Up against sharpened threats against Cuba’s revolution and a reduced flow of U.S. dollars to Cuba, the government there has acted dramatically to move towards a dollar-free domestic economy. The goal is to prioritize dollars for use in international trade.
The Cuban Central Bank ruled that, as of Oct. 28, stores, providers of personal services, and commercial enterprises are not allowed to accept payments in U.S. dollars from Cuban citizens and foreign visitors. Banks are exchanging dollars for convertible Cuban pesos on a 1-to-1 basis. To speed the process along, they are putting off a 10 percent tax on such transactions until Nov. 8.
The official rationale for the tax is to cover Cuba’s increased risk in trading abroad in dollars. The possession of dollars at home remains legal, as are dollar withdrawals from individual bank accounts.
Cuba has long depended on dollars to conduct its foreign trade, and Cubans themselves have relied upon them to buy goods unaffordable on their peso salaries and unavailable through the rationing system. Half of all Cubans have access to dollars, mostly from relatives living abroad.
Appearing Oct. 26 on a television round-table, six days after injuring his right arm and left knee in a fall, Cuban President Fidel Castro emphasized his government’s resolve to “guarantee Cuba’s economic independence” and protect itself from “external economic aggression.”
The U.S. State Department has just created an interagency task force to pressure foreign banks and commercial institutions into rejecting dollars used in Cuba’s overseas trade. Washington recently imposed a $100 million fine on a Swiss bank for dollar transactions carried out for nations embargoed by the United States, among them Cuba.
It cracked down also on a company serving Cuban Americans by helping them forward remittances to Cuba. From now on, they will have to change dollars into other foreign currencies before sending money on to their relatives in Cuba.
The author can be reached at pww@pww.org.
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