Reports from Cuba: Dollarization with a Face Mask

Fernando Damaso reports from Cuba via Translating Cuba:

José Martí and George Washington. Top: In hard currency. Bottom: It had to be.

Fernando Dámaso, 15 July 2020 — Though authorities are trying to hide it, the dollarization of the Cuban economy is moving ahead at a frantic pace. But the formula fully complies with the accepted dogma of government institutions.

Instead of allowing free flow of the dollar and other hard currencies, commercial transactions now require debit cards linked to bank accounts holding foreign currencies. In other words, all hard currency remittances from Cubans living abroad to family and friends living in Cuba. Before anyone can use them to make retail purchases, these funds must first pass through a funnel which allows the state to collect and use them as it sees fit, even before Cuban recipients can make purchases in stores set up for this purpose.

Initially, the stores were intended to sell only “large and medium size” items such as televisions, washing machines, kitchen appliances, electric motorcycles, splits and air conditioners. Now, in a desperate struggle for foreign exchange, they also sell food, toiletries and personal hygiene items.

This means that, if Cubans want to eat and bathe, they must acquire foreign currency (mainly dollars), open a bank account in which to deposit it and use the bank’s debit card in order to make purchases. It is a kind of economic face mask to disguise the dollarization of the economy.

The need for this is perhaps due to some outdated ideological mindset that still persists. In short, the enemy’s currency has been imposed, displacing the convertible peso (CUC) and Cuban peso (CUP), currencies not unlike those used in the well known game of Monopoly and now worth much less value than before. We have gone from two currencies to three: one with value and the other two devalued.

But there’s more: If you open an account, handing over your dollars in cash, you lose 10% of your deposits to an absurd, exploitative tax, whose justification is the economic “blockade” and other nonsense.

As things now stand, any Cuban who does not receive dollars or other hard currency, or who does not have it in the form of cash, cannot open a bank account or get a debit card. Nor will he or she be able to shop in these stores, which are sure to be much better stocked than those which accept payment in CUC or CUP.

This measure was conceived for the sole purpose of allowing the state to collect dollars which it is incapable of acquiring through production or export. Meanwhile, the average Cuban, who does not earn dollars or get remittances from overseas, will grow poorer by the day. This from a “government of the people, for the people” that long ago went from one promising a better life to one of “socialist equality through poverty.”

We’ll have to tighten our belts if we want to survive the pandemic and, even worse, the prolonged death throes of socialism and its failures.