An Observation of Cuba: July 2023
For many U.S. citizens, Cuba travel is still shrouded in mystery after the initial flurry of visits that occurred during the Obama administration. Most of us probably did not know that the Biden administration reinstated a general license for group tours to Cuba under the People to People category back in 2022. However, most of us are also unaware that another general license category, Support for the Cuban People, has always remained open as a means to travel independently to Cuba, without the need for a group tour, even though the Trump administration added new restrictions.
A general license, in layman’s terms, is a self-certification that enables you to travel to Cuba in a way that’s approved by the U.S. Office of Foreign Assets Control, or OFAC. Through this self-qualified license, I traveled to a place so close by plane, yet so far in ideology that was on my “want” list for quite some time, and probably on yours as well.
As a recent MBA graduate from UCLA’s Anderson School of Management, Cuba felt like an “anti-MBA” way to end my studies — a place where all of my capitalist economic learnings could flip upside down in a socioeconomic environment where “privately-owned” remains a fairly alien concept. To that end, I hope to share with you some interesting insights and give you a sense of the Cuban travel experience in 2023.
First off, to travel under the Support for the Cuban People general license, U.S. citizens need to create their own itineraries that prove that the purpose of their trip was not for tourism. There are plenty of blog posts that can help you understand what the structure of such itineraries look like, but the basic Spanish terms you should become familiar with are: casas particulares, paladares, and cuentapropistas. These are all designated names for non-state-owned lodging, restaurants, and businesses respectively that U.S. citizens need to patronize with in order to “support” the Cuban people in a government-approved way.
A name-by-name prohibited list of Cuban government-sponsored hotels is shown on the U.S. Department of State’s website, but my general rule is — if it looks nice, fancy, and/or commercialized, it’s probably not the place for U.S. citizens to visit. When you’re exploring the streets of Havana, these grandiose hotels, such as the Gran Hotel Manzana (pictured above), stick out like a flashy sore thumb in crumbling Havana where basic infrastructural needs lack abundance — so your gut will easily know. Instead, we relied on AirBnB to find lodging and experiences that were run by private Cuban citizens. We loved historic Villa Villegas, which explicitly states on its page: “For travelers coming from USA this is considered a Casa Particular and adjusted to the category support for the Cuban people.”
Our first breakfast at the Villa Villegas casa particular revealed some bread with an eye-catching shape and color, as well as eggs that looked slightly different in color than what we were used to. In Cuba, the state heavily subsidizes certain specific food staples that are allocated to citizens in a regulated quantity. We learned that after the Cuban revolution, private corner bodegas that provided food and supplies for lower-income immigrants to the country were transitioned into government-managed outposts of food. Rations would be regulated and distributed to citizens via markings on an individual paper-based supplies booklet, or Libreta de Abastecimiento, which is still in use today. While seemingly regular in concept, much of these supplies are sporadic, and word-of-mouth is an essential way of knowing when certain products arrive to these shops.
Meanwhile, our confusion was starting to build up. If basic food staples were being regulated, what was going on with the private restaurants we visited, where food appeared ample and prices were listed in dollars? Why is Cuba even accepting dollars when the U.S. trade embargo, one of the most enduring trade embargoes in modern history, is still in effect?
Well, this is where things get really interesting. To super simplify all that has happened in the past few decades — back in 2021, the Cuban Convertible Peso (CUC) — a currency pegged to the dollar and once exclusively used by tourists to purchase was eliminated. The Cuban peso (CUP), or moneda nacional (MN), which the rest of Cuba continues to use, would be freely exchangeable with the U.S. dollar.
For decades after the dissolution of the Soviet Union, and in particular after 2004, the Convertible Peso was used for purchases oriented around imported and tourist-targeted goods, like cigars or specialized foods, which were unattainable to many on the island. The sudden marriage of the two currencies, as this blog warned, was expected to cause “significant dislocation and inflation of the prices of food and basic goods,” now that the two disparate “dollar apartheid” worlds were rapidly blending together.
The result is what you will see, albeit confusingly, as you travel in Cuba in 2023. While many tourist locales will show you prices in dollars, their exchange rate relative to the main national currency of Cuba, the Cuban peso (CUP), varies widely based on where you choose to dine or shop. Thus, even though the government quadrupled its official CUP <> USD exchange rate last year, from 24 CUP to 120 CUP per USD $1, we were seeing businesses charge their own exchange rates of 180–200 CUP per $1, revealing the rapid inflationary pains these businesses were experiencing based on the cost of goods.
Interestingly, by exchanging U.S. dollars to Cuban pesos on the black market (do NOT do this on the literal streets, but with a trusted source!), tourists can potentially get a better deal by getting more Cuban pesos themselves at a high informal rate (ex., 200 CUP to $1) rather than paying a private business directly in U.S. dollars. An informal rate is displayed on this website, which, at the end of July 2023, was at 227 CUP to $1. As you can see, writing on chalk is helpful here, especially when prices of goods are changing week by week.
Confused yet? I haven’t even mentioned the digital “dollar but not dollar” currency that you may also notice while exploring Havana, known as the Moneda Libre Convertible, or MLC. This leads to the final piece of my observations on Cuba — the “dollar stores.” These are shops where Cubans that have access to foreign currency (ex., remittances, tourism workers) can buy a relatively wide (but still sporadically stocked!) range of goods we might encounter in our daily lives, like chocolates and potato chips. One of our guides mentioned she keeps a “maybe list” at the ready in case a dollar store has it available, such as Corn Flakes. Yes, Corn Flakes, something that would normally bore the heck out of an American shopper at Target.
If Cubans can already exchange pesos freely to the dollar, what the heck then is an MLC? Well, because other foreign currencies make their way into the Cuban economy, such as Euros, the MLC provides an opportunity for Cubans to load non-U.S. currency into a plastic card that is then converted to dollars, which can then be used in dollar stores. This website does an excellent job of clarifying Cuba’s incredibly complex currency situation, especially with regards to MLCs.
All in all, our trip to Cuba brought more questions than answers. It reminded me of my recent trip to Israel, the West Bank, Egypt, and Jordan, where the more I saw, the more questions I had about “why.” Layers upon layers of diplomatic and socioeconomic complexity have turned Cuba into a crumbling beauty for tourists, but a mysterious enigma for many economists and business owners, or just practically anyone who is not familiar with Cuba’s turbulent history. I especially want to thank all of the local guides who made Havana’s economic workings more approachable and understandable to the untrained eye like my own.
The last visual treat I got before returning to Miami was seeing shelf upon shelf of tasty Havana Club rum, something I thoroughly enjoyed on my last night in town at the world-famous La Bodeguita Del Medio. I’ll let you explore the Internet rabbit hole of this legendary brand’s modern-day issues on your own time; it was a family-run business by the Arechabalas that was ceased by the government during the Revolution, and has now been witnessing a bizarre consumer war of players that extend from Puerto Rico to France. Again, for reasons of the embargo, this is impossible to see back in the U.S. (and don’t even think about bringing it in, either — as of September 2020, the importation of alcohol and tobacco of Cuban-origin is re-banned!). Remember, the time to visit Cuba is NOW, before a new policy changes or a new ban comes into effect. ¡Disfrútalo!
