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Posted November 22, 2007 by publisher in Business In Cuba

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A group of dissident women handed in a petition signed by 10,738 people on Wednesday demanding an end to Cuba’s dual currency system which they said caused poverty and inequality.

Seven women took the petition to the National Assembly, which is obliged by Cuba’s constitution to consider any legislative proposals requested by more than 10,000 citizens.

In Cuba’s socialist society, people get paid in Cuban pesos but need a harder currency called the convertible peso—worth 24 times more—to buy most consumer goods.

“We demand for all the nation that the Cuban peso be an acceptable means of payment in every establishment without exception,” the petition said.

The signatures were gathered by members of the Latin American Federation of Rural Women, a group that receives support from Cuban exile organizations in Miami.

“We expect a positive reply from the government because this is a demand that all Cubans are making,” said Maria Antonia Hidalgo, from the eastern province of Holguin.

Cuba introduced the convertible currency in 1994 when Cubans started receiving remittances from their relatives in Florida to help them weather a deep economic crisis triggered by the break-up of Havana’s benefactor, the Soviet Union.

Cuban leader Fidel Castro said the measure was temporary and the government’s goal is to eventually unify the two currencies when economic expansion permits.

The campaign for monetary reform recalls a signature drive called the Varela Project led in 2002 by prominent dissident Oswaldo Paya, who gathered 25,000 signatures to petition for a referendum on civil liberties in Cuba.

The Assembly rejected Paya’s request and Castro mobilized for a referendum to preserve Cuba’s socialist state.

The Cuban government does not acknowledge the existence of dissidents and labels all opponents as “mercenaries” on the payroll of the United States, its ideological nemesis.

Some telephone calls made by the organizers of Wednesday’s petition to the National Assembly came from the U.S.-funded Office of Cuba Broadcasting in Miami, which oversees anti-Castro radio and television broadcasts to Cuba.

(Editing by Alan Elsner)

  1. Follow up post #1 added on November 22, 2007 by manfredz with 464 total posts

    Having both the CUP and CUC is indeed social dynamite in Cuba splitting its society into those who have relatives outside sending them money or who work in the tourist industry and those who don’t.  A doctor or engineer will make the equivalent to 18-20 CUC a month; a cleaning lady or bartender in a good tourist hotel can make that easily in a day.
    Add to that lots of goods above bare basics are available in stores where all purchses must be paid in CUC (so even those that don’t have them can readily see what they’re missing out on) and of course social discontent will grow.
    Problem is I have yet to see a detailed model how they can handle having only one currency without all kinds of side issues (e.g. how not to make everything supercheap to tourists).  But it is a problem that is not going to go away
    (to give you an idea:  when I was recently in Cuba for Cdn $100 I got 91 CUC; for Cdn $20.- I got just over 480 CUP)

  2. Follow up post #2 added on November 22, 2007 by HavanAndrew with 87 total posts

    It’s a very tough situation that La Revolucion has put itself in. Pre-Castro Cuba was the tale of two countries, the very wealthy and the very poor resulting in a perfect storm because those in control suppressed the majority. The current dual currency society that the Cubans are living in is a perfect storm also. Go to rural and remote areas of Cuba and there are so few with CUCs and the economic conditions are grim. Areas where there are economic activities involving CUCs are mostly based on access to tourism money, these areas also have a sub economy known as mercado negro. Mercado negro actually generates a small amount of activity just like any other market economy. Maybe the real issue is that Cuba has three different economies, CUP, CUC and the black market.

    All three need to be eliminated before a real market economy can start. Cuba’s biggest issue will be getting a currency that can be traded in world markets. Currencies are traded on the world markets based on the trust of each countries’ economies. Just how this will happen considering Cuba has defaulted on so many loans is a very concerning issue.

  3. Follow up post #3 added on November 22, 2007 by publisher with 3905 total posts

    Right. I don’t think anyone wants Cuba cash backed by the “full faith and credit of the Cuban government”.

    Also, I hope someone doesn’t come along and tell me that Cuba’s bad credit is because of the US Embargo.

    Cuba consulting services

  4. Follow up post #4 added on November 23, 2007 by cubanpete with 127 total posts

    The Banco de Cuba is so little regarded in international banking circles that even the CUC or “chavito” is not traded internationally.  Not even in Red China.  CUCs are not even accepted in payment of fees at Cuban diplomatic missions throughout the world; hard currency only, por favor.

    For change (cambio) we can believe in.

  5. Follow up post #5 added on November 23, 2007 by anders

    from an economist point of view I would say the object of the national peso is to regulate domestic exchange of all kinds,
    the object of peso convertible is rather to regulate the inflow of foreign currency to the households thus actually creating a hazard to national inflation rates, balance of payments a s f. 
    The convertible is a buffer currency that has proved to be amazingly succesful for this period of time - given its objectives -  but eventually, as GNP grows, will be completely unnecessary. Or more likely - the national peso will be obsolete !

    These women will get their wished for single currency system eventually. Simply because it is sencible and the intention of the Cuban government. The obstacles can also be used as a protocoll over the economic changes and developments necessary to reach there. What keeps them from currency reform today shows what economic reforms are necessary in the future !

  6. Follow up post #6 added on November 23, 2007 by manfredz with 464 total posts

    in the meantime, as i said, its a society of haves and havenots.  Notice each time it seems to happen more often that I get shortchanged or other errors when paying with CUCs.  And can only assume that its to help more join the haves and the existing haves to have more CUCs.

  7. Follow up post #7 added on November 23, 2007 by anders

    you are probably right manfredz. unfortunately I´m convinced a certain amount of increased economic inequality is inevitable for simplistic mathematical reasons.

    This is because Cuban domestic economy can only grow if more and new consumer goods are introduced. there must be people able to buy them and this can only be accomplished if purchasing power is distributed unevenly, eg everyone can not be made able to buy a new refrigerator at the same time .
    In other words, if a thousand dollars are distributed evenly they will not increase purchasing power. this is why the cubans are facing a dilemma right now.

  8. Follow up post #8 added on November 23, 2007 by manfredz with 464 total posts

    very true. 
    cuba probably experiences what it was like in east germany - when something hit the stores everybody bought it cause you would never know when you would see it again. You did not go shopping with a shopping list; instead when you saw something you decided if you wanted or not.
    To me, part of restructuring is to do away with this almost “unity wage” that almost everybody makes.  Then people will be making various wages, of course will have different priorities so not everybody will be rushing off to buy a fridge at the same time.  Sure at first it’ll be a little chaotic, but will settle in. Or at least that’s how I hope it’ll go

  9. Follow up post #9 added on November 24, 2007 by anders

    yes manfredz,
    as they need to establish production of various consumer products in order to push economic growth further they also need consumers to buy them. That can never be everybody at once since purchasing capability on the island is very low. It is partially the same fenomenon as when computer electronics was established as a consumers product in the west 10-15 years ago. Not entirerly, but it works for him who wants to see my point.

    The Cuban dilemma is to accomplish this without too much social disturbans. This takes wisdom and compensation for the majority at other levels.
    This matter is a function of economics as a function of demografics, income levels, social awerness and simple mathemathics as I see it. The same development problem would occur in any society at the same level of economic development.

    If there is any trouth to cuban claims they have a better political system then many other countries here is the challenge for them to prove it !

  10. Follow up post #10 added on April 16, 2009 by Mike London

    Just returned from Cuba. I’m fascinated by the system of currencies. Can anyone tell me what happens when, say, a person driving a horse carriage for tourists gets paid 20CUC. Can he spend that, or does he have to get in converted into Cuban peso, thus enabling the government to be certain of getting their taxation. Would be fascinated if anyone could help me on this?

  11. Follow up post #11 added on April 16, 2009 by publisher with 3905 total posts

    If someone gave you cash, would you spend it grin

    Cash is cash. He’ll figure out a way to use it.

    Cuba consulting services

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