Reports from Cuba: King Dollar rules Cuba more every day

Laura Rodriguez Fuentes reports in 14yMedio from Santa Clara via Translating Cuba:

King Dollar Rules Cuba More Every Day

With the arrival of new dollar stores — stores that accept only US dollars — Santa Clara residents have seen the reappearance of consumer products that had been in short supply for months. 

The seller of dollars suggests moving from his place on the sidewalk so that the park surveillance cameras do not record him red-handed. He walks to a nearby passageway of a family building and from his wallet he extracts a considerable bundle of bills: Cuban national currency (CUP), Cuban convertible pesos (CUC), and US dollars.

The clandestine operation is carried out in a few minutes with a good margin for the money changer, who returns to the park where the transaction began.

“Buddy, are you going to exchange?” he murmurs with dissimulation and fear of the authorities, marketing his itinerant currency trading business to those who are on their way to one of the state exchange houses near the place.

Since the elimination of the 10% tax on the dollar was announced last July, among other economic measures, this 50-year-old money trader has bought and sold more currencies than during the first seven months of 2020.

He did not know that the Government was going to repeal the tax but he was aware of the rumor that stores in freely convertible currency in Cuba were going to reopen with a huge supply of essential products in the midst of the pandemic.

“Rumors in Cuba run fast,” says the money changer, who prefers that his name remain anonymous. “Many people who traveled or whose relatives brought them dollars before the pandemic, began to sell them to us because it was better than exchanging them (at the official exchange houses (Cadecas).”

“However, since the end of last year there has been an unusual increase in the demand for foreign exchange,” explains economist Ricardo Torres in his study The foreign exchange market in Cuba, “due to the creation and expansion of the domestic supply of goods in Cubain freely convertible currency.”

The expert also believes that, added to the limitations of the financial system in offering foreign currency, the worsening of the shortage in the network of stores in CUP/CUC and the decrease in tourist income due to the pandemic, the appetite for the dollar has increased.

“Having dollars, until now, did not make you richer than others, because a CUC, on the street, was worth more than a dollar,” says the money changer. “Now everything has changed. The State does not want us to be the ones who handle the dollars.”

Apart from the deepening of the black market for dollars, the measures have created a new social class, made up of people who can better survive the pandemic by having relatives abroad. With the restrictions, remittances have become a lifeline.

According to the calculations of several economists, a third of the population residing in Cuba receives remittances regularly. It is a market that moves, in cash, more than 3.7 billion dollars annually through formal and informal channels.

Most Cubans who receive money through Western Union or through the cards issued by the Cuban financial company Fincimex must withdraw the money in CUC and then change it to national currency (CUP).

But on September 28, the US State Department further restricted access to dollars for Cubans by adding the American International Service to the list of companies under sanction.

This company is in charge of processing dollar shipments to Cuba through Fincimex, which belongs to Gaesa, the military consortium that controls the Cuban economy. Due to all these obstacles and sanctions and because there is not always currency in the state exchange houses, the population resorts to illegal resellers.

At the beginning of September in the streets of Santa Clara, if someone wanted to buy dollars, they would have received 1.50 CUC for each one.

But if the person wanted to sell, they only got 1.25 to 1.30 CUC for every dollar. Up to now, the price can vary according to supply and demand, just as it happens in any capitalist country.

“For a long time, the informal exchange rate remained relatively stable, but this changed around the summer of 2019 when, for the first time since the replacement of the dollar by the CUC, the value of the US currency exceeded that of the convertible peso,” says Torres.

This reality is known first-hand by the money changer: “For every one hundred dollars we were giving 110 (CUC),” he says. “In recent weeks things have been tough, [the authorities] have their eyes set on us, because of the dollars,” says the currency seller.

Since before 6:00 in the morning, in the surroundings of the Praga store, in Santa Clara, there are about 50 people who have already taken their turn (held for them by  intermediaries — called coleros — in line) to enter and buy basic products that have been in short supply in their homes for months.

This two-storey market, located on the city’s central boulevard, was chosen by the authorities from among the nearly 5,000 existing in the country for the sale of food in US dollars.

In Cuba there are 72 establishments like this one.

The line in the narrow street is guarded by police officers whose duties reflect the state of scarcity that Cuba is experiencing: in addition to ensuring social distancing, they must prevent the sale of places in the line, prevent crowding, and ensure no one waits in line overnight.

There are also people who want to buy basic products in these stores but do not have dollars, such as Lisandra Alemán, a Santa Clara mother of two children with no relatives abroad, who considers the government measure an abuse.

“Why some yes and others no?” she asks. “They tell me that inside the store that sells cleaning and personal hygiene products there is everything. Right now in my house there is not a drop of detergent to wash with and I see so many people pass by with crates full of things that I need. I cannot and will not be able to shop there.”

The opening of both supermarkets in Santa Clara and the elimination of the tax on the sale of dollars has contributed to exacerbating the fragmentation of Cuban society.

Those who do not have a relative abroad usually approach the establishments and look through the windows of the stores. They are mostly elderly and low-income people. The guards at the doors prohibit entry only “to look.” In addition, an electronic card is required in hand together with the identity card that supports it, in order to shop in those stores.

In this same circuit there are other stores that sell products in CUC or its equivalent in Cuban pesos and that have been completely out of supplies for months.

Dunia Machado, a girl living in Corralillo, a coastal town in Villa Clara, who claims to have come to the provincial capital on vacation, was impressed with the store’s merchandise in freely convertible currency.

She and her mother approached the windows with another group of curious people in a kind of self-flagellation.

“I came with the hope of buying a shampoo in the normal stores, but of course I did not find anything. They say that inside [the store] Soap and Water there are all kinds, but that’s in dollars and we don’t have them.”

Of the foreign currency stores in the central Santa Clara boulevard, one sells only clothing and footwear, another is intended for products for newborns, and there are only two where they sporadically put out merchandise available in CUC.

The so-called Ten Cent, one of the largest markets that existed in the city, currently operates for State online purchases of the State e-commerce platform TuEnvío, which collapsed the first day it was put into operation.

Both supermarkets are supplied, one can observe with the naked eye, a large number of products that have not been available in the stores in CUC for a year or more, such as condiments, canned goods, preserves, soft drinks, detergents of various brands, and meat, which are sold in smaller quantities in common stores that do not accept payment in foreign currency or whose supply does not cover the needs of the majority of the population that is subjected to the lines.

The same goes for the appliance store that sells fans, refrigerators, and washing machines that are not available at other stores. Although the Government has tried to supply the markets in CUC, demand exceeds supply.

Yamila Conyedo has had a freely convertible currency card in her possession since the appliance stores opened in October last year.

While waiting for her turn to enter the Prague store, she believes that “it is a valid exit for those who have this possibility,” whom she considers a high percentage of Cubans. “If it were not like that, these long lines would not be formed every day. I think that Cubans who do not have families abroad are looking for alternatives to get dollars.”

After the stores opened in July, several photos of products for sale in these establishments circulated on social media. Many Cubans living abroad compared the high prices of meat and canned goods offered in Cuba with those of the country where they reside, generally the United States, where these items cost half or even less.

Several independent media published photos of the products with exorbitant prices: sunscreen for children at almost $29, a smoked leg of pork at $224.35 or a kilogram of beef fillet at $23.80. The cost of gouda cheese at $8.10 per kilo and the high prices of packets of powdered detergent were also criticized.

One midday in August, Luis Pérez, a resident of Placetas, Santa Clara, was able to fill his supermarket cart in the provincial capital with detergent, cereals and some jams. He spent about $40 on his card.

“I came late and I think they had taken everything,” he said. “I did not find chicken or other meat that was cheap. I also saw some that was there before, when the store was in CUC. They are not cheap, but it is what it is.”

In the same line, customers comment that many of the products of these establishments went to the black market – especially those related to personal hygiene such as bath gel, toothpaste and soaps – when they were acquired by resellers who have dollars in their pockets and buy places in line from the coleros to access the stores.

As with the black market for dollars, the market for resold products also strengthened during the pandemic. With the opening of these stores, another clandestine company of merchants has been created who can buy with Fincimex cards and profit, in a certain way, with this privilege created by the measures of the Government itself.

Recently, the authorities decreed a war against the coleros and the hoarders, which however does not seem to affect the stores that sell in freely convertible currency.

A packet of detergent, which costs six dollars in convertible stores, costs twice as much on the black market.

Another form of resale is entering the establishment with the owner of the card, who charges the buyer a commission above what he spent, but charges it in national currency.

Yaíma, for example, is a woman from Santa Clara who has dedicated half her life to reselling “anything” at her doorstep.

Recently, she deleted her profile from the La Candonga de Santa Clara group so that they could not track her, as they have done with other sellers who promoted themselves on social networks.

With her card she can access the Agua y Jabón store, where she usually buys toothpaste to resell at home, but in the same area where she lives.

“It is no secret to anyone that this was going to happen,” she says without revealing her identity. “If there is nothing in the other stores, then you buy what you can and sell it to the neighbors to earn a little. At whatever price, you are solving the problem for those who do not have greens (dollars) to put on the cards That is solidarity. You have to be in solidarity, always in solidarity.”

2 thoughts on “Reports from Cuba: King Dollar rules Cuba more every day”

  1. It’s the ultimate triumph of the “revolution.” Produce nothing, solve nothing, take responsibility for nothing, be good for nothing, and sit back while Cubans live off foreign charity. Gracias, Fidel.

    This is also the triumph of parasitism–and the fattest parasite who sucks most is Castro, Inc.

  2. Needless to say, this is a de facto admission of being a failure as a socioeconomic system. It is crystal clear that the dollars are coming from external sources in exchange for nothing, meaning they are NOT being earned, but rather extracted via emotional manipulation, aka exploitation.

    Obviously, complete lack of shame goes hand in hand with utter hijeputez and is an integral part of it, so Castro, Inc. has zero problem with this as long as it upholds the prime directive.

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