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Posted April 23, 2003 by publisher in US Embargo

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By TRACEY EATON / The Dallas Morning News

Cuba has endured invasions, bombings, terrorist attacks and more. And as each crisis fades, socialist leaders grow ever more defiant, almost cocky.

But now U.S. officials have found a way to inflict some real harm: They’re threatening to cut off the cash, and many Cubans are in a panic.

Cuban-Americans every year send $800 million to well over $1 billion to relatives on the island. U.S. officials last week said they were considering banning those cash remittances as a way to punish Cuba for the worst dissident crackdown in decades in March and the firing-squad executions of three hijackers in April.

“Cut off that money and you’re chopping the heads off a whole bunch of Cubans,” said Rebeca Rivero, 33, a Havana personnel manager who receives money from her relatives in Miami.

The White House has said no firm decision has been made on the remittances, but spokeswoman Claire Buchan said U.S. officials are eager for democratic change in Cuba and are studying ways “to speed up that objective.”

Just the idea of stopping the cash flow, first reported in The New York Times on April 17, threw the socialist machinery into swift action. An April 18 government statement, thought by many Cubans to be penned by Fidel Castro himself, said that ending remittances “would affect an incalculable number of people in Cuba and the United States.”

Mostly though, the statement had a rebellious tone.

“The Cuban economy…can withstand the suspension of remittances, with their supposedly grandiose benefits,” it said.

Halting remittances would be yet another maneuver in an endless string of moves and countermoves by both governments during 44 years of hostilities.

It would also mark another shift in America’s often inconsistent Cuba policy, which only last month called for the cap on yearly remittances to be increased to $12,000 per person from $1,200.

Some for, some against

Most Cuban-Americans want to be able to send money to their relatives. But some exile hard-liners would rather that the United States tighten the economic noose, stopping remittances and virtually all travel to Cuba. Some have even suggested a naval blockade.
Castro loyalists scoff at that, saying they’ll meet any threat.

The Inter-American Development Bank estimates that Cuba received $1.1 billion in remittances in 2002. That compared with $31 billion for the rest of Latin America and the Caribbean, with Mexico getting the largest share, $10.5 billion.

But two factors set Cuba apart. First was the rapid growth in remittances, which jumped by an average of 44 percent per year during the last decade.

Second was that so many of the greenbacks were sent informally � in money belts, purses and day packs.

Rather than entrust their money to banks or institutions, many Cuban-Americans turn to mulas, or mules.

Thought to number in the thousands, mulas usually travel to Cuba twice a month, delivering from $6,000 to $10,000 each time, according to a July 2002 study by Manuel Orozco.

Their fees range from 7 percent to 10 percent. Sending $100 to a relative costs about $10. Send more and the percentage drops.

Some mulas work for entrepreneurs who hire them to travel to and from the island. Others are self-employed, according to Mr. Orozco, a migration expert at the Inter-American Dialogue, a leading policy analysis center.

All told, the mulas shuttle $180 million to $800 million into Cuba every year, he estimates.

Just how much money flows into Cuba is uncertain. But Pedro Gonz�lez Munne, editor of Miami’s La Nacion newspaper, said he suspects it’s “two or three times” the $1 billion per year often cited.

Scores of unlicensed Florida travel agencies send money to Cuba, said Mr. Gonz�lez, author of a book about remittances and other financial dealings.

And some mulas make “deposits” at private Cuban homes that act as informal banks and distribution centers, he said. These centers keep enough cash on hand to make deliveries in less than 24 hours � even before the next wave of mulas arrives. That makes the system faster and more efficient than anything the Cuban government or private companies have devised, said Mr. Gonz�lez, a former Havana journalist who moved to South Florida in 1991.

“No one can compete,” he said.

Ultimately, hundreds of thousands of Cuban families benefit from remittances. And while some receive just $20 a month, that goes a long way in a country where the average salary is half that.

A liter of milk costs less than a penny. So does a pound of rice or beans. That’s because the government spends about $500 million a year to subsidize basics.

Ileana Lozano, an accountant who lives in Guanabo, said she uses money sent by her Miami relatives to care for her mother, Mercedes, 80. She said many Cubans are worried about what they’ll do if that money dries up.

“At work today, no one talked about anything but remittances,” she said.

Her husband, Alexis Gonz�lez, a stockroom manager, isn’t quite as concerned.

“People will keep bringing in money, even if it’s in the sole of their shoes,” he said. “It won’t get here by Western Union, but it’ll get here.”

Studies show he’s probably right.

Continuing cash flow

When former President Bill Clinton suspended remittances in 1994, “reported private family transfers to Cuba continued to rise,” according to Lorena Barberia, author of a September 2002 study of remittances.
Ms. Barberia, Cuba program director at Harvard University’s David Rockefeller Center for Latin American Studies, writes that, “Neither the tightening nor the loosening of U.S. policy appears to have had significant impact on the overall volume of official flows.”

That hasn’t stopped people from trying to stem the cash flow.

Jorge Mas Canosa, then head of the powerful, anti-Castro Cuban American National Foundation, met with Mr. Clinton in 1994 and insisted that he “stop remittances entirely,” according to Lisandro Perez, a Florida International University professor. “The president agreed to do it.”

The Cuban government set out to capture as many dollars as possible, opening a chain of Tiendas de Recuperacion de Divisas, or TRDs � Currency Recovery Stores � that sell everything from kitchen pots to bicycles � all for dollars.

By 2000, more than 400 TRDs were operating around the country, taking in hundreds of millions of dollars in revenues per year, Ms. Barberia said.

That money � much of it from cash remittances � boosts the beleaguered Cuban economy, experts say. And much of it wouldn’t reach Cuba if not for the Bush administration, which has been making it easier for Cuban-Americans to send money while clamping down on travel to Cuba.

The policy is selective, discriminatory and ironic, said Phil Peters, a Cuba expert at the Lexington Institute, a private research group.

“The embargo is kept in place by Cuban-American pressure, and its purpose is to limit the flow of hard currency to Cuba. Yet through travel and remittances, Cuban-Americans deliver more money to the Cuban government than any other Cuban industry except tourism,” he said.

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