Cuban response to new Bush offensive

["michael a. lebowitz" <mlebowit@xxxxxx>]

> Date
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> > > 
> Re: Marx Conference in Havana just completed
> by Michael Perelman
> 14 May 2004 02:00 UTC
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>
> Thank you, Michael, for the excellent report.

Thank you. I think people missed a good one.

>   I understand that Cuba
> was 
> trying to
> draw back from the dollar economy a bit before Bush acted.  Am I
> wrong?
>
> Could you teach us something about the evolution of the cuban economy?
>
> Thanks again.

        Unfortunately, I'm not able to keep up with developments in Cuba as much as I would like because I'm absorbed in Venezuela. I'm sure others know much more. There's no question in my mind that Fidel and many others see the market as corrupting and would like to foster solidarity and to increase moral incentives rather than to let self-interest be in command. However, my sense is that there is no desire to pull back from the dollar economy as such. Cuba desperately needs dollars to pay for imports, and having locals ask their US relatives to send money is important in permitting them to purchase many things like the food, medicine, etc they don't produce. This is especially important in the context of high oil prices (much higher than budgeted for). I think this need has accelerated efforts to economise on the use of the USD.
        It is important to understand that, although people know that there is the peso economy and the dollar economy in Cuba (and that tourists and increasingly Cubans live in the latter), Cuba really has a 3rd currency-- the convertible peso (which is a perfect substitute for the usd internally); in this particular respect, Cuba is not a dollarised economy because they have complete control over the extent of convertible pesos in circulation--- ie., to this extent they retain their monetary sovereignty. Within the last year, the government has been moving to reduce the circulation of the usd between enterprises, replacing this with the convertible peso and has pushed to get the usd into the central bank faster. Ie., faced with scarcity of the usd for imports, it is economising on its use and substituting the convertible peso for internal circulation. If I'm correct about what is happening, it would be entirely consistent-- in the context of a real threat of reduced usd as the result of the new Bush offensive--- for them to extend this to purchase of consumer durables, ie., to further substitute that peso by requiring people to exchange their usd for these. This could occur while not in any way reducing the demand for usd remittances (and, in fact, prices of these could be increased at the same time). Again, this is only my own speculation as to what is occurring. What is not speculation, on the other hand, is that Cuba remains in difficult economic shape (if only they can succeed in finding that good oil!) and somehow manages to keep going.
        I hope this helps and stimulates someone who knows more to comment.
                in solidarity,
                 michael

ps. I've seen on tv this morning a massive crowd (and a very tired-looking Fidel) out in front of the US interests building in Havana, protesting the Bush moves.

Michael A. Lebowitz

Professor Emeritus

Economics Department

Simon Fraser University

Burnaby, B.C., Canada V5A 1S6

Currently based in Venezuela. Can be reached at

Residencias Anauco Suites

Departamento 601

Parque Central, Zona Postal 1010, Oficina 1

Caracas, Venezuela

(58-212) 573-4111

fax: (58-212) 573-7724