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Posted May 23, 2004 by publisher in Business In Cuba

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Miami Herald

A government document showed prices at Cuba’s dollar stores set to increase by 10 to 30 percent.

By Andrea Rodriguez, Associated Press. Posted on Fri, May. 21, 2004
HAVANA - Cuban officials have asked managers of dollar-only stores to mark up the price of their products—including such staples as cooking oil, milk and pasta—by 10 to 30 percent, according to a document obtained Thursday by The Associated Press.

The government, blaming new U.S. measures aimed at squeezing the island’s economy, abruptly closed the stores early last week.

Identical ‘‘Closed for inventory’’ signs went up at shops selling clothes, furniture and toys, while long lines of customers waited at other stores to buy food and personal-hygiene products—about the only items still being sold for dollars.

Government officials have said the stores would reopen, with higher prices, but have given no date. Gasoline prices will also rise, they’ve warned.
Cuba implemented liberal reforms in the early 1990s to cope with the loss of Soviet aid and trade. The possession of dollars was legalized in 1993 to draw hard currency from growing tourism and family purchases at the state stores. The government has steadily offered more and more goods in U.S. currency, while the ration book of items available in pesos has withered.

“We’ll have to see,” the man says, as he and his wife troop off valiantly on what is likely to be a fruitless quest ó a search for dog collars in Cuba, one of the last communist redoubts in the world and a land where accessories for household pets are no longer readily available, if they are available at all.

The same goes for shoes, clothing, electrical lamps, residential furniture, refrigerators, children’s toys and countless other consumer goods, all of which have been taken off the market by the Cuban government, in response to a series of new punitive economic and political sanctions imposed against Cuba earlier this month by the administration of U.S. President George W. Bush, who is seeking re-election in November.

Depending on whom you talk to, the new U.S. measures against Cuba are either a brutal tightening of the screws ó aimed at driving septuagenarian president Fidel Castro from office after 45 years in power ó or merely a pre-electoral sop to the 1.3 million Cubans who now dwell in the United States, mainly in south Florida, and who would mostly like to see Castro explore some alternative career options but don’t really know how to bring that about.

Either way, the latest U.S. measures have certainly raised the ire and the alarm of Cuba’s leaders, who decry Washington’s latest tactics as another step toward an eventual armed invasion of the island. “I will be front and centre to die in defence of my country,” Castro vowed last Friday in an emotional address to a vast throng of his compatriots, who marched in protest along the winding Havana seawall, between foaming bursts of ocean spray and the offices of the U.S. interests section, the equivalent of the U.S. embassy here.

By one count, this was the fourth time in the past six months that Castro has warned of an imminent U.S. military action against Cuba, the only communist outpost in the world whose capital just happens to be located within direct if treacherous rafting distance of Key West, Fla.

“One constant in Cuban politics is, there always has to be a crisis,” a somewhat jaded-sounding European diplomat told the Star this week. “They dwell in a permanent state of crisis.”

Still, the spectre of a U.S. invasion has been an almost constant source of anxiety among officials here ever since 1961, when Cuban exiles with U.S. backing tried and miserably failed to take control of the island by means of force.

Since then, there have been countless bungled efforts by disgruntled Cubans or U.S. secret agents to destabilize the Cuban government or to assassinate its now stooped and gray-bearded leader.

Never before, however, have the hostilities between Washington and Havana been played out against a backdrop of women’s perfume, household appliances, sportswear and shoes, all arrayed behind the now closed and bolted doors of the dozens of shops and retail emporia that have sprung up on the island during the past 10 years, offering consumer goods that were previously all but unavailable here ó but charging for them in U.S. dollars.

Except for food and hygiene products ó including soap, detergent, deodorant and bathroom tissue, as well as hair-colouring products and skin cream ó such goods have now been taken off the market “until further notice.”

This week, senior Cuban officials echoed their president’s defiant sentiments, speculating darkly about the warlike motives they see behind the latest U.S. measures, which are principally aimed at drying up the supply of U.S. dollars to a country where the greenback has become a kind of national lifeblood, following the collapse of the Soviet Union, Cuba’s long-time patron, more than a decade ago.

“The people who are in power (in Washington) are people with an extreme view of the world,” Miguel Alvarez, chief adviser to the president of the country’s national assembly, said in an interview this week. “For them, the winning of the Cold War will not be complete until Cuba falls. For them, Cuba is the jewel in the crown.”

The new sanctions imposed against Havana mark a toughening of the embargo on Cuban trade and investment maintained by Washington since the early 1960s and include the following:

A reduction in the allowable number of trips by Cuban-Americans to visit relatives in Cuba from once a year to once every three years

A reduction in the spending allowance permitted for such trips from $164 (U.S.) a day to $50

New limits on the amount of money Cuban-Americans may send to family members in Cuba, a one-way revenue stream that totals roughly $1 billion a year.

At a news conference here this week, Foreign Minister Felipe Perez Roque predicted the new sanctions would do major but unspecified harm to the Cuban economy. “We cannot quantify the economic impact they will have,” he said. “But they will have a series of effects. They will cause serious damage to our country.”

Others say the measures are unlikely to be nearly as onerous as the Cubans insist. For example, any American who wants to visit the island more often than the new rules permit can avoid detection by detouring through third countries, such as Canada or Mexico.

Similarly, wire transfers of money to Cuba can be routed through other countries, thereby escaping official U.S. scrutiny. And limits on how much Americans may spend in Cuba are likely unenforceable in practice.

“The money always sneaks through,” agreed a young Cuban artist with a brush cut and a jovial manner who gave his first name as Nilio.

He and his wife, Laura, were among the disappointed shoppers at the Galerias de Paseo emporium this week. They had come in the hope of buying a couple of new lamps for their house, but the home-furnishing section, like almost everything else, was closed.

Like many Cubans, Nilio and Laura have relatives in Miami who regularly send them money, enabling them to purchase goods they could not otherwise hope to afford. “We also steal whatever we can,” said Nilio. He squared his shoulders as a robber might, waited a beat, then relaxed and smiled. “It’s just a joke.”

Another couple at the Galerias de Paseo emporium was looking ó also in vain ó for a pair of women’s shoes.

It is not entirely clear why Cuban authorities felt obliged to counter the new U.S. sanctions by closing down the country’s dollar stores, thereby stifling one of the major routes by which desperately needed foreign currency enters the country’s official economy. Many stores that cater primarily to tourists have also been closed, meaning more foreign income foregone.

“It’s an opaque system,” said one knowledgeable foreign observer of the Cuban scene. “The dollar stores will have to open eventually.”

Others speculate that some sectors of the Cuban leadership may long for the days before the Soviet Union’s collapse, when the island’s communist system was much purer than it is now, with a more or less classless society, very unlike today’s Cuba, where there are essentially two classes of people ó those with access to dollars and those without.

Still, it seems all but certain that the dollar stores will have to be reopened eventually, although their return to business is expected to be accompanied by a general hike in prices. Cuban authorities have warned that gas and food prices are likely to rise as well. As for the threat of a U.S. military intervention, Alvarez agreed that Washington’s current setbacks in Iraq ó where the U.S.-led occupation has become bogged down in bloodshed and scandal ó have diminished the prospects of an armed action against his country, but he does not rule the danger out altogether.

If there is a danger of armed hostilities between the two countries, it is far less likely to arise from U.S. controls over dollars and family visits than from another, potentially far riskier U.S. decision, announced alongside the latest economic sanctions.

Washington says it now plans to begin broadcasting radio and television signals to Cuba from military aircraft flying offshore, a means of circumventing Cuban signal-jamming efforts.

In 1996, Cuban air force jets shot down two U.S.-registered civilian planes after they violated Cuban airspace, an act that produced violent diplomatic repercussions but not an exchange of bombs.

A downed U.S. military aircraft ó whether the result of a blunder or a deliberate attack ó would be a very different matter and would certainly be seen by Washington as an act of war.

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