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HavanaJournal.com: Cuba Business

Can Raul Castro manage change in Cuba?

Posted March 12, 2008 by publisher in Cuba Business.
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CBS - This story was written by CBS News producer Portia Siegelbaum in Havana. “How can I afford $90 for a pair of glasses?” That’s the question Matilde, a retired school secretary threw at me. The glasses in question are for her 83-year-old mother, whose myopia makes it impossible for her to read without prescription lens.

The old pair fell off the table, shattering the glass lens. When bought just five years ago they cost only 54 Cuban pesos or just over $2. But today, the cost of the glasses reflects the dual economy that plagues nearly every aspect of Cuban life and is one of its most irritating factors.

The Cuban government, the dominant employer, pays workers in ordinary Cuban pesos that can be exchanged at official exchange houses at a rate of 26 to 1 for Convertible Cuban pesos or CUCs.

While it has no value outside of Cuba, the CUC is the only currency accepted at many supermarkets, shops, restaurants and nightspots across the island. Needless to say, these places offer goods not available anywhere else.

This is the system that produced $90 eyeglasses for Matilde’s elderly mother. Stores selling eyeglasses in regular Cuban pesos are badly stocked with limited ability to make lens. It is not uncommon to be turned away or put on a long waiting list if your eyeglass prescription is anything special.

Only stores selling frames and lens in CUCs are fairly well stocked with imported products and the markup on these as well as on any imported goods in Cuba can be as high as 200 percent.

The government explains the markup as a way to redistribute income. That is, take hard currency away from those who have it and plow it back into the economy so that the have-nots benefit from it.

Today, as never before, Cubans are voicing their dissatisfaction with the hardships they face. Surprisingly they’ve been encouraged to do so by none other than Raul Castro, who officially blessed opening the floodgates during a speech last July.

According to Castro, who has now officially replaced his older brother Fidel as president of the country, some two million different complaints were culled from the debate.

Topping the list: the inadequacy of wages, the housing and transportation crisis and the deterioration of the health and education systems, once the pride and joy of the Revolution.

Rafael Hernandez, editor of the sometimes polemical Cuban magazine Temas, says the demands coming out of this nationwide discussion “are very clear in terms of creating a new tempo, a new timing for political change and I think that anyone…in charge of the Cuban government must be aware of this.”

Julia Sweig, Director of Latin American Studies at the Council on Foreign Relations in Washington, D.C., agrees. She believes encouraging the discussion has put Raul Castro under “pressure to deliver and to do so quickly.”

She says that while it’s possible this was not anticipated, in her view, “Raul Castro seems to be acutely cognizant of the bread-and-butter issues the population is demanding and of the demands for greater autonomy from the heavy handedness of the State.”

Hernandez and Sweig both see the roots of today’s inquietude as lying in the past. Says Hernandez, “I think that the economic situation in Cuba, the way Cubans perceive their own future has changed throughout the last 15 years. That our own perception about what is socialism has changed tremendously throughout the last 15 years and I think that the future depends on that redefinition of socialism.”

Sweig says the very survival of the revolutionary values and goals depend on how the government responds to the issues that everyone is talking about.

“The groundwork for the process Raul is now overseeing was laid before Fidel Castro’s illness was announced,” she points out. “In that sense the transition began even before the summer 2006 with the top leadership of the regime talking about the revolutionary project itself being on the line.”

By suggesting the possibility of change, Sweig adds, “Raul has demonstrated that he has built and aims to continue building a political consensus within the government and [Communist] Party to appreciably enhance the quality of life.”

In a speech before parliament following his election last month, Raul Castro declared, “We are examining, for instance, everything related to the timely implementation of comrade Fidel’s ideas on ‘the progressive, gradual and prudent revaluation of the Cuban peso,’ …. At the same time, we keep delving into the phenomenon of the double currency in the economy.”

It was what the Cuban public wanted to hear. Rumors of the “imminent” upward revaluation of the Cuban peso spread in some neighborhoods.

“I walked past long lines at CADECA [money exchanges] on my way to the bus stop this morning,” says Marbelis, who makes her living working for foreigners as a private nurse. “People were exchanging CUCs for Cuban pesos because they believe the value of the CUC is going to drop and are trying to get the possible deal while they can.”

The scene she described in the Havana municipality of La Vibora was repeated around the country reflecting Cubans’ hopes for an easing of the daily grind.

In 1993, when the Cuban economy hit bottom, the government legalized the use of the U.S. dollar by Cubans, which gave them access to what at that time was a very small number of special shops patronized mainly by diplomats and foreign residents.

The senior Castro, then firmly in control, described the measure as the first inequality to be instituted by the Revolution. It elevated the standard of living of those who possessed dollars while leaving the vast majority of the population in the dust.

But just what would happen if the peso was revalued overnight or a single currency was declared?

“Declaring a single currency which is valid everywhere in Cuba is not going to solve anything,” says Michael, a doctor on duty in the recovery room at Havana’s Frank País orthopedic hospital.

“Let’s say we all get paid in CUCs. In just two weeks, the shelves in all the hard currency stores will be bare,” he told the nurses sharing the night shift with him.

Many people agree with him. Shelves at the special supermarkets are often sparsely filled. Many times shoppers confront row after row of cookies and sweets, rather than the basic products they’re seeking. Reportedly the instability in the supply of imported goods is a product of the government’s cash shortage.

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