Cuba's Revolution Of Rising Expectations

This story was written by CBS News producer Portia Siegelbaum in Havana.

The old pair fell off the table, shattering the glass lens. When bought just five years ago they cost only 54 Cuban pesos or just over $2. But today, the cost of the glasses reflects the dual economy that plagues nearly every aspect of Cuban life and is one of its most irritating factors.

The Cuban government, the dominant employer, pays workers in ordinary Cuban pesos that can be exchanged at official exchange houses at a rate of 26 to 1 for Convertible Cuban pesos or CUCs.

While it has no value outside of Cuba, the CUC is the only currency accepted at many supermarkets, shops, restaurants and nightspots across the island. Needless to say, these places offer goods not available anywhere else.

This is the system that produced $90 eyeglasses for Matilde's elderly mother. Stores selling eyeglasses in regular Cuban pesos are badly stocked with limited ability to make lens. It is not uncommon to be turned away or put on a long waiting list if your eyeglass prescription is anything special.

Only stores selling frames and lens in CUCs are fairly well stocked with imported products and the markup on these as well as on any imported goods in Cuba can be as high as 200 percent.

The government explains the markup as a way to redistribute income. That is, take hard currency away from those who have it and plow it back into the economy so that the have-nots benefit from it.

Today, as never before, Cubans are voicing their dissatisfaction with the hardships they face. Surprisingly they've been encouraged to do so by none other than Raul Castro, who officially blessed opening the floodgates during a speech last July.

According to Castro, who has now officially replaced his older brother Fidel as president of the country, some two million different complaints were culled from the debate.

Topping the list: the inadequacy of wages, the housing and transportation crisis and the deterioration of the health and education systems, once the pride and joy of the Revolution.

Rafael Hernandez, editor of the sometimes polemical Cuban magazine Temas, says the demands coming out of this nationwide discussion "are very clear in terms of creating a new tempo, a new timing for political change and I think that anyone…in charge of the Cuban government must be aware of this."

Julia Sweig, Director of Latin American Studies at the Council on Foreign Relations in Washington, D.C., agrees. She believes encouraging the discussion has put Raul Castro under "pressure to deliver and to do so quickly."

She says that while it's possible this was not anticipated, in her view, "Raul Castro seems to be acutely cognizant of the bread-and-butter issues the population is demanding and of the demands for greater autonomy from the heavy handedness of the State."

Hernandez and Sweig both see the roots of today's inquietude as lying in the past. Says Hernandez, "I think that the economic situation in Cuba, the way Cubans perceive their own future has changed throughout the last 15 years. That our own perception about what is socialism has changed tremendously throughout the last 15 years and I think that the future depends on that redefinition of socialism."

Sweig says the very survival of the revolutionary values and goals depend on how the government responds to the issues that everyone is talking about.

"The groundwork for the process Raul is now overseeing was laid before Fidel Castro's illness was announced," she points out. "In that sense the transition began even before the summer 2006 with the top leadership of the regime talking about the revolutionary project itself being on the line."

By suggesting the possibility of change, Sweig adds, "Raul has demonstrated that he has built and aims to continue building a political consensus within the government and [Communist] Party to appreciably enhance the quality of life."

In a speech before parliament following his election last month, Raul Castro declared, "We are examining, for instance, everything related to the timely implementation of comrade Fidel's ideas on 'the progressive, gradual and prudent revaluation of the Cuban peso,' …. At the same time, we keep delving into the phenomenon of the double currency in the economy."

It was what the Cuban public wanted to hear. Rumors of the "imminent" upward revaluation of the Cuban peso spread in some neighborhoods.

"I walked past long lines at CADECA [money exchanges] on my way to the bus stop this morning," says Marbelis, who makes her living working for foreigners as a private nurse. "People were exchanging CUCs for Cuban pesos because they believe the value of the CUC is going to drop and are trying to get the possible deal while they can."

The scene she described in the Havana municipality of La Vibora was repeated around the country reflecting Cubans' hopes for an easing of the daily grind.

In 1993, when the Cuban economy hit bottom, the government legalized the use of the U.S. dollar by Cubans, which gave them access to what at that time was a very small number of special shops patronized mainly by diplomats and foreign residents.

The senior Castro, then firmly in control, described the measure as the first inequality to be instituted by the Revolution. It elevated the standard of living of those who possessed dollars while leaving the vast majority of the population in the dust.

But just what would happen if the peso was revalued overnight or a single currency was declared?

"Declaring a single currency which is valid everywhere in Cuba is not going to solve anything," says Michael, a doctor on duty in the recovery room at Havana's Frank País orthopedic hospital.

"Let's say we all get paid in CUCs. In just two weeks, the shelves in all the hard currency stores will be bare," he told the nurses sharing the night shift with him.

Many people agree with him. Shelves at the special supermarkets are often sparsely filled. Many times shoppers confront row after row of cookies and sweets, rather than the basic products they're seeking. Reportedly the instability in the supply of imported goods is a product of the government's cash shortage.

Back at the hospital, the nurses had been complaining that they earned some 200 Cuban pesos less than the cleaning staff. Another bizarre aspect of the current economic situation.

Just a few weeks earlier, the hospital director, Rodrigo Alvarez
Cambra spoke bitterly about the problem. "We are paying more than 500 pesos a month but we're still way understaffed for janitors and nothing we offer convinces them to work during the evening hours."

This situation reflects two problems: one, Cubans generally feel their wages are inadequate making unskilled workers less willing to take dirty jobs, and two, there is a generational change.

Younger workers look down on unskilled, agricultural and blue collar jobs. The mostly highly educated young people believe these jobs are both low-paid and stultifying. The resulting shortage of workers represents another serious threat to economic growth.

Hernandez says what's needed is "Changes to make the economy grow, avoid inequalities, or to decrease the level of inequalities created by the crisis and changes that may allow most people to have access to the market to the consumption market."

Economists point out however that the government has much to do before it can make these changes.

Since 1986, the economy did not grow more than 4 percent, explained economist Juan Triana, speaking to a group of Cuban academics. On the bright side, he noted that today the average growth rate tops 6 percent, even though the GDP growth is falling short of planning.

On the negative side, the increase, he said, is concentrated in certain sectors with basic services, such as education and health care not growing at all.

Unfortunately, nearly every Cuban runs up against the health and education systems every day. One complaint is the shortage of doctors, which the average Cuban blames on the thousands of medical professionals serving in other countries, such as Venezuela.

That shortage has resulted in the closing of neighborhood doctors' offices and longer lines at community health clinics. But the flip side of the coin is that the export of services represents nearly 70 percent of the increase in economic growth.

In addition, the steady supply of petroleum arriving from Venezuela has resulted in an end to the annoying blackouts that plagued Cubans for hours daily and done much to improve their lives.

The government has a lot to do before the standard of living can be raised, says Triana. Among the problems to be solved: the deterioration in technology; inefficiency in agriculture including in low production, low mechanization, and the failure to generate highly productive jobs.

Only the biotech sector, he says, can compete on a world scale but unlike tourism, biotechnology is incapable of motivating growth in other sectors of the Cuban economy.

Tourism, he points out, a major motivating force for several years has declined over the past two years due to regulatory measures and unfavorable changes in the exchange rate.

Still, in his point of view, 2008 offers good perspectives. Triana cites good relations with Latin America, the prospect of improved relations with Europe, particularly Spain, positive and improving relations with China and improving relations with Russia.

He also mentioned new deals with Venezuela, the high price of nickel, sugar and tobacco, the possibility of slightly increasing nickel production, and the secure supply of petroleum. All this, he said, has led the government to plan for 8 percent growth this year.

There is some speculation that the government will try to respond to popular demands for change by moving on issues that do not first require improvements in production and services.

Several sources say that immigration regulations will be relaxed so that people seeking to leave the country, either permanently or temporarily, will have an easier time of it. Others say Cubans with cash will be allowed to stay at hotels previously closed to all but foreign tourists thus increasing profits for hotels operating at half capacity, and that Cubans will be allowed to open cell phone accounts.

All these changes would give an appearance of greater openness. However, most specialists believe that tackling low wages, high prices and the dual currency will take a while.

Sweig thinks Raul Castro is going to have to move on all fronts at once. "I think he will need to do a little of everything: greater freedom to move around internally and abroad, greater purchasing power from wages, which means dealing with the currency issue and greater opportunities for Cuban to provide for their families and see themselves, especially young people, as having a stake in the survival of the revolutionary project. Beans alone won't do it and Raul seems to be aware of this as well."

By Portia Siegelbaum