- Created: Friday, 24 April 2009 16:22
FRFI 182 December 2004 / January 2005
On 25 October 2004, Cuba announced a new law, Resolution 80, stating that from 8 November cash in US dollars (USD) would no longer be accepted in domestic commerce. This will be substituted by the peso convertible, a currency printed and controlled by the Cuban National Bank. The announcement was made by President Fidel Castro during the ‘Round Table’, a daily, live television programme to discuss national issues. HELEN YAFFE reports from Cuba.
On 15 November, at another Round Table discussion, Fidel Castro declared that the task had been simple, successful and had popular support, and that it was one of the most important measures taken in recent years. Only a socialist country, said Fidel, could achieve such a measure. Thus Cuba has reclaimed its monetary sovereignty and has become the first country in the world to de-dollarise.
The USD began circulating in 1993, during the most austere years of the Special Period. Dollar decriminalisation was seen as a necessary evil to undermine the informal dollar market, the result of widespread scarcities. In this objective it was successful. The USD coexisted with the national currency, the national peso, the currency of the Cuban people. Within two years the value of the national peso rose against the USD from around 150 pesos for $1, to around 25 pesos for $1. With the increase in tourism and the remittances sent from Cubans resident in the United States, the USD circulated widely in Cuba.
In 1994 the Cuban government introduced the peso convertible, a currency with equal value to the USD, in an effort to limit the physical presence of the Yankee green-back. Cuba had three circulating currencies; the USD, the peso convertible (equal to USD) and the national peso (stabilising around 25=$1). In 2002, as conditions improved, the USD coin was removed from circulation. From July 2003 inter-firm transactions in Cuba were carried out in peso convertible only and the process of de-dollarisation began.
Resolution 80: a response to recent US attacks
In May 2004 the US Federal Reserve imposed a fine of $100,000 on the largest bank in Switzerland (USB) for transferring USD notes to Cuba. The Miami Mafia and right-wing press alleged that Cuba was laundering $3.9 billion with the Swiss bank.
On 8 June the Cuban government responded with a detailed account of Cuba’s operations with foreign banks in Granma, paper of the Cuban Communist Party, stating that ‘the ultra-right wing of the Bush administration is taking steps clearly aimed at blocking the income our country obtains from tourism and other services, and reducing to zero the possibility that Cubans living in the United States can send remittances to their relatives in Cuba by using the most evil, devious, hypocritical method imaginable: simply by preventing Cuba from making deposits in foreign banks of the dollars it obtains from sales in hard currency shops, from activities related to tourism and from other trade services. Thus, Cuba would not be able to use these dollars to buy medicines or food or to import the stock needed...
‘These actions are even more outrageous if one takes into account the fact that the only reason tourists who visit Cuba must use cash is that the Yankee blockade does not allow them to use credit cards or travellers’ cheques issued by US banks and other financial institutions that control this market... [The] persecutions and threats, which hang permanently over those who send money from the United States to their relatives in Cuba, means that they often prefer to send cash, so there is no paper trail that could make them liable to persecution from US authorities and to the violent behaviour of the terrorists who live in Miami’.
The Miami Mafia escalated the hysteria about the Swiss bank account, explicitly threatening all financial institutions which deal with Cuba. On 3 June, El Nuevo Herald raged that ‘this money laundering scandal shows that Cuba is a safe haven for money from terrorists and embezzlers’. In a press conference on 22 June, rabidly anti-Cuban Congresswomen Ileana Ros-Lehtinen said: ‘I am shocked that a bank which was given the extremely important responsibility of distributing the new American money should violate our country’s regulations concerning a state identified as a terrorist state.’
On 23 July, Juan Zárate, the US Treasury Undersecretary responsible for the fight against financing terrorism, announced an investigation into ‘possible links between “US bodies and persons” and the $3.9 billion that Cuba infiltrated into the international banking system using a Federal Reserve program’.
On 9 October, Daniel W Fisk, undersecretary for Western Hemispheric Affairs at the US State Department boasted about the Bush administration’s determination to destroy the Cuban Revolution: ‘our strategy is to identify long-ignored revenue streams for the Castro regime and then move to degrade them. For example, tourism... over a full calendar year, we estimate a net annual loss to the regime of some $375 million – and that’s just from reduced travel. When factoring in the decline in all revenue flows, we estimate we will have denied the regime at least half a billion dollars that Castro would have used to support his security and intelligence apparatus.’
Daniel Fisk announced the establishment of a Cuban Assets Targeting Group to investigate and stop hard currency flows into and out of Cuba. This group has 27 members, more than the group set up to pursue the assets of Osama Bin Laden.
Resolution 80 is the Revolution’s response to the establishment of the Cuban Assets Targeting Group. In the same week that Resolution 80 was announced, the Bush administration froze the US assets of SERCUBA, a company that facilitates remittances to be sent to Cuba from the US.
Resolution 80 does not criminalise the USD in Cuba. Cubans are free to hold USD in cash or in bank deposits and can withdraw either currency with no tax.
Immediate benefits for Cuban economy
Cubans had two weeks to change any quantity of USD into peso convertible with no charge and no record of their identity being taken. Banks carried out conversions exclusively from 12 noon and opened during the weekends to allow time for everyone to convert their currency. Exchange bureaus were set up in shops and offices throughout the country. Within days, all Cubans understood the provisions of the new law and the reasons why it was necessary. An advice line was set up. The conversion has not been financially detrimental to Cubans and the vast majority fully support the move.
The original deadline for conversion was postponed until 15 November because of the of level of demand. By 16 November 2,580,068 conversion transactions had been carried out, without a single incident and absolutely no panic. Since then a 10% charge has been imposed for converting USD into peso convertible, a tax which reflects the risk to Cuba of using the USD cash in international transactions. This effectively lowers the value of the USD by 10% against the peso convertible. As no movement of actual cash is involved in credit or debit card transactions, no charge is imposed. There is no charge to convert peso convertible into USD. There is no charge for converting euros, sterling, Canadian dollars or Swiss francs into the peso convertible. Tourists from those countries account for 80% of all visitors.
The 10% tax on dollar conversion will encourage Cubans abroad to send remittances in currencies other than the USD, thus decreasing the US government’s ability to obstruct and monitor remittances sent from the US.
The conversion to the peso convertible also undermines the flow of cash from US government agencies and the Miami Mafia to counter-revolutionaries in Cuba. In April 2003, 77 counter-revolutionaries were arrested carrying thousands of dollars in cash channelled via the US Special Interests Section in Havana.
Resolution 80 gives the Cuban government greater control over national finances. They can monitor the quantity of peso convertible printed and circulating, which will assist development plans and social expenditure. Since the announcement, the amount deposited in existing and newly opened savings accounts is greater than the sum deposited throughout the previous 10 years, giving the Cuban economy more funds for investment.
Francisco Soberon Valdes, President of the Cuban National Bank said that the peso convertible would generate confidence and credibility, as the currency ‘of a country, whose economy, without external help and under a ferocious blockade by the most powerful country in the world, has been capable of sustaining the most successful system of health and education in the Third World...in a world where corruption, speculation and financial fraud are as common and as daily as hunger and the destruction of the environment’.
‘...this new victory reaffirms our fullest convictions that there is no obstacle in the world or any aggression that our people and our Revolution, which are definitively the same, will not be capable of taking on successfully.’
US vetoes Cuba’s UN victory
On 28 October, following an inspiring speech by Cuban Foreign Minister Felipe Perez Roque, 179 nations voted at the United Nations in favour of ending the US blockade of Cuba. Just four countries voted against the resolution: the US, Israel, the Marshall Islands and Palau. Micronesia was the only country to abstain.
However, this resounding moral victory will make little difference, except to show how isolated the US position has become. This is the 13th year that Cuba has won the UN vote yet, as in every previous year, it has been overturned by the United States, using its right of veto on the Security Council.
The US can always count on Israel’s unconditional support – a small price to pay for US imperialism’s massive military, economic and political support for Zionism. But the US is forced to rely on bribery and regional influence to secure any other support – the only allies it was able to buy off this year were the tiny Marshall Islands (70,000 inhabitants) and Palau (20,000 inhabitants), two of the newest UN members. Both are totally dependent on the US. Recently the US turned one atoll in the region into a practice target for intercontinental ballistic missiles. Easy pickings for this international playground bully, indeed.
The US blockade of Cuba leads to annual losses of more than $1.8 billion for Cuba. Perez Roque gave concrete examples of the effects of the blockade and what more Cuban society could provide if it were not in place, such as building new homes, providing all families with gas to cook on and preventing power blackouts.
End the illegal US blockade of Cuba!
No culture, please, we’re Yankees
The lumpen bureaucrats of the US Treasury and State Departments are refusing to grant a licence to a group in the US that is seeking to restore the Hemingway museum in Havana. The museum, housed in the crumbling villa that was US author Ernest Hemingway’s home and was bequeathed to the Cuban people by his widow, contains his 9,000-volume library, including many first editions, manuscripts, letters and personal belongings. It is now in danger of collapse. A group of Americans, including Hemingway’s grandson and US actors Lauren Bacall and James Gandolfini have applied for a licence for a feasibility study on restoring the house. However, the US administration prefers to see a cultural and historical site demolished rather than, under any circumstances, do something which might ‘promote tourism to Cuba’.