The Internet Travel Guide "Getting to Know Cuba"

Current issue dated

The Cuban Economy

The collapse of the Soviet Union had a greater impact on the Cuban economy than four decades of the US embargo. Since Cuba lost its most important trading partner, the economy has been in dire straits. During the Cold War, 70% of the country's foreign trade was with the Soviet Union. The relatively small country has suffered tremendously since the lifeline was cut to its former benefactor. The total volume of trade has declined from 13 to 3.2 million tons. Despite a rigorous program of economic measures, this big hole in Cuba's public purse cannot be plugged with the remaining income from the export of nickel, fish, tobacco, and citrus fruits. Cuba's import business has virtually come to a halt due to the lack of foreign currency.

Truck during sugar harvest.

After several half-hearted reforms, the government has almost secretly started to restructure the planned economy. The island is opening up to foreign investors. There are already 200 joint ventures, among others with Spain, Canada, and France. The comandante en jefe himself has visited potential trading partners ? sometimes even in civilian clothes.

Tax stamps

The Cubans and putting their greatest hopes in tourism, which opens the door not only to foreign currency, but also to western ideas. In September 1993, the government allowed several professions to begin handling their business in a free enterprise fashion.

Cuban Truck

In 1994, an income tax system for private businesses was introduced to siphon off (in some cases considerable) amounts of money. This led to major protests among the Cuban population since they had never paid taxes before. The most drastic measure, however, was the legalization of the dollar, which deeply affected the Cuban socialist consciousness. Those who manage to get dollars from tourists or friends abroad live a comparatively luxurious life. Salaries paid in pesos is practically worthless. This fact threatens to split the society, which Castro has been able to prevent so far. Castro says yes to capital investments but no to capitalism ? an aim hard to achieve. Castro's crisis managers can be compared to acrobats balancing without a net.