Cuban Economic Dysfunction over Lunch
Stopping by a tucked away cafe in Old Havana on a steamy afternoon, the shade from the spindly trees beckoned a midday break for lunch. This was the first time we’d found a small, Cuban band playing its way down the call in the heat of the day.
This place probably wasn’t in any of the guidebooks. Of course, there was no way to tell because we didn’t bring one. The tables had a nice mix of locals, so it had to be good. Besides, the sweet sounds from the little quartet were filling the square in front of the Cappuccino Cafe and we were ready for the day’s first cold beer.
The food was like most of the fare in this vibrant historic district, fresh and delicious. It kept our attention until a handsome Latino pulled up a chair at the table next to ours, ordered and settled in with a sweeping observation of the scene. He had an investigative quality in his stare and when he started taking notes in a writer’s journal, our interest was adequately piqued. Coming from Portland, Ore., where you can’t turn around without running into some sort of writer, I tend to leave them to their business while I attend to mine. But being in a foreign country that’s been mostly off-limits to Americans for the last half-century, I mustered my best Spanish and queried, “¿Está usted un periodista?”
Juan Carlos worked for a business magazine in Mexico City and was on assignment exploring the challenges of doing deals with the Cuban government and what the softening of sanctions from the U.S. might mean for other economic development players in the region, specifically Mexico. We could have talked on through dinner and drinks, but Juan had a “fixer” to meet that would help get him in front of the right government officials to ask his questions.
We did have over an hour of lively conversation about Cuban politics, the economic challenges of the region and what roles ideology and corruption played in stunting Cuba’s economic growth. We were both quick to point out how those issues were a way of life in both our social and political frameworks. What seemed most important was the willingness of the Castro regime to move this new sense of openness beyond the diplomatic arena and embrace it when structuring deals and business partnerships with foreign investors.
There are mixed signals from the Cubans when it comes to business relationships. Whether you’re talking about the Chinese or the Venezuelans, Germany or Canada, there is an air of distrust with the Castro machine. While diplomatic ties exist, their formality tends to put a strain on getting things done on any kind of business or commerce timetable. Every company that wants a piece of the Cuban economy has to jump through major hoops with the government in order to establish trade. And trade might be a misnomer. Cuba barely has enough output to take care of its own population, let alone thinking about exporting goods to South Korea, where they are currently getting all their municipal and tourist buses. Yes, they have sugar, rum and cigars that garner attention on world markets. And they do export some of the best-trained medical personnel to developing countries around the world. But Cuba would be hard pressed to negotiate trade deals with world manufactures and expect to find any balance. That puts tourism in the headlights as the economic engine that could make up the trade deficit.
But tourism in Cuba is also has a level of formality that tends to stunt growth. Regardless of the softening of U.S.-Cuban travel policy, the place has a limit to how many outsiders it can actually support. And while the movement to privatize homegrown accommodations has expanded capacity, independent travel around Cuba while staying in “casa paticulares” is not for the faint of heart.
The question I pose to Juan is: “Are there incentives for Mexican business interests to develop business infrastructure in Cuba, when the government controls everything?” His answer was simple: “it’s complicated.” He talked about development projects, as examples, where Mexican interests come in with cash and expertise to build something, like a manufacturing facility or a resort. The Mexican government has some incentives. Juan’s visit was exploring the lingering shady business practices of the Castro regime, particularly where promises are made for certain considerations. He also talked about how the Cuban government underhandedly intimidates potential business suitors with “reminders” of what happens to businesses that don’t respect the government’s policies. It was all a bit shady and Juan would do his best to get to the bottom of it.
The actual business of being a tourist was familiar. No shortage of casas to stay in and restaurants to dine in. Getting around is easily negotiated with the most basic Spanish language skills. When locals found out we were Americans traveling independent of a group or organization, we’d get “está comenzando” it’s started. Tourism on that level has certainly been in place for countries outside “el bloqueo,” the embargo. Cuba’s limited tourism market ranks 185th in the world and income generated from tourist activity is about 2.5% of GDP total. A lot of foreign investment drives tourism development. With the onslaught of Americans visiting Cuba due to the embargo being lifted in 2015, that total is expected to grow to 3% by 2024. Not exactly on fire, or the kind of engine that would heat up the economy for the whole country.
When you talk to Cubans working in the tourist trade, they are quick to point out that some of the changes over the last five years since Fidel turned the reigns over to Raul have been nothing short of life altering. Families that once would eek out subsistence existence fishing, now have mini resorts with diving and snorkeling activities. Our place in Playa Larga, Hostal Mayito, has a kitchen that attracts travelers from the main highway 12 miles away to stop and have lunch or dinner. All by word of mouth and maybe a little help from online travel reviews. It has, indeed, started.
The band is packing up in the mid-afternoon crush of humidity and warmth. Juan Carlos saunters off into the swelter to find his story as we re-hydrate with on last, cold cerveza. It’s a short walk over to the Malecon, where the breeze blows in off the Straits of Florida, making it comfortable to be outside. But it’s right in line with the rest of our experience in Cuba: comfortable. It is foreign in so many more ways than other Caribbean or Latin American destinations. And the fact you’re walking around in a time capsule of architecture somebody forgot to bury is enough to keep any experienced tourist, a little off balance. But, in the final analysis, it is just another cool place to hang out with locals, be intrigued, eat, drink, hit the music scenes, and at the end of the day, feel right at home.
