Dmitri Prieto

Cuban currencies and the US dollar. Foto: IPS/Cuba

HAVANA TIMES — The point of the “psychological barrier” around the issue of dual currency is that if prices charged in CUCs in chopins (hard-currency stores) are translated into Cuban Pesos (CUPs), and these in turn are compared to the salaries paid by the government, this high-prices/low-incomes relationship will reveal the tragedy of the current economic climate.

I don’t want to go into yet another harangue about how many days one has to work to buy a bottle of cooking oil or a few frozen hamburgers or a stick of butter (there’s an excellent analysis in Spanish by the Cuban writer Arturo Arango on this, complete with tables and calculations), but it’s one thing to be aware of “what everyone knows” and quite another thing to recognize it at the official level.

For the last 20 years it has been the dream of Cubans to buy products at a “chopin” using the currency from their wages. But today it has become crystal clear that what determines access to such products isn’t the quality (“convertibility”) of the currency (CUP or CUC) but its quantity.

It’s crystal clear because if you were to use a debit card to make your purchases at a chopin, the balance of your salary in “national currency” would drain out of your account like water running through a slotted spoon.

Recently there has been increased public debate about the real purchasing power of Cuban wages, This has followed the adoption of the new Customs regulations (affecting the importing of articles that are scarce in Cuba) and the new Tax Law (which is not discussed between people and whose content is a mystery to the vast majority of all current and potential taxpayers).

In cyberspace, there are the interesting contributions by acute polemicists such as Felix Sautie and Roger M. Diaz Moreno (both in Spanish), among others.

The possible way out of the problem, trumpeted by the new opportunities for making purchases in chopins (by credit card), would consist of simply declaring the two currencies equivalent at the current exchange rate (or another similar one), and then allowing only one of them in circulation. This is what is in fact being done through the new payment method in chopins with “national currency” – which today is only possible through magnetic cards.

Of course, the provocative contradiction between prices and wages would emerge with full force, especially with the still surviving memory of those legendary days when the Cuban peso and the US dollar were exchanged at a 1:1 ratio.

And one would have to take into account that the senior leadership of both the government and Cuban unions have said quite clearly that at the moment there are no plans for increasing wages.

The aggressive roar of the lion, which is now being heard over the propaganda apparatus of the bureaucracy concerning the social inequality, has generated understandable fears, because (even from the point of view of Marxism) economic truths cannot be propped up with ideological slogans.

Dimitri Prieto-Samsonov

Dmitri Prieto-Samsonov: I define myself as being either Cuban-Russian or Russian-Cuban, indiscriminately. I was born in Moscow in 1972 of a Russian mother and a Cuban father. I lived in the USSR until I was 13, although I was already familiar with Cuba-- where we would take our vacation almost every year. I currently live on the fifth floor of an apartment building in Santa Cruz del Norte, near the sea. I’ve studied biochemistry and law in Havana and anthropology in London. I’ve written about molecular biology, philosophy and anarchism, although I enjoy reading more than writing. I am currently teaching in the Agrarian University of Havana. I believe in God and in the possibility of a free society. Together with other people, that’s what we’re into: breaking down walls and routines.

7 thoughts on “The Beginning of the End of Cuba’s Dual Currency? (II)

  • A technical discussion of the effects of the dual currency system and how to move to a single currency:

    PESOS, POVERTY, AND PERVERSIONS:
    WHAT’S WRONG WITH CUBA’S MONEY AND HOW TO FIX IT

    http://www.ascecuba.org/publications/proceedings/volume18/pdfs/canler.pdf

    One of many interesting insights:

    “…the common practice of translating Cuban salaries into dollars using the “free” exchange rate is as misleading as using the official exchange rate for non-personal transactions. The economic reality is that a salary of CP400 is worth less than the US$432 suggested by the official exchange rate, but also more than the US$17.28 suggested by the CUC exchange rate.

    The difference in exchange rates between the current system and what would prevail under a free market
    (p1—p2) implies that there are winners and losers, as the market is distorted away from a free equilibrium.”

  • Thanks Dimitri for the second part of your essay. It’s a good discussion, faced with the absurdity of the two currencies one encounters in Cuba – actually it’s not the dual currency system that is absurd – there are quite valid reasons why it was instituted – but the gap between the two.

    Travelers to Cuba are caught in the middle. Sometimes there is an easy solution. Taking the Hershey train between Matanzas and Havana for instance, there is a photo of Fidel and Raul in the train station exhorting overseas folks to pay the fare in CUCs. As I recall, it was about 7 CUP – a good bargain for both CUC and CUP payers.

    Taking a bus intended for locals – not officially allowed of course – you can also pay the fare in CUCs which is again a good bargain for both categories of passengers.

    There are other times when it doesn’t work. The peanut cone vendors whose wares I became addicted to, sell a cone for 1 CUP but in tourist areas like Varadero, they ask 1 CUC, which is of course ridiculous.

    From a tourist point of view, I like the dual currency system. It formalizes the unavoidable fact that there has to be two prices – one for cashed-up tourists and one for locals. Otherwise you are subjected to the “Psst, wanna buy pesos, senor” jineteros faction that preys on tourists and is ubiquitous in other Caribbean capitalist countries.

    I would like to see the Cuban government work toward a solution that is as satisfactory for Cubans and overseas travelers as possible. I’m confident it will happen.

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