about it. Learn about them. Look for the ways in which you can help them by buying things from them, or by giving them an extra-large tip. These people have families, hungry children, elderly parents—share your wealth with them.
They not only deserve it, but they need it.
Soooooo, where that money at dirty?
It's your hands.
You're not a victim, nor a perpetuator, you're a fucking warrior. Spend it like you missed it.
Let me hear you say uh-ooooooohhhh.