Cuba opens dollar stores filled with products that had been scarce for months
Government-run stores that accept U.S. dollars for payment opened across Cuba on Monday filled with products that had been in short supply at state markets for months.
Cuts of beef were on display and store shelves were lined with soap, detergent, shampoo, preserves of all kinds, pasta and grains as hundreds of people waited in line to make purchases with credit cards issued by Cuban banks that pay for the products in U.S. dollars. The government also eliminated the 10% tax that applied to purchases paid for with dollars and expanded the list of products that can be purchased with American currency.
“It is a return to the ‘90s in full order. Cuba has become not only the theme park for tourists, where they come to see how socialism is really lived, but also a time machine for Cubans themselves who see our lives returning to the Special Period,“ Eloína López, a 43-year-old housewife, said in a telephone interview from El Cotorro, on the outskirts of Havana. The Special Period refers to the island’s economic collapse following the end of subsidies with the fall of the former Soviet Union.
López currently lives off the monthly remittances sent by her husband from the United States. “I have spent months working to get meat because people do not want to sell it even under the table [on the black market]. Vendors are terrified by news reports about where police put people who do illegal things,“ she said.
López said the new stores are “a relief” because “at least there are things for those who have money.” But she expressed concern for those who have no family abroad. “I have my husband out of the country, but not everyone is that lucky. There are people who live solely with what they give in the ration books. Those people are going to go through some rough times,” she said.
In the early hours of Monday, the Cuban convertible peso (known as CUC) plummeted against the dollar in clandestine exchange houses, trading between 1.30 and 1.50 CUC per dollar.
Cuba’s economy has been impacted over the years as the economy in Venezuela — Cuba’s main trading partner — deteriorated under the Nicolás Maduro regime.
The government previously headed by Raúl Castro and now by Miguel Díaz-Canel went into more debt to buy food abroad due to the inefficiency of the Cuban-Soviet business system.
With galloping foreign debt, sanctions from the Trump administration and a shutdown of tourism due to COVID-19, the government said it was forced to open dollar stores to raise foreign exchange and operate.
For Emilio Morales, from the The Havana Consulting Group, it is a “desperate” measure, which shows how critical the economic situation is on the island.
“The country does not have dollars and the intention is to extract from people the money they have stored under the mattress and also stimulate the sending of remittances from abroad, because the main sources of government revenue have been reduced considerably,” he said.
“Selling in convertible pesos in the domestic market is no longer profitable to the Cuban military, since that currency has no value outside of Cuba. Therefore, they need to sell in dollars in order to pay suppliers,“ Morales said.
Various countries have expressed concern about the Cuban government’s defaults to their business owners. Companies in Spain, the main foreign investor in Cuba, are owed more than $300 million, according to reports by the news agency EFE.
“This crisis has not caught us at the worst time, but certainly a bad one, because there is still a tense situation from the financial point of view of the country and companies that have collection problems,” Xulio Fontecha, president of the Association of Spanish Entrepreneurs in Cuba (AEEC), told EFE.
For Morales, the problem is “systemic,” caused by a regime that has not been able to boost the country’s economy in more than 30 years.
“The country barely keeps generating electricity, thanks to the oil that Maduro delivers from Venezuela,” he said.
Morales said of most concern is that the government has not signaled that it plans to implement profound economic changes.
“The strategy to develop the country does not exist,” Morales said. “What they are trying to implement are survival measures after 60 years of accumulating problems, 60 years with a population subjected to poverty and a generation in power that has created a model where perpetual power and limits on citizens have been the key to its existence.”
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This story was originally published July 20, 2020 at 3:21 PM.
