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The town Daniel and Paul like most is Baracoa.
It's on the east cost, about five hours northwest of Santiago if you go by bus (preferably Viazul, $15).
The countryside surrounding Baracoa is breakthtaking and invites you to take hikes into the mountains along beautiful rivers.
In addition to that, you can find there nice beaches.
The people in Baracoa are extremely friendly and helpful.
Seafood is cheaper than anywhere else on the island, and the coconuts are assumed to be the tastiest there.
Here are some important phrases we learned in Baracoa.
They are quite useful when you get hassled in the streets:
If somebody offers you cigars for the 100th time, you simply reply "Quieres comprar pizza?" - i.e. Do you want to buy a pizza? - and the person will smile and stop bothering you.
If you don't understand a deal or think that you are being ripped off, then you should ask "Cual es la mecanica?" - i.e. What's this all about? I don't get it. Again, the Cuban should give you a smile and reconsider his deal. Or he'll just leave you alone.