Cuba: Two Currencies, Infinite Problems

What’s up with the two currencies?” This is the question I heard without fail every time I met an older US American on the tourist circuit in Cuba. Those who have never traveled to the island nor studied it in depth may not know that the country operates a system of doble moneda, or two currencies. One of these, the CUC, is valued at 24 or 25 times more than the other, the Cuban peso.


The goods and services that the Cuban peso can purchase pale in comparison to those that the dollar equivalent currency CUC can offer. And who has access to the CUC: workers in the tourist and entertainment industries, prostitutes and hustlers, those involved in the informal economy, top tier athletes, people who receive remittances from abroad and some lucky others. The rest of Cubans, the vast majority of workers on the island, are paid in Cuban pesos, which they must exchange, at an unequal exchange rate, for CUC if they wish to buy any luxury item like furniture, electronics, entrance to a club, etc.

In my mind this constitutes economic violence against those Cuban who have little to no opportunity to earn CUC. The current system, in which certain stores sell goods in CUC and others in Cuban pesos, creates a physical separation of the two economic worlds inhabited by Cubans. Though it may sound complicated and confusing, once in Cuba it is easy to tell the difference between the two types of stores. CUC stores and markets are bigger, nicer, better stocked and better organized compared to their peso counterparts. It is the difference between a supermarket and a poorly-stocked storehouse.

What I mean to say is that this system tramples all over the social contract laid out by the Castros’ socialist revolution.

'To fight for social revolution in America is not a utopia of the crazy or fanatics. It is to fight for the next advance in history'
‘To fight for social revolution in America is not a utopia of the crazy or fanatics. It is to fight for the next advance in history’

The good news: in late October of 2013 Raúl Castro announced the beginning of the end of the dual currency. Unfortunately, Castro has not yet detailed a formal plan, so Cubans are stuck wondering when the unification will occur. And for a people who have seen so many ‘announced’ government plans be delayed or scrapped, this uncertainty is unsettling. But this is not the bad news.

The real bad news: I don’t think it will matter so much. The unification will certainly simplify life for Cubans and help make the economy more efficient, but it is far from a sweeping change. For Cuba the unification of these currencies is only the first of many steps needed to combat the people’s economic woes.

Last fall I wrote a long research paper on this subject, but viewing the reality was much different. After only a few days in Havana it quickly became apparent to me that there is a sizable portion of the Cuban population that live everyday in search of the CUC. It made me sick that a government could literally separate the haves and have-nots in such a stark manner. Even though inequality exists in all parts of the globe, it seems a little more gruesome when the government purports to uphold social equity as one of its chief principles. This made it all the more strange when I soon realized that the dual currency was not really to blame.

Yes, it creates confusion for those not familiar with the system. Yes, it burdens Cubans waiting outdoors in long, slow lines to exchange money. Yes, it is a concrete manifestation of the two economic realms that exist in an increasingly unequal society. But the dual currency is as much a scapegoat as it is a legitimate issue.

The government has portrayed the dual currency system as a necessary evil that it was fighting to get rid of, but officials rarely mention that they first created this system instead of instituting more sweeping, radical changes that would have undermined the previous governmental control of the economy. The state has made it sound like it stands with the Cuban people in a fight against the doble moneda, but the state operates and continues it. The two-currency system is a problem and it needs to be ended, but once unification occurs I think that Cuba will find out that that was only the beginning.

Esencia CasaEnLineaThe real problem is that Cuba has developed two classes of economies, which are represented through its two currencies, but would still exist even if there were only one. There is the class that for one reason or another can purchase big screen televisions, that live in air conditioned homes, that eat at expensive restaurants; this is a small class, but it exists and it is growing. And then there is everyone else, the mechanics, the teachers (including highly educated college professors), the bus drivers, the low-profile athletes, and basically anyone on the government payroll that doesn’t receive favor from the Communist Party. This is the class that lives six people to one minuscule apartment, that takes the vastly overcrowded bus two hours to work everyday, that can barely afford to eat ham and cheese sandwiches while others in the same neighborhood dine at Havana’s fanciest restaurants. This is more than just an issue of two currencies.

A poll that I recently read on the state news outlet Cuba Debate asked users what they thought the most pressing economic issue on the island was in 2013; 67% said the dual currency. Trailing behind were: the authorization of non-agricultural cooperatives (17%), the increase of social objectives in state businesses and entities (11%), and a commercial agricultural experiment in Havana, Artemisa, and Mayabeque [the capital and its two surrounding provinces] (5%).

Instead of fixing this dual economy, everyone focuses on the unification of the currencies, which is less like a finish line and more like the first hurdle of a 400m race.

Even with the equalizing of the currencies, or the elimination of one, the average Cuban salary will still sit at just over 480 pesos per month [around USD 20]. Recent relaxations on economic restrictions mean little when salaries remain so low. For example, just a couple weeks ago the government legalized the selling and buying of cars through state dealerships, but a used 2009 minivan would set you back $110,000 in Havana (or 5,500x an average monthly salary).

Even Cubans with families sending money from the United States can’t hope to buy 99% of the cars on these lots. This is not a problem with the double currency; this is problem with the state and the economy as a whole.

The problem is that the economy does not produce or operate efficiently. The biggest sources of income for the island are tourism and remittances to Cubans from family abroad. But Cuba did once produce, and although its industrial sector was propped up by Soviet subsidies, slow insertion into the market could have made the Cuban economy viable. This is what the government hopes to do now, but with foreign investment and tourism profits bringing capital to the island instead of Cold War favors. Unfortunately authoritarian governments are not known for their efficient spending, so we will see if Raul puts this money towards further diversifying the economy and opening up options and freedoms for his compatriots.


For all of the friends and acquaintances I made in Cuba, and for the 11 million other cubanos, I sincerely hope this is the case. And I hope that the future will be bright for the island, so that it may become the ‘Pearl of the Antilles’ once again.


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