Cuba’s Revaluing of Its Peso Shows the Country is an Economic Basket Case
By Julio Zangroniz
Economic experts concur that recent measures taken by fidel castro’s regime to “revalue” the island’s peso, its official currency, are proof positive of what a basket case the dictatorship’s economy has become.
In an article in today’s electronic edition of The Miami Herald reporter Nancy San Martin notes that, though the government’s economic measure seems “designed to close the gap in the purchasing power of those who earn only pesos and those who receive U.S. dollars from abroad,” it makes no economic sense “because the communist-ruled island’s economy is not strong enough to back up the 7-8 percent increase in the value of its currency,” according to experts.
San Martin quotes a recent study by Carmelo Mesa-Lago, widely considered one of the top U.S. experts on Cuba’s economy, who terms the currency changes “a symbolic, political decision geared to the outside world and… Cubans who only have pesos.”
The strengthening of the peso is possible, claim Havana officials, because of an economic “surge” due to help from Venezuela and China. The South American country, through the “generosity” of castro puppet Hugo Chavez, provides Cuba with about 53,000 barrels of oil a day for free or near-free terms (suppossedly, in exchange for the “glorious benefits” of having uncounted numbers of Cuban “doctors” running all over Venezuela –as well as an undeterminate number of “security” advisors). And China recently put its capitalistic foot forward by investing in Cuba’s nickel industry at very generous terms to the Cuban dictator.
San Martin’s story goes on to quote two Cubans on the island about how tough things really are over there.
“I lived very well with the money I earned. But then things got tough, the peso lost its value and a lot of people left their jobs because the salaries weren’t worth it,” admits Havana resident Rafael Guerra, 34.
And Oscar Espinosa Chepe, a dissident journalist who also lives in Havana and was released from prison in November, declares: “Since I got out of jail, prices have gone up tremendously. People are very worried.”
How could these things happen under such tightly-controlled conditions, where the government is the sole master of all economic decisions?
There’s probably some undiscovered link to the American Embargo that no one is telling us about!
And does anyone think that fidel’s personal fortune of $550 million –recently documented by Forbes magazine– is in pesos? Even the newly re-valued ones? Hah!
The Cuban regime, no doubt, is banking on the despised “gusanera” outside of the island to continue to bail it out of trouble… by sending more and more dollars to those relatives trapped in the “Caribbean Paradise.” Because “glorious communism” doesn’t have any idea about how to truly improve things.
What do you think would happen if, by some magic miracle, Cubans outside the island stopped sending money for just a few months? More than likely, the dictatorship would have to find ways to make dirt edible.
The Miami Herald story closes with the example of a humble Miami handyman who was forced to increase his remittances to his son in the island, from $100 to $120. His explanation: “I have to send more, so that my family in Cuba doesn’t end up with less. Things have gotten very expensive over there. They can’t afford to lose any money.”
John Kavulich, another international economic expert who regularly monitors the Cuban economy, observes: “The most important facet of what’s going on here is that the basis Castro is using to trumpet these successes is solely the generosity of others” such as Venezuela and China –and those hated exiles. “How is that a sustainable economic policy and how can they be proud of that rationale,” asks Kavulich.
Mr. Kavulich, the answer is, simply, that fidel and his lackeys cannot.
As the Bible says, “Por sus frutos los conocereis” –by their deeds ye shall know them. And their deeds show, plain and simple, that Cuba’s economy is nothing but a basket case.