“The future ain’t what it used to be”, words once uttered by baseball legend Yogi Berra. And that’s especially true for the baseball mecca ninety miles off the coast of Miami, the controversial country of Cuba.
This is my travel diary of a nation kidnapped by a power-hungry son of a landowner, the ever-opportunist Fidel Castro. It was Castro who turned La Habana, a shelter of America’s most famous mobsters once known as “Las Vegas Latina”, into a sad window into the past.
A Brief History of Cuban Politics and Havana’s Most Infamous Hotel
It’s 1955. Cuba was one of the more prosperous countries in Latin America. Fulgencio Batista was still a well-liked dictator. Coming from humble origins, he was the first indigenous president of Cuba. Indigenous, because Fulgencio was partly of African and Taino (Cuba’s native population) descent. A man of the people, because he used to labor in the sugar cane fields and as a fruit peddler.
Military officer Batista thanked his popularity to the ousting of another dictator, Gerardo Machado, in the 1930s.
I had the privilege to stay at the Hotel Nacional de Cuba, once U.S.-owned, which was one of the last battlegrounds of the Machado-regime and Batista (tangled up in an unusual alliance with radical communist students). A bunch of Machado’s army officers sought refuge in the seaside hotel, which culminated in a bloody siege of the Hotel Nacional. A victory for Batista, as it meant that he climbed the military ladder by eliminating opponents.
State-owned Hotel Nacional, nationalized by Fidel and company after his revolution, is another manifest of socialist neglect. As a rule of thumb, hotels in competitive markets are forced to renovate roughly every three years. Yet staying in Hotel Nacional feels like going back in time. Leaking bathtubs are a testimony against state ownership in the hospitality industry.
The iconic hotel had to reopen for tourism in 1992, after the Soviet Union fell. Cuba lived off Soviet welfare for years, but after the Soviet collapse Fidel was desperately looking for alternative sources of income and found one in the Hotel Nacional. In the interim, Fidel used the hotel to accommodate visiting world leaders and as a military stronghold, evidenced by an extensive network of trenches and tunnels below the property.
The United States’ Puppet: Fulgencio Batista
Given that the alternative to Batista was a group of barely drinking-age commies, Batista represented ‘stability’ whereas the rebellious students meant ‘revolution’: in the 1930s, the Cubans still preferred the former over the latter.
For much the same reason, Batista was a friend of the United States. And there was plenty of American interest in Cuba besides U.S.-owned Hotel Nacional. Like many Central American countries, U.S.-companies owned a large share of the land (about 40%), dominated the sugar industry, controlled 90% of mining, and practically the entire energy sector.
From day one, Batista was given generous aid, which was justified with the all-too-familiar anti-communist Cold War rhetoric. While the U.S. told Batista what policies to implement, Batista in turn received weapons to consolidate his political control. Moreover, the American mob also exerted considerable influence, laundering money and building casinos, with Batista raking in anywhere from 10 to 30 percent of all profits, to be deposited in his Swiss bank account. Batista was a puppet of U.S.-interests.
By a strange twist of fate, the very same Hotel Nacional de Cuba, the scene of a violent government overthrow in 1930s, now became the venue of the most infamous gathering of high-ranked mobsters in world history. In 1946, the infamous Havana Conference took place, with “Lucky” Luciano, Meyer Lansky, Frank Costello, Vito Genovese and other heads of the mafia present. This unusual display was later dramatized by film director Francis Ford Coppola in the Godfather II-movie.
As in many other Latin American countries, Batista’s control over the country’s army (remember, Batista was a military officer) ultimately gave him the necessary edge in controlling political outcomes. At first, people were happy with Batista’s coup d’etat, but that didn’t last for long. Soon, Batista oppressed dissidents by any means necessary and was later accused by Fidel of using horrendous torture methods. Many other dissidents were simply executed by Batista’s army. Censorship and martial law were the rule rather than the exception.
Batista was running the country into a cliff and sowing the seeds for another popular uprising. It was just a matter of time.
The Boys Who Became Men: Fidel’s 26th of July Movement and the Cuban Revolution
In probably the most naïve attempt in history to violently overthrow a government, Fidel Castro, his younger brother and 130 henchmen decided to attack the Moncada military base (close to Santiago de Cuba) on the 26th of July 1953.
They failed miserably. Most of the rebels were executed, others were imprisoned and tortured. Fidel was trialed and thrown into jail. In a typical telenovela scenario, the only thing that saved Fidel from execution was the fact that he was married to the daughter of the Minister of Transport, who vouched for him. Despite being sentenced to 15 years in prison, Fidel and Raul Castro ended up spending less than two years in jail and were exiled to the U.S., before moving to Mexico.
Mexico is where the Castro brothers met “Che” Guevara and started recruiting rebels, orchestrating another attempt to overthrow the Batista-government. While Raul Castro and el Che (Argentinian, of course) were fervent socialists, the rest of the rebels were mostly interested in getting rid of Batista. Fidel Castro, as it seems, was first and foremost a megalomaniac: he became a socialist because it satisfied his lust for power: his quest for resources, control and power “married” very well with Guevara’s and Raúl’s socialist ideas.
With little money on hand, Fidel Castro managed to buy a secondhand ship in the United States (called the Granma) and with 70+ rebels on board they headed for the coast of Cuba. Beating the odds of making the crossing alive, they reached Cuba seven days later, seasick, dehydrated and underfed. They were, again, headed for failure.
Batista was forewarned and gave them beating. Only a dozen or so survived: the other guerrilleros were killed, captured or simply gave up and went home.
Nowadays, the Granma is proudly showcased in the Museum of the Revolution in downtown Havana. It is a miracle that more than 70 people fitted on the boat, let alone cross the Caribbean Sea on it. Curiously, the building that now houses the Museum of Revolution was once meant to be the headquarters of the provincial government, with construction starting in 1909. However, then-president Mario García Menocal liked it so much that he decided to turn it into his own presidential headquarters.
It was the very same Presidential Palace where a Catholic student group would attempt to kill Batista in 1957, leading to one of the most violent waves of repression of the Batista regime. Fidel, after coming to power, decided to reside elsewhere and turned the palace into a museum instead. It is now a rather distasteful exhibition of state propaganda in a badly maintained but beautiful structure. Looking at the exhibition, and the average tourist visiting the museum, I couldn’t help thinking that at least some of the poor visitors would come out brainwashed.
Notwithstanding Batista’s initial triumph against the rebels, the survivors (among which Fidel, Raul, el Che and Camilo Cienfuegos) fled to the mountains to regain strength. Yet, even at its height, it is told that Fidel’s guerilla army was only 300 men strong. It was clear that, in sheer numbers, Batista’s army vastly outnumbered Fidel’s guerrilla movement.
The turning point came when an American journalist, Herbert Matthews, interviewed Fidel Castro for the New York Times. Fidel started to conquer the hearts of many Americans, while simultaneously promising to never nationalize U.S. companies, much less turn Cuba into a socialist state. As a result of Fidel’s successful press offensive, Batista’s days were increasingly numbered.
As the revolutionary movement gained ground, helped by locals, Batista was nearing his end. “Batista huye”, goes a famous headline of a Havana newspaper. “Batista runs away”. When Batista asked for support from the U.S. and the U.S. refused, he left the country.
While Batista himself continued to enjoy quite a pleasant life in Portugal after fleeing Cuba (Batista died at 72 years), helped by a generously filled Swiss bank account, his fellow countrymen were not so lucky. They had to endure Fidel’s “revolutionary” government policies. With Batista fleeing, Cuba’s army simply surrendered and stopped fighting the rebels, leaving their fate in the hands of Fidel. The graduate-aged guerrilleros simply barged in, encountering little to no resistance, and took over.
A How-To Guide for Revolutionaries
Another question that made me wonder during my trip was: what was Fidel Castro’s secret behind his rise to power and how was he able to remain in power for an incredible six decades? What was his modus operandi?
I’ll try to take a shot at it:
- Take a national icon or hero from the past and use his image for your own cause (in Cuba, José Martí, or in Venezuela, Simon Bolivar), even though they held different political ideas (he or she is dead anyway)
- Blame any failure on a common enemy (in the case of Cuba, the United States); hatred unites
- Use any failure of the common enemy as a “sign of strength” and frame their failures as “victories” of your own, in order to disincentive dissenters; invest in lots of propaganda touting your “successes” and claiming merits
- Go for short-term gains, solve “the long run” along the way
- Eradicate enemies and diverging ideas at all cost, even among your own ranks; either blame deaths on your common enemy or frame deaths as accident and be sure to honor “your own”. Use propaganda of the dead in your own favor
- Allow dissenters to leave the country, but make sure ties are severed and that they will never ever return
- Declare national emergencies to pass radical reforms, label any radical measure as “temporary” if possible
- Invest in intelligence instead of the economy: spotting dissidents early-on is way more important than bringing prosperity. Prosperity is overrated anyway
- Disarm the populace and replace police chiefs and army officers with friends and allies
There you go: a tried and true recipe for a successful overthrow and sustained dictatorship. Case in point: Cuba.
The Socialist Revolution: How Today’s Cuba Was Shaped
And so it was that the boys became men in 1959. Boys, since it was Fidel Castro (32), together with Che Guevara (30), Raúl Castro (27), Camilo Cienfuegos (27) who took control over Cuba at a young age.
The famous but almost impossible-to-attribute quote “If you’re not a socialist before you’re thirty, you have no heart; if you are a socialist after thirty, you have no head” comes to mind. It was unfortunately the one without head to take charge of economic matters, even though his former deputy Ernesto Betancourt said Che was “ignorant of the most elementary economic principles.” Che Guevara, that is.
The ones allegedly with head – especially the incredibly popular Camilo Cienfuegos – started to be critical of the reforms and the direction of the country. It led to what is assumed a cold-blooded assassin of Cienfuegos. The official story is that Camilo’s plane mysteriously got lost and that Cienfuegos’ death was an accident. Yet it is more probable that Fidel started seeing an adversary in Cienfuegos, who surpassed Fidel in popularity. Afterwards, Cienfuegos was widely used in state propaganda, and it is difficult to object from the afterlife.
The almost mythological phrase “Vas bien, Fidel” (“You’re doing fine, Fidel”), attributed to Camilo Cienfuegos, makes many appearances throughout the country, even though it is more likely that Fidel asked “Se oye bien?” (“Can I be heard?”), to which Cienfuegos answered “No se oye bien” (“They can’t hear you”). Nowadays, Camilo Cienfuegos is honored with a sculpture on the Plaza de la Revolución (Revolution Square), where Fidel would address a million Cubans on important occasions, with Camilo’s face and hat prominently placed on the headquarters of the Ministry of Communications.
Presently, this ministry is in charge of Cuba’s internet, which is ridiculously outdated. State-owned monopoly ETECSA charges Cubans (and tourists) roughly $1 for an hour of WiFi. In a country where many people earn only $20 to $40 dollars a month, internet is still a rich man’s privilege. One needs to purchase a scratch card in a store, where often long queues form, to use the Internet. In general, queues are a part of the Cuban way of life, and even the Internet is not spared from the socialist knack for waiting in line.
“Vas mal, Fidel!”
The joke is that Fidel Castro in a meeting asked for a “dedicated economist”, but Che Guevara, who was more asleep than awake, accidentally heard “dedicated communist” and turned out to be the only one to raise his hand. He became the Minister of Industry, inflamed with the idea of the socialist “ideal man”, who would not respond to economic but moral incentives. El Che was responsible for the Cuban land reform.
Fidel himself did not stay behind. As with many other promises that turned out to be false, Fidel promised elections and a democratic state, but instead guided Cuba into a new era of socialist dictatorship. Despite assuring the U.S. he wasn’t a communist and would welcome foreign investment, he began nationalizing U.S.-owned land and corporate assets, especially factories and banks.
The Fidel regime also imposed rent control, with discounts of 30 to 50 percent on rental properties, a populist’s signature move. Disillusioned land, business and real estate owners fled the country. Investors scrambled and foreign investment came to halt. Fidel also nationalized the press, education, and even art and cinema: he needed control over all four to control the country’s narrative and propaganda.
Hotels and casinos were closed and tourism died. Land was largely nationalized and the remainder was given away to small scale farmers. Tobacco became government’s business, receiving 90% of tobacco harvests for practically free. Buying and selling property became prohibited and even restaurants were closed. Black markets were flourishing, even in basic food staples. The State assumed control over exports.
The reminiscences of many black markets are still around: private restaurants, called paladares, are only permitted since recently. Before the paladares, illegal restaurants were hustling for customers on Havana’s streets. Cigars, too, are sold, illegally, in hidden stores inside buildings.
Moreover, no foreign retail stores can be found in Cuba. Or, at least, they are extremely scarce. International brands such as Mango, Pepe Jeans and United Colors of Benetton do have stores in Havana, selling clothes at exorbitant prices to the nouveau riche, mostly youngsters earning hard currency from tourism. Supermarkets, which did not exist until recently, only carry a few products. Capitalism has been absent for decades but is gradually making a comeback.
Cuba’s Monetary Hassles and Headaches
In 1992, when Cuba stopped receiving Soviet welfare, it did not lower government spending. The result was a large public deficit. But since Cuba was unable to go into debt (the country was cut off from international capital markets), the Cuban central bank ended up buying pesos (CUP) and financing the deficit. Inflation ensued. Price rose 150% in 1991 and more than 200% in 1993 and the exchange rate took a beating.
The Cubans did what any other country’s citizens do when faced with a similar dilemma: they reach for hard currency. In this case, the dollar. Even Cuba, the sworn enemy of the United States, became de facto dollarized. State-owned banks even allowed Cubans to open dollar-denominated bank accounts.
Ten years later, the Cuban central bank began replacing dollars with “convertible pesos” (CUC), which now widely circulate. At the same time, Fidel outlawed the use of U.S. dollars. Now, Raul Castro promised to get rid of the convertible pesos, but no serious attempt has been made so far. It appears that the only solution is to allow purchases in U.S. dollars in Cuba. The only thing that prevents Cuba from dollarizing completely is the fact that many workers are dependent upon government salaries paid in the weaker, nonconvertible Cuban pesos, but – luckily – it seems that Cuba will no longer be able to use the central bank as a source of government funding for generations to come.
The Venezuelan regime seems to suffer a similar fate, as a dollarization appears to be inevitable. But it is a positive thing when abusive governments lose control over their respective currencies and are no longer able to exploit its central bank’s monopoly on the issuance of currency, as happened in Ecuador and El Salvador.
Safe but Socialist? Gun Crime in Cuba
There exists, however, an astonishing difference between Cuba and its bigger brother, Venezuela: gun crime. Whereas in Cuba, gun violence is virtually nonexistent, it is an everyday occurrence in Venezuela. Murder rates (although Cuban statistics are shady) in Cuba appear low, while in Venezuela such rates are sky high. Crime in Cuba is limited to pickpocketing, theft (our cleaning lady “robbed” our hotel shampoo) and swindle (especially by hustling “jineteros” who get rewards for bringing you to restaurants or cigar stores).
Both Batista and Fidel cracked down on gun possession. As a dictator, it is easier to control the country with a disarmed populace. In Cuba, mere gun ownership means 8 to 12 years in prison … a Cuban prison, that is.
The unintended consequence of the disarmament is that the badly lit streets and dark alleys in downtown Havana are probably among the safest ones in the world. Poor and socialist, but safe.
Another factor contributing to public safety was the fact that Fidel Castro, ever the opportunist, used the Cuban exiles in the 1980s and 1990s to offload so-called “social undesirables”. He would sneak prison inmates (many times murderers) and mentally ill onto the boats setting sail for the U.S., basically cleansing the Cuban social fabric.
It is rumored 10% of all Cuban migrants were in fact deported by Fidel. A win-win for Fidel, since he was getting rid of costly prisoners and mentally ill, while at the same time sabotaging his adversary the United States.
Frozen in Time
Most things are and feel old in Cuba. As markets were outlawed in the 1950s, the country grinded to a complete halt. Cuba is like a window into the past, a world that hasn’t advanced for 60+ years. Cuba feels like the famous scene of the Wizard of Oz, but instead of Dorothy stepping from a black-and-white to a color scene, landing at José Martí Airport feels quite like the opposite.
Approximately 75% of cars are old timers. You can find Ford Fairlanes and Falcons, Chevrolets Bel Airs, Chevys, Plymouths but also Soviet quality Ladas and Moskvitchs, often with newer engines that were brought into the country in 2014.
Traffic is no issue at all, since car ownership is absurdly low, an unintended consequence of outlawing car purchases. Of every 1,000 Cubans, a mere 40 (or 4%!) own a car, compared to more than 600 cars for every 1,000 Spaniards or Italians or even 300 for every 1,000 Argentinians. Motorcycles are a rare sight.
In 2014, Cuba began to allow dealerships and car purchases again. But in a ridiculous twist of events, a new Peugeot (a French car, for crying out loud) could cost anywhere between $91,000 to $250,000, making it either impossible or morally objectionable to buy one.
Yet, much of this is about to change. In a decade or two, the streets of Havana will look radically different. Even timid reforms will drastically reshape the cityscape. Cuba, and its capital, will eventually not look much different from other Latin American colonial outposts.
Until that day, however, Cuba is still the best human experiment in the world of how socialism brings disaster and the best place in the world to learn about the economic ruin caused by either well-intentioned or self-absorbed socialists.
Cuba’s Bet on Tourism and the Next Cuban Uprising
Now the country is betting big on private-public projects, especially in tourism. Private capital makes up for the lack of investment and government “creates the right conditions” and provide land. With largely Spanish and Italian investment, huge all-inclusive hotel resorts are built along the Cuban coast. Whereas consumerism was once condemned by Fidel Castro (“Consumerism cannot coexist with planetary survival”), it is now embraced by the socialist regime out of sheer necessity.
The underlying economic model is awkward but surprisingly interesting. It appears that hotels virtually operate in monopoly markets, able to charge room prices that exceed – by large – the prices in a competitive market. The supply of hotel rooms is severely constrained, but perhaps the total revenue earned and divided between the few market participants is higher than a competitive market would allow. Apparently, for many tourists Cuba’s casas particulares (nowadays essentially private and small-scale bed and breakfasts, especially popular on AirBnB) are not a substitute for hotels. As a consequence, hotels are expensive and price-quality is low, especially compared to other Latin American cities.
In return for their quasi-monopolies, foreign hotel developers put up the cash to build the hotel and infrastructure. Government, then, becomes co-owner of the property (holding a 51% majority of shares) in a public-private joint venture, and skims off a large part of the earnings. Then there are some other hotels which are 100% state-owned, but managed by foreign operating companies (Iberostar, Mélia). As rumor has it, the Cuban army has a finger in every hotel pie.
A Cuban-based fund called CEIBA Investments, managed by a fellow Dutch fund manager, even found their way to the London Stock Exchange to raise money for Cuban hotel development. Times are changing indeed, and this time Cuba is going all-in on tourism. Tourism is an understandable choice given Cuba’s many beautiful tropical, white-sand beaches (I had a great time in Varadero, a two-hour drive from Havana, and would have loved to see the other cayos along the Cuban coast).
Yet the attempt to earn hard currency from tourism, by (barely) allowing markets for foreigners while isolating the Cuban people from participating in all this lavish (but condemned by Fidel) consumerism, is a political dead sentence. Whereas before, everybody was equally poor in Cuba, the haves and have-nots are now ever more visible, both in tourist-only stores, in Cuba’s hotel chains and by increasing access to the outside world through the Internet.
This is probably a recipe for another social revolt, hopefully this time for the better.
Capitalism Is Coming, And It’s Coming Fast
The pinnacle of our trip was a “For sale” sign on a façade, something unthinkable a decade ago. Capitalism is coming, and it’s coming fast.
Although quite intrigued, I am still left with more questions than answers: why do Cuban socialists bet on mass tourism when they publicly despise consumerism? Will their economic-driven hypocrisy be tolerated by the Cubans?
Did the world’s least efficient economic system help create the “Cuban way of life” or are Cubans simply born relaxed and laidback?
Why did the Buena Vista Social Club musicians live for so many years despite their daily dose of tobacco?
How long can a country’s structures last without maintenance and investment?
Why would, angry because of all the corruption, the Cuban people entrust their faith to corrupt government, especially in the case of public-private ownership in monopolized markets?
Or simply: what will be the next chapter of economic history in ever-controversial Cuba?