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The Cuban communist dictatorship announced on June 10th that it was “temporarily” suspending the acceptance of bank deposits in U.S. dollars, effective June 21st. Essentially, all persons and businesses, Cuban and foreign, will not be able to transact, carry, or deposit in Cuban banks United States dollars until further notice. Why is the Marxist government doing this? Is this a rationally justified state economic decision, or a Castro regime dollar pillage scheme?
The publicly announced rationale from the Island’s totalitarian rulers follows its historical pattern of pointing the finger at the United States for its maladies. The amplified sanctions placed by the Trump administration and its difficulty in transacting in greenbacks was the most cited reason. It is true that the specific targeting of Castro-Communism’s military state-owned enterprises, like the GAESA (Grupo de Administración Empresarial SA) mega commercial emporium by the former Republican president, has frustrated business ventures and hard currency entries. Yet, this does not comprehensively explain this step (or misstep) by Havana.
For quite some time now, Cuban communism has carried out most of its international commercial transactions in Euros or other currencies. The bulk of the Castro regime’s foreign trade, in other words, is unfolded in other currencies. The only major industry transacted almost exclusively (until June 21st) in U.S. dollars have been the remittances from Cuban exiles in the United States. Less important sectors that also employed greenbacks were cash purchases by the communist government from American farmers, tourist operators in the United States, and Panamanian-based business transactions. The American dollar, in other words, did not have hegemony over Havana’s business activities.
There are far more plausible explanations for this apparent divorce between the much sought-after United States dollar and the Castro regime. Cuba’s war on the greenback is an opportunity for the Marxist dictatorship to rake in the American dollar. By making it virtually illegal tender, for practical purposes, after June 20th, Cubans were forced to rush to the state banks and surrender the world’s premier signature currency. Given the communist dictatorship’s exquisite history of looting its citizens’ property (foreigners too), most Cubans have kept American dollars out of the government’s reach. To put it another way, Cubans hide their U.S. dollars so that they can buy or barter things in the black market, Cuba’s unofficial, but most efficient economy.
The socialist economic model has always been about planning under centralized stewardship. It was never about common-sense economics or supply/demand rationality. Therefore, a vibrant black market, underground economy, has been inherent to socialism globally. The U.S. dollar, relative to the Cuban peso has been averaging in the black market for 70 pesos for every dollar (it has gone as high as 75 to 1). Cuban communism has survived economically, in part, due to the successful ransacking of every aspect of their subjects’ lives.
The plundering has been accomplished from the despoliation of worker’s salaries, both the domestic workforce and its foreign-leased neo-slave trade, commissions it marauds from remittances, currency exchanges, product sales from state stores, privileges, licenses, leases, and practically any commercial transaction that it oversees. In a totalitarian regime, that means anything except the black market, although this has many times been tolerated to avoid famine and deal with the systemic incapability of providing for its citizen’s basic needs.
The massive influx of American dollars that this new measure will bring, by forcibly requiring all greenback holders, Cubans and foreigners, to turn in the dollar and “exchange” it, will undoubtedly fatten the communist regime’s collection of the world’s preferred currency. It is almost predictable that the Marxist government will shave off a hefty fee from these “exchanges”. Cash remittances from abroad will suffer the same fate. In addition to the stampede of United States dollars that will enter the Cuban banking system, as well as the fees it will collect, this latest regime-orchestrated greenback policy will allow them to clamp down on the black-market currency exchange business.
Cuban communism has had a paying problem since it took power. The Soviet Union learned the hard way. The Paris Club, after concluding that the Island’s Marxist government would never pay off its huge debt, decided in 2015 to condone $8 billion of the Castro regime’s debt. It gave Havana five years to pay a remaining $3 billion which was extended due to the coronavirus but is due in the Fall of this year. With high likelihood, the Paris Club will be begged for more time or maybe another debt pardoning. The apparent war on the U.S. dollar may play into the Castro-Communist theatrics.
Soviet subsidies in exchange for international communist subversion, foreign investments and tourism, Venezuelan oil for imperialist overseership, drug trafficking, remittances, neo-slave human labor leasing trafficking, front businesses, and currency manipulation strategies have all been part of Castro-Communism’s systemic survivorship maneuvers. One thing is most assuredly: the Cuban people will foot the bill as they have for over 62 years.
Julio M Shiling, political scientist, writer, director of Patria de Martí and The Cuban American Voice, lecturer and media commentator. A native of Cuba, he currently lives in the United States. Twitter: @JulioMShiling // Julio es politólogo, escritor, director de Patria de Martí y The Cuban American Voice. Conferenciante y comentarista en los medios. Natural de Cuba, vive actualmente en EE UU.