The Black Market

Cuba

From pirated DVDs to homemade pizzas, the black market in Cuba is huge and all encompassing. The bolsa negra, as it’s known here, has become a necessary fixture of the Cuban economy, touching nearly every person on the island and providing goods and services that are otherwise unavailable in the state-run marketplace.

In Cuba, nearly every economic activity is regulated. Raúl Castro has eased up government control in recent years, allowing Cubans with certain jobs the opportunity to work for themselves instead of for the state. This is an important move towards private business and entrepreneurship in Cuba, but the country is still a far cry from any kind of capitalist system. To this day, the state employs four of five workers in Cuba.

cuban-black-market

Cuba’s black market really took off during the 1990s after the Soviet Union collapsed. Shortages on all kinds of goods followed. This led Cubans to do whatever they could to fill in the gaps in the marketplace.

In other countries, the black market is where drugs and prostitution are peddled. In Cuba, it’s where household items, clothing, food, and electronics are sold.

Cubans are a hardy bunch, and rise each day to make what they can from what they have. The verb resolver (to resolve) has become synonymous with making ends meet via legal or illegal means in Cuba. For most people, interacting with the black market is an act of survival, and has simply become the norm.

State employees often steal small items from their place of work — for example, thread to make clothes or flour to bake bread. This is an almost necessary evil given how low salaries are in Cuba. Those with more money may travel abroad to places like Ecuador or Europe and return with items to sell on the black market, including clothing and electronics.

Since the Internet is so heavily regulated in Cuba, the black market is even used to get online. People who are allowed by the government to access the Internet – including doctors and other professionals – may sell time on their accounts to people who would otherwise be unable to access the web. More well-to-do Cubans may also have illegal satellite dishes, which allow them to pick up channels and movies from the U.S.

Most Cubans are self-employed in some way, and use the supplemental income to help them get by on the $20-per-month average salary that is provided by the state. Economists estimate that nearly everyone in Cuba is involved with the black market in one way or another.

cuban-flower-vendor

Pesos convertibles (CUC) are also important on the black market. Some people get this currency by selling things to foreigners, like food or handmade jewelry, while others receive cash sent to them from abroad. It’s estimated that around 60 percent of the Cuban population has access to pesos convertibles. A new wealthy middle class has emerged in Cuba in recent years, and you’ll often see them flaunting items purchased on the black market with pesos convertibles, including cell phones and fancy cameras.

Castro’s government is aware of the black market and has taken steps in recent years to gain some level of control over it. Over 300,000 Cubans now have licenses that allow them to work for themselves; their jobs fall under about 200 categories that the government has deemed acceptable. Even so, these new entrepreneurs complain that taxes and social security payments take over 50 percent of their profits. And because there is no wholesale market in Cuba, it’s difficult to obtain the raw materials that they need to grow their business.

cuban-entrepreneurs

The government is also working to crack down on theft by state employees, and has sentenced workers and officials to long jail terms if caught stealing from the state. In March 2015, a dozen people were sentenced to between 5 and 15 years in prison for attempting to divert millions of eggs to the black market.

The Libreta

Cuba provides all of its citizens with basic food rations through a system known as the libreta. The libreta is shorthand for the ration book that marks the distribution of food and the amount that each person is allowed to purchase. Raúl Castro has flirted with the idea of getting rid of the entire system, but because the subject is so contentious, the issue has been dropped from the party platform. A few items were, however, removed from the government rations, including peas, potatoes, and cigarettes. These items are now available on the free market for a much higher price.

At present, each person in Cuba is allowed the following items per month — 11 ounces of beans, 6 pounds of rice, 4 ounces of lard, 5 pounds of sugar, and 8 eggs. These items are available at local shops known as bodegas. The libreta also outlines who is allowed to purchase certain items; for example, milk can only be bought for pregnant women or children under the age of seven.

cuban-vegetable-vendor

At certain times of the month, however, some items are entirely unavailable. Cuba often blames the U.S. embargo on the shortage of supplies, despite the fact that Cuba buys around 40 percent of its food from U.S. businesses (agricultural products are exempt from the embargo).

A serious problem for most Cubans is that the majority of goods – including soap, toothpaste, and toilet paper – are sold in pesos convertibles, while Cubans are paid low salaries in Cuban pesos (moneda nacional). The markup on the goods is huge (around 240 percent on average), and thus makes daily necessities unaffordable to many Cubans.

Cubans who have access to foreign money – for example, those with relatives in the U.S. – are better able to afford what they need. The same goes for those who work in tourism, as they often receive tips from travelers. However, for elderly Cubans or those who lack sources of foreign currency, it can be nearly impossible to have a surplus of food or money. The rationing program has thus created a dualistic system of haves and have-nots, despite the fact that on paper everyone receives an equal amount of basic food items.