There's money, and then there's money

Cuba has two currencies: the Cuban, or national, peso, and the convertible peso, which is commonly called the CUC.

Why two currencies? After the Soviet Union fell, Cuba was short on hard currency. I am not an economist but I think "hard" currency translates as money that is worth anything, especially for international trade. That led Fidel Castro, in 1993, to legalize us of the U.S. dollar as currency in Cuba. About a year later, the dollar was replaced by a new kind of money: the CUC. The ultimate plan is get back to a single currency in the future, but that's complicated. Imagine working at a bank in Cuba.
If you are interested in the financial issues, this article from The Economist is worth a read.

What the two-money system means is that Cubans who work for the state, which is most people, are paid in pesos. Imported items and consumer goods are bought with CUCs. There are about 24 pesos to 1 CUC, which is worth almost exactly 1 US dollar. Consequently, people who don't work for the state, like taxi drivers and waiters, earn CUCs make a lot more money than various professionals. The average monthly wage is Cuba is about $22. We spent more than that on dinner. Doctors' salaries were recently raised to $67 per month. Gas, on the other hand, cost about $1 per liter (roughly $4/gallon).

Since hotels, restaurants and taxis all take CUCs, that's the money that tourists use. It creates kind of an economic segregation, since there are places where you just can't buy things - you can't take the local bus, can't buy from certain stores, etc. There are places that take both pesos and CUCs, more and more of them, I learned, as Cuba works toward a single currency.  I had two experiences with this. The first was at the coffee shop in a Havana hotel where we stopped for breakfast. The prices on the sign were in pesos, but since we didn't have any, I asked if they would also accept CUCs. They did, and the cashier dug out her calculator to convert a precise exchange rate of 24 to 1. Our pastries, juices and a sandwich added up to just over $2. The other experience was buying pizza on the street in Viñales. A pizza priced, in pesos, at the equivalent of 75 cents ended up costing about $5 in CUCs. This is what you'd call the dirty tourist inflation rate.

This system has the benefit of protecting Cubans from running out of stuff. As you'll read in my next post, products are often not available in Cuba. Imagine if some tourist, or a Cuban expat, were to walk into the pharmacy and use CUCs to buy up all the cheap medicine. The ones we passed all had 2 or 3 bottles of everything, securely displayed behind the counter. What if some foreigner bought up all the cheap shoes or all the available tools at the hardware store?

I didn't like being excluded from buying whatever I wanted, wherever I wanted to buy it. I grew up in capitalism, and therefore have a right to purchasing power. We could have converted some CUCs to pesos and rode around on the city bus or bought a cheaper pizza. But what would that have accomplished? Would it have satisfied our desire to be morally superior tourists? Maybe we weren't riding around on a tour bus with an English-speaking guide, but we were just as foreign as the rest of them. Getting a few pesos in my pocket wasn't going to change that. And even with the dirty tourist inflation rate, nothing in Cuba was very expensive for us.