Cubans push back against ‘dollarization’ of the economy

The opening of dollar stores to attract foreign currency in the middle of the pandemic has left many Cubans angry. Cuban leader Miguel Díaz-Canel was criticized for his poor performance during a speech to announce a new economic plan.

A Hail Mary reopening of dollar stores in Cuba to deal with the coronavirus pandemic’s fallout has angered many Cubans, as the increasing inequality in a society that claims to be egalitarian gets the spotlight.

The announcement came last week during an odd speech by Cuban leader Miguel Díaz-Canel in which his irritation was not lost on the population. He also promised to implement some reforms already approved by the Communist Party in 2016 but inexplicably postponed, including the creation of small and middle-sized private companies and some opportunities for importing and exporting.

Both the announcement and Díaz-Canel’s performance have received an unprecedented amount of criticism among Cubans.

More than a thousand readers aired their questions and frustrations on Cubadebate, a state media outlet, as many Cubans who do not have family abroad to send them dollars grapple with the idea that food items such as meat or ice cream would be out of their reach.

“And the Cuban who does not receive money from abroad? And even worse, what about the pensioners? Many of us have been left out with this measure. Perhaps this is not a republic ‘with everyone and for the good of all,’ a reader identified as Yoyi said in reference to a phrase by 19th-century independence leader José Martí that is frequently used by Cuban leaders.

Hosts of a podcast made in Cuba discussed “the bad impression” left by DíazCanel’s speech.

“He looked upset and honestly looked bad in that speech. I think the general opinion of the people is that they didn’t like the speech,” said Camilo Condis, a young Cuban entrepreneur and host of “

[”The Swarm”]. Another host, Miguel Alejandro Hayes, said that the Cuban leader had failed to deliver a “hopeful message.”

The lack of concrete details on how the economic plan would work in reality suggests it was rushed because of the pandemic, even though the economy plunged last year due to the Venezuela crisis and tougher U.S. sanctions.

Cuba’s economic situation is almost as dire as it was in 1993, during the infamous Special Period when Fidel Castro first allowed the circulation of dollars to counteract a sudden 35 percent GDP loss after the collapse of the Soviet Union. And, as in 1993, the gamble largely depends on the Cuban exiles abroad sending more remittances to the island so they can be used at the new stores and, in theory, as starting capital for the private sector.

This might not happen soon given the impact of the pandemic on the global economy. Remittances from the U.S. are also restricted to $1,000 per quarter per person, and some of the primary services used to send money to Cuba, such as Western Union, are still delivering the payments on the island in the local currency known as CUCs.

With so many unknowns, the sudden dollarization has been deeply unpopular.

A Cubadebate reader even quoted George Orwell’s “Animal Farm” to point to the widening class inequalities that might result from the new measures.

The dollar remittances are not supposed to circulate in cash but to be deposited directly to Cuban bank accounts. But the measure adds more chaos to the already wrecked monetary system, which will now be working with three currencies: the dollar; the Cuban peso, in which state salaries are paid; and the CUC, Cuba’s own local hard currency. One CUC is equivalent to 25 Cuban pesos.

Because the government also eliminated this week a 10 percent tax on the dollar, the CUC has near parity with it in the official exchange houses known as Cadecas. Buying dollars in Cadecas and banks, however, is limited and the currency is not always available, so most Cubans turn to the black market instead, where purchasing dollars is more expensive.

Almost everything from food to household items was previously sold in CUC government stores even though workers are paid in a different, devalued currency, the Cuban peso. Since last year, Cubans have been struggling to find essential food and hygiene products in mostly empty supermarkets. Also last year, the government started selling home appliances in certain stores in dollars, but many complained of the few items in stock.

Although Cuban officials promised that 47 “essential” food and toiletries would still be available at CUC stores, Economy Minister Alejandro Gil fueled the discontent by speaking of “high-end” and “middleend” products that would only be available at the new dollar stores. And the disappointment is visible even among core supporters of the Communist government, who resent the aid from Cuban exiles, for years scorned by the government as “counterrevolutionaries” and “worms.”

Criticism of the dollarization spread on social media even before the official announcement, thanks to a leak to independent news site 14ymedio. And it got under Díaz-Canel’s skin.

“The enemy, its media and its mercenaries work to sow hopelessness and discouragement. ... They speak of economic apartheid. Can you talk of economic apartheid in a country where the government is concerned every day with how most of the things could reach everyone equally?” he said, visibly upset during a lengthy tirade against the U.S. and the “enemies” of the Revolution.

But even other liberalization measures have received significant pushback from the population as it was clear the government will keep significant control over the economy.

On live television on Wednesday, Rodrigo Malmierca, the foreign trade and investment minister, gave more details about how self-employed workers, or cuentapropistas, and future “micro-enterprises” will be allowed to import and export.

A cuentapropista needs first to open a bank account in dollars. State enterprises would act as intermediaries, arranging prices and controlling how much of the revenue would stay in the account for future purchases and restocking. But the account owner would not be able to take dollars out of it, only the local currency.

Cubadebate readers asked how so much government control would boost investment and production.

“Do you think that future investors from those ‘micro-enterprises’ are fools?” asked Roger Rivero, another Cuban commenting on Cubadebate. “They would have to sell through exporters that fix the prices; a mysterious portion of the revenue is retained, and they cannot get their profits from selling abroad in hard currency.

“Gentlemen, seriously, LOOSEN the grip!!!!

Enough of so much control over other people’s money.”