The problem with sending remittances to communist Cuba and a possible solution

The communist Castro dictatorship not only takes a huge cut of every dollar sent to Cubans on the island, in effect, they take every penny of it. But there may be a way to cut the corrupt regime out.

Emilio Morales in Diario de Cuba:

Remittances to Cuba: The Problem and the Solution

Taking capital out of the hands of the oligarchs and putting it directly into those of Cuban citizens is the empowerment that the Cuban people need, and the great challenge faced by the Biden Administration.

The issue of sending remittances to Cuba is currently being debated. As is known, they constitute the main source of revenue for Cubans, and are the result of the efforts of tens of thousands of exiles who send money to their relatives on the island to help them meet basic needs, as the latter live in a country where they are prohibited from generating wealth.

After the military companies that control 100% of remittance transactions arriving through official channels were sanctioned by the US State and Treasury departments, the Cuban Government refused to hand over their handling to any civil institution. Even though at the end of 2020 the Central Bank of Cuba granted the non-banking financial company RED SA the pertinent licenses to take charge of handling remittances from the US —a market accounting for 92% of the total received— this still has not happened.

The explanation for this is simple: the military does not want to lose its main source of financing.

Meanwhile, Covid-19 has further complicated the situation, as flights from the US to Cuba have been suspended for almost 18 months. This has meant that informal remittances (48% of the total) have almost disappeared. For now, the issue of remittances has come to a standstill, and hangs in the air. Although it refuses to take action, the Cuban Government has the solution in its hands.

The problem

Since 1993, when they were allowed, down until today (28 years), the Central Bank of Cuba has never published a report on remittances. The matter was controlled by the military from the very beginning; first, by the group of Fidel Castro (CIMEX SA) and, as of 2006, by his brother Raúl’s (GAESA).

Cash remittances currently represent 25% of Cuba’s GDP. If we add remittances in goods, the total rises to one third of GDP. The exportation of medical services accounts for another third, with the real economy constituting the rest.

As we know, the Cuban elite appropriates 80% of the salaries of the doctors it sends abroad, and 100% of the remittances that arrive through official channels. Both amounts are stolen from the Cuban people. In other words, 2/3 of the country’s GDP, generated by Cubans’ families in exile, and by citizens, are not used for the benefit of the people or for the development of society, as demonstrated by the current collapse of the health system and the lack of food and medicine. These 2/3 of the national GDP end up elsewhere.

The governance system that prevails in Cuba is not that of a socialist government, but rather one dominated by a group of oligarchs that controls an obedient president not elected by the people. This is why —as US President Joe Biden has stated— Cuba has a failed government, one not interested in the welfare of the people, but rather the fortunes that can be stolen and accumulated through legislative mechanisms and business schemes concealed in tax havens.

This oligarchical group has turned the remittance business into an almost untraceable money laundering business, allowing it not only to launder assets in tax havens, but on the island itself. GAESA keeps the money from remittances in a bank account in a third country through its respective affiliates and subsidiaries (CIMEX SA, FICIMEX SA, AIS SA), sanctioned by the US State and Treasury departments.

The problem of remittances is not, therefore, that the military seizes 10% or 15% of them. It should be made clear: the Cuban military appropriates 100% of the remittances. It is as simple as that.

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2 thoughts on “The problem with sending remittances to communist Cuba and a possible solution”

  1. There is no way Castro, Inc. will stand for losing its take or even significantly lowering it. There is too much money at stake, and the regime doesn’t give a shit about fairness, justice or international law. It will either come up with something that looks better but amounts to the same thing, or it will devise a work-around to wind up with the money, such as by controlling where it’s spent and jacking up prices accordingly.

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