Iván García, Translator: Unstated
Rigoberto still remembers the smell of the green bills sent monthly from
his brother in New Jersey. "They were so stiff you could stand them up
in a line one behind the other. With those 250 dollars he sent me, you
could buy almost twice as much as now," he remembers, coming out of the
small Western Union in the Carlos III mall, where he just changed 300
dollars.
But in 2005, Fidel Castro was caught by authorities of the U.S. Treasury
Department changing old notes for new, in a count of 4 billion dollars
that Cuban entities had on deposit in branches of the Swiss bank UBS.
This led to a fine of $ 100 million that the Swiss bank paid without
protest, but they ended their transactions with Cuba.
Then a remarkably tense Castro placed a 'revolutionary tax' of 20% on
the currency of his public enemy number one. By the way, the charge is a
tax of 8% on other currencies. As a result, the dollar's purchasing
power fell into a tailspin. Even before the excessive tax on the dollar,
the hard currency stores in Cuba had raised the prices between 15% and
30% on their goods.
Every year, in particular from Florida, the more than 800,000 Cubans who
live there send some billion dollars to their families on the island, by
Western Union, through "mules," or agencies that spring up like weeds
That same amount in 1999 had a purchasing power 1.4 times higher
compared to the present. Here's an example. With $100 in 2011 you can
buy $60 worth of goods versus $99 before. Right now, prices of food oils
in hard currencies have been increased: those of domestic manufacture,
from 2.15 to 2.40 and those imported from 2.40 to 2.60. Oil is one of
the most consumed household products, because the amount assigned by the
ration system — about a cup a person a month, is not enough.
Between the 10% 'revolutionary tax'–since March it has been cut in
half–and the price increases for staples, people see how magic dilutes
dollars sent by relatives.
In 1993 hard-currency stores (TRD) sprung up and spread around the
country. Before that, there were few shops selling in dollars and they
were for diplomats, foreign experts and tourists. But the TRDs were born
with a ferocious tax voracity.
With taxes of around 240% for most products offered. In addition to
raising the dollars so necessary to the half-empty coffers of the
nation, this caused a notable economic strain. As if that were not
enough, Cuban companies, burdened by low productivity and high costs,
happily sell goods for foreign currency in order to be profitable. This
phenomenon we call "closed-circuit production."
According to Orlando, a retired economist, these goods and services
offered in dollars bring about a two-headed economy. "All companies that
operate in foreign currencies, buy and sell their services in that
currency, while their workers are paid in Cuban pesos." The average wage
in Cuba amounts to about $20 a month.
If you make a tour of stores in Havana, you will notice that there are a
lot of domestically produced goods. The absurdity is that many times,
items such as fruit juices, textiles or mayonnaise, cost more than
imported ones.
Economists believe that this phenomenon will delay the unification of
the two currencies: the Cuban peso (CUP) and Cuban Convertible Peso
(CUC). A situation that strongly affects workers, who are paid in pesos
and have to buy an important part of the basic market basket in hard
currency.
If you want to dress in fashion, you have to pay with money in which the
State does not pay you. It's the same if you buy a washing machine. To
repair the 60% of homes in poor condition in the country, you need hard
currency. The worst thing is that to obtain hard currency you can't
depend on the labor force. Unless you are a notable musician,
outstanding intellectual, elite athlete or government official, with the
ability to travel abroad, your legal currency income will always be small.
Only 25% of State employees are paid a tiny percent of their salaries in
hard currency. This happens with ETECSA, the only telecommunications
company in Cuba, that pays department heads $10 to $40 a month in hard
currency. "The ten dollar bill just enough to buy me a bottle of oil, a
box of detergent and some soaps," says Mirta.
That is why remittances are vital to families on the island. The figures
speak for themselves. In one way or another, 60% of Cubans receive
dollars or euros sent regularly by relatives and friends abroad. That
slight majority, from 2000 to date, has seen the purchasing power of the
dollar decline by 40%.
To this, add the global economic crisis engulfing the United States and
Spain, the main countries where Cuban exiles live, many compatriots are
really struggling. And to keep sending the same amount of money in 1999,
even less. Now the money reaches only to eat.
Either way, recipients of remittances are privileged. There is 40% of
Cubans who see dollars only in the movies. For them it's a real headache.
April 5 2011
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