City Journal - The Last Communist City 13min

Cuba has two economies now: the national Communist economy for the majority; and a quasi-capitalist one for foreigners and the elite. Each has its own currency: the Communist economy uses the Cuban peso, and the capitalist bubble uses the convertible peso. Cuban pesos are worth nothing. They can’t be converted to dollars or euros. Foreigners can’t even spend them in Cuba. The convertible pesos are pegged to the U.S. dollar, but banks and hotels pay only 87 Cuban cents for each one—the government takes 13 percent off the top. The rigged exchange rate is an easy way to shake down foreigners without most noticing. It also enables the state to drain Cuban exiles. A million Cuban-Americans live in south Florida, and another half-million live elsewhere in the United States. They send hundreds of millions of dollars a year to family members still on the island. The government gets its 13 percent instantaneously and most of the remaining 87 percent later because almost every place that someone can spend the money is owned by the state. ... A single restaurant meal in Havana costs an entire month’s salary. One night in a hotel costs five months’ salary. A middle-class tourist from abroad can easily spend more in one day than most Cubans make in a year.