Fidel pretends the bucks don't matter in Cuba
Monday, November 29, 2004 at 11:52AM ■"For Many Cubans, an Uneasy Farewell to the Dollar: Putting an end to dependency on a symbol of capitalism," by James C. McKinley, Jr., Wall Street Journal, 29 November 2004, p. A12.
Fidel is trying to de-dollarize the Cuban economy, which, quite frankly, has been dollarized for so long that Cuba barely has a national currency. Now Castro issues a decree saying you can't use dollars anymore, although you can hold them in bank accounts (boy, that makes it seem like a permanent rule set, huh?). To incentivize citizens to convert their dollar holdings, Castro is enforcing a 10% surcharge on all money changing after 15 November.
And yet still people holding onto their dollar savings. Why?
"Nobody knows if this is permanent or momentary," said a 33-year-old plumber, who like many people interviewed for this article asked that his name not be published. "A year from now the law supporting the convertible peso could not exist. This exchange rate only exists here in Cuba, because Fidel Castro is the only one who says it is true. So the smart ones who have money are guarding their dollars.
Fidel must be feeling vulnerable, cause he's cutting off his nose to spite his face, but clearly he feels this desperate move will solidify his grip on power, which surely was weakened over the years by a dual economy: one based in pesos that he could control and one based in dollars over which his control was largely marginalized (its implicit slogan being, "To each citizen according to his uncle in Miami"). So now Castro reins in private enterprise and re-establishes state control over the lucrative tourism industry.
All this represents is yet another way the government of Cuba takes from its people and gives little back in return. This is nothing more than Castro's hard-currency accumulation scheme: give me real money and I'll give you pieces of paper that are worth whatever I damn well declare they're worth. This is the logic of the Big Man at work, and it's why Cuba remains firmly inside the Gap.
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