New Way to Send $$$ to Cuba Avoiding Regime & US Embargo
Inside and outside the Island, businesspeople create formulas to save their currencies, import or avoid the US embargo
HAVANA TIMES – Javier operates a food service business in Central Havana serving both tourists and locals. His customers have the option of paying for his services in pesos, dollars or euros, currencies this businessman has no intention of leaving on the table. Because he has a Spanish passport, he was able to open an account at one of that country’s banks. This serves a double purpose: it allows him to move his earnings offshore and to act as an informal money transfer agency.
Any number of Cuban emigrés living in Spain are familiar with the services Javier (a fictitious name) offers. The operation is simple. They deposit remittances they want to send to Cuban family members into his account along with a twelve-euro “commission.” On the other side of the Atlantic he meets the recipients at their home at a pre-arranged time. Once he receives confirmation on his cell phone that the transfer has been gone through, he turns the cash over to the emigrés’ Cuban relatives.
It’s a win for everyone involved in the transaction. Javier makes a small profit from the hard currency in his foreign bank; the relatives on the island get much-sought-after euros (or their equivalent in pesos) which are unavailable to them in Cuba; and the emigrés circumvent the Cuban banking system, a widespread desire among many in the exile community. The only loser in all this is the regime, which has no clue that money is being moved around.
Cuban creativity continues to satisfy the needs of the moment. This business is similar in part to one El Nuevo Herald described in an article on Friday, which describes how people like Javier are bypassing the island’s official financial channels. The Miami-based newspaper spoke with several of that city’s money transfer companies, which help finance the island’s private sector with remittances from Cubans living in the United States.
The setup works like this: a private business owner in Cuba submits a request through a money transfer company, which handles buying and shipping products from an account funded by deposits from family members. Once the item is delivered, the owner reimburses the company in pesos or foreign currency at its branch office in Cuba and pays it a fee for acting as intermediary
The company benefits because the process ensures it has cash on hand in Cuba to pay remittances since it is impossible to execute bank transfers from the United States due to the embargo. “From a banking compliance perspective, it is completely inappropriate,” said one Cuban customer who benefits from the practice. “But from another perspective, we are talking about the first time in recent history that the Cuban government does not have access to these dollars or to any of the monies from these operations.”
Businesspeople interviewed for this article said ideally there would be a bank specifically for the private sector but they believe that this alternative, though inadequate, is currently the best option.
Other interviewees say that moving money across the globe is very complicated because banks are very interconnected through the U.S. banking system. Unless one has foreign nationality like Javier, or is married to a foreign national, it is almost impossible to have an overseas bank account.
The Herald claims these alternative solutions are an unintended consequence of measures taken by the Trump administration. Because the U.S. does not allow remittances to be transferred through banks run by the Cuban military — the only available option on the island — many companies were forced out of the business. Other options, however, began to proliferate. The first solution relied on so-called “mules,” which had all the risks and limitations of carrying cash around. But the pandemic, along with the subsquent closure of international borders, encouraged more imaginative solutions.
Sources in the Biden administration told the Herald that it was looking very closely at what it can do to facilitate private businesses’ access to the financial system. “This is one of the main things, if not the main thing, that small Cuban businesses who want to do things well and be respected have asked us,” said an official.
The Herald published an article on Thursday that addresses the issue of new privately owned companies that are “scaling up businesses to a degree that was unimaginable just a couple of years ago.” Oniel Diaz Castellanos, founder of the Cuban consulting firm Auge, told the newspaper that the proliferation of these businesses is a paradigm shift on the island.
Though there are many in society who perceive small and medium-sized businesses (SMEs) as little more than extensions of the regime and drivers of inflation, the article is more in line with the positive view offered by Cuban economist Pavel Vidal, who just a few weeks ago pointed out what he feels are many unfounded prejudices. “A segment within the ruling party does not want reform and are very happy with the seemingly widespread pessimistic view of SMEs,” he argued.
Those interviewed for the article share that point of view and believe that their prosperity is evidence that less money is flowing into the state coffers. However, the article also describes suspicions many people, including many in the opposition, still have about these new entrepreneurs because they operate outside the political arena and are limited in what they can do in regards to imports and exports, areas in which the regime still maintains a monopoly.
However, some merchants interviewed by 14ymedio are happy to discuss their ability to overcome the difficulties faced by ordinary Cubans.
“We’ve been learning which importers do everything more quickly and efficiently,” says the accountant at a small business that purchases food from overseas. “A good incentive for employees who work directly with SMEs helps a lot. Almost all the work of contacting the supplier and managing the shipping, freight and everything else is done by us. By the time [our clients] sign and stamp the import certificate, we’ve already taken care of things. All they need to do is validate it”.
The embargo exists because Richard Nixon was partners with Batista in casinos and brothels.
He asked Castro if he would re-open those businesses, and Fidel told Dick to go away.
And that’s why we have this genocidal embargo.