Cuba's economy - and the impact US tourism could have

Cuba's economy - and the impact US tourism could have
Tonight at 11: Cuba Rediscovered
Tonight at 11: Cuba Rediscovered
Tonight at 11: Cuba Rediscovered
Published:
Updated:
When you look around Havana, you can't help but think of the 1950s, and it's not just because of the old cars. The truth is that the country has not really evolved much since then. Cell phone coverage is spotty (most Cubans don't have them anyway), there is no Internet, and the grocery stores look like places where your great-grandmother might have shopped. Under socialism, there are no competing products and very few packaged foods. So instead of a row of shelves with things like canned vegetables from competitors like Del Monte, Jolly Green Giant, and Contadina -- you have unwrapped items. Vegetables, meat and rice are measured by hand and poured into plastic or paper bags fore the trip home.

See Cuba slide shows, video, blogs and more!

It wasn't always like that in Cuba. Back in the 1950s, Cuba had a thriving middle class and one of the highest standards of living in the western hemisphere. Then came the socialist revolution, and the U.S. embargo in 1962, leaving the Cuban economy in shambles. So, the Cubans made the proverbial "deal with the devil" -- aligning with the Soviet Union, which pumped about $6 billion a year into their economy. When the Soviet Union dissolved, Cuba took a massive hit, losing more that a third of its economic activity. In Cuba, they call it the "Special Period." If it were in the United States, we would call it a depression.

With its export market shot, Cuba turned to importing - tourists - and today it is the third most-visited country in the Caribbean. Most of the visitors come from Canada and the European Union -- with a few Mexicans and South Americans sprinkled in too. But what they are really holding out for is the Americans.

Despite the conflict between our governments, the Cuban people are ready to embrace those of us from the States. "These people don't hate the American people - never", said artist Xavier Rodrigeuz, "Americans are our brothers." Xavier is an artist who sells his artwork on the El Prado, a pedestrian walkway in the heart of old Havana. To him, more American tourists will mean more sales, and a better economy all-around for Cubans: "It's good for me that's obvious. It's good for all."

See Cuba slide shows, video, blogs and more!

Cubans are banking on it, and even the socialist government is taking some tepid steps toward a market economy. In the mid-1990's, the government began allowing people to run their own businesses out of their homes. People could open restaurants (Paladars) or turn their homes into a Bed and Breakfast (Casa Particulars). They pay a monthly licensing fee and can keep their profits. In a place where the average person makes about 20 dollars a month, private business owners are in a position to earn much more.

But, there are still fundamental problems to address. Just about everywhere you look in Havana, you see wonderful architecture in the buildings. Many are 500 years old. The problem is that many of them look it. The infrastructure is crumbling. The government is beginning to put some of the money from the tourist trade into repairs, but it will be a decades long process. Right now, it is hampered by the fact that the blockade makes it harder to get building supplies.

See Cuba slide shows, video, blogs and more!

Political considerations figure in too. Havana in the 1950s, was like Las Vegas today. It had casinos, organized crime, and corruption. The socialist government of Cuba eradicated that in the early 1960s, and it would take a major shift before the Cubans will allow American companies to come in and re-build that industry. The conundrum is that it would be hard to be competitive with other Caribbean vacation spots without it.

Then there are the property disputes -- more than 5,000 -- that are still unresolved. The Castro government seized all private property in the country more than 50 years ago. It eventually paid reparations to all of the countries involved -- except the U.S. Before any true economic exchange can take place, those disputes would have to be adjudicated. That's only where the complications begin. It will also take years for the positive economic affect of more American visitors to reach beyond the relatively small group of Cubans who have direct contact with outside visitors.

We traveled to a neighborhood known as the "Banquito" -- 10 miles from the center of town. Not only would tourists not know it's there, but they would have little reason to go there. It's is next to a river that floods during the rainy season, filling up the homes with water. The people who live here are the poorest of the poor.

"I don't see Americans here very often," said Elesar Morales who has a Paladar at his home. His restaurant includes a few tables in the front, and behind the house, he has two dozen rabbits who are on the menu. Not exactly the kind of thing that will make American tourists go out of their way.

Overall, closer relations between Cuba and the U.S. should benefit both countries. A U.S. Chamber of Commerce survey says opening up Cuba for business will help generate about $800 million in economic impact in Cuba -- and more than $1.2 billion in the U.S. -- from the get-go. In the long run, undoing 50 years of economic sanctions will take years.

American Steve Rupert, who has been traveling to Cuba for 20 years, said "It will be greatly ironic if the Americans are in fact the ones that come here and save this place, (but) I think it's definitely going to happen." Economically, it will benefit both countries. Eventually. But our governments will have to figure out a way to reconcile the politics first.

See Cuba slide shows, video, blogs and more!
Filed under: