Roberto Jorquera
Since the 1960s, the US government has maintained a crippling economic blockade on Cuba. The blockade has had a devastating effect on the ability of the Cuban government to trade on the international market. The resulting isolation has led to the increasing "dollarisation" of the Cuban economy. On November 8, the Cuban government launched an offensive to turn this around.
After the collapse of the Soviet Union and the Eastern Bloc cost Cuba 80% of its foreign trade, the US dollar, a more stable currency, dramatically increased its circulation within Cuba. The Cuban government was forced to legalise the US dollar in 1993 in an attempt to control its circulation and reduce the black market. However, the increasing dependence of the Cuban economy on access to US currency has provided the US with another weapon in its war against the revolutionary country.
The US has set up a government body to limit the flow of US dollars to and from Cuba. Earlier this year, the US fined a Swiss bank US$100 million for handling Cuban trade payments in US dollars. In late October, the US blocked a firm that facilitated transfers of US dollars from Cubans in the US to their families in the island.
Granma International reported in its November 15 international edition that,"The Cuban government operation to replace US dollars with convertible pesos began on November 8. Now, stores, hotels, restaurants, taxis and all other services will not be available in US dollars, as has been the case since 1993.
"The convertible peso, established in the 1990s, has the same value as the dollar and is the only acknowledged currency on the island. Convertible pesos will continue to be exchangeable with the dollar and other hard currencies according to the international market rate.
"In addition to removing the US dollar from circulation, as of November 15 it will be penalised by a 10% surcharge for exchange, with the objective of confronting the costs and risks of Cuba handling this currency, provoked by the measures of the Washington government in its desire to crush the Cuban Revolution.
"Therefore a one-dollar bill will now be exchanged for 90 centavos of a convertible peso and for 23.4 non-convertible Cuban pesos which, to date, were exchanged for 26 to one dollar in the Cuban exchange bureaus known as Cadecas.
"The measure was announced by President Fidel Castro on October 25, in response to US measures to prevent Cuba depositing dollars in foreign banks for its commercial obligations."
In a detailed report, tourism minister Manuel Marrero stated that the 10% surcharge on exchanging dollars for convertible pesos, "has not been adopted to generate additional income, but to discourage the use and actual circulation of US dollars and to offset the costs and risks stemming from the use of this currency within the national economy."
Marrero highlighted that 75% of tourists who travel to Cuba do not need to use US dollars, explaining "The majority of visitors to Cuba come from Canada (28%), the European countries (40%) including the United Kingdom (7%)."
Central Bank vice-president Rene Lazo says that the US dollar was hampering the government's control over currency circulation. "The bank can now play a greater role in maintaining an appropriate balance between currency in circulation and the supply of goods and services, an essential ingredient to ensure that the Cuban currency holds its value."
From Â鶹´«Ã½ Weekly, November 24, 2004.
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