Anne Nelson

Business Unusual in Cuba

Letter from Havana

Last month, U.S. President Barack Obama used his visit to Havana, Cuba to showcase the promise of enterprise: He met with prominent business leaders and held a special panel for entrepreneurs. A small army of other U.S. executives and business school students flooded into Havana over the course of the month, prospecting for deals. But many of them left disappointed. The opening of political relations between the two countries is long overdue, and the coming months will bring many critical discussions about human rights and other pressing issues. But the conversation opened with economic policy, and what these entrepreneurs have discovered is that normalized trade relations will require them to find a common language, and even a common currency in which to do business.

Like the antique American cars whose worn-out engines have been replaced by ones from Soviet Ladas, the new Cuban economy will remain inefficient even if it acquires a shiny chassis. At the heart of the matter is “La Lucha.” This is the Cuban term for the vast economic system that hovers between the broken official economy and the criminalized black market economy. Any foreign enterprise seeking to do business in Cuba will be affected by its workings.

The official economy is the product of the Cuban Communist system, offering free healthcare and education. A city bus ride costs a few cents, and basic foodstuffs are sold for a pittance. But the system suffers from a lack of supplies and dire distribution problems. Rural clinics are often missing basic medications, buses are scarce and crowded, and it can be difficult for the average Cuban to locate even locally produced foodstuffs. For example, chasing down the elements of a basic Cuban diet—rice, beans, cooking oil, eggs, cabbage, sugar, and salt—can require visits to four different markets and half a day in line.

nelson_cuba_market_rtr1xhi3.jpg Claudia Daut / Reuters

A man eats his lunch in a food stall at a farmer's market in Havana, Cuba, February 23, 2008.

In Cuba, the black market is illegal and carries severe penalties. This has led to La Lucha, an “alegal” channel for procuring goods.

Read the full article on ForeignAffairs.com