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One town's experiment gives Cuban peso value

Associated Press

A communist experiment is letting average government workers in this eastern city enjoy a few things only foreigners and monied Cubans can usually afford: a good burger, a kicking jazz bar and stiff cocktails.

Across the rest of the island, average monthly government salaries of 408 pesos, about $19.50, don't cover grocery bills, let alone a night out. But in Bayamo the central government has made a special effort to support peso businesses, giving the lowly currency actual buying power.

Along the stylish pedestrian mall known as Paseo or ''The Boulevard,'' six blocks of restaurants, barber shops, ice cream parlors and department stores give Cubans a taste of tourist life at local prices.

Jazz bands jam for free until 2 a.m. at the Piano Bar, where mojitos go for just 5.50 pesos, or 30 U.S. cents. A 1950s-style diner serves up tasty meatball sandwiches for about half a peso -- the equivalent of three cents -- and four scoops of the richest ice cream in Cuba for about the same price.

''Almost everyone who comes in is surprised at first. The music is good. The cocktails are strong,'' said Ernesto Aldana of the Piano Bar, where the Cuba Libre -- copious rum pours with ice and splashes of cola and lime -- costs 4.80 pesos, the equivalent of less than 25 cents.

''It's like you're paying in dollars,'' Aldana said. ``But you're not.''

Under the country's dual currency system, most things Cubans want and need are not available in the money they earn -- the regular Cuban peso which is worth a little more than 4 cents. Virtually all upscale businesses across the island are priced for foreigners in so-called convertible pesos worth $1.08 each, 24 times as much.

Cuba has had two currencies since the collapse of the Soviet Union wrecked its economy and spurred its turn to tourism. Tourist businesses took U.S. dollars and charged U.S. prices, while the peso was maintained for everyday transactions.

The convertible peso, also called hard currency, was born around the same time but took on its current value in 2004, when the government banned the use of the U.S. dollar.

Cubans have long hoped the government would merge the two pesos and close the gap between the goods and services they and foreigners can afford. But so far, nothing has changed under Raúl Castro, who took over as president from his ailing brother, Fidel, earlier this year.

Cuba's government historically has chosen provincial areas to test potential economic policy changes. In Bayamo, a city of 140,000 and the capital of Granma province, leaders of the regional Communist Party began expanding peso businesses in 2005.

''Normally, there's a gap between quality of service to foreigners and service to Cubans,'' said Isidro Alonso of Bayamo's Communist Party's Committee on Ideology. ``We are working to erase that.''

Huge government subsidies are needed. Paseo businesses here take in only 1,000 to 1,700 pesos a day, or $50 to $80. And the program only took shape after Bayamo communists asked central government planners for special autonomy and won the right to sell regionally produced items such as rum, seafood, beer, yogurt, beef, ice cream and cheese to local residents, rather than shipping them elsewhere on the island.

''We would see products like powdered milk made here and sold somewhere else and we said, 'How is this possible? If we make it in Granma, we should be selling it in Granma,''' Alonso said.

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