Recent developments, including the opening of a dollar-based market in Havana, have reignited memories of statements made by Miguel Díaz-Canel in 2020. At that time, the Cuban government was planning monetary unification and assured the public that the economy would not be dollarized.
"They went on social media to say we were going to dollarize the economy, shut down CUC stores, and sell everything in foreign currency. They claimed the working people, 'whom they care so much about,' earning in CUP would be left completely defenseless," Díaz-Canel stated. He attributed these assertions to a campaign orchestrated by opposition groups and independent media, describing it as an "opinion matrix being sown on social networks."
Fast forward to 2022, during a parliamentary accountability session, Díaz-Canel acknowledged a partial dollarization of the Cuban economy. He cited various macroeconomic imbalances, including loss of foreign currency income, high fiscal deficits, increased personal incomes, and low productivity, hindering the supply of goods and services to the working populace.
The situation was further complicated by a corruption scandal involving the upper echelons of the regime, culminating in the arrest of former Economy and Planning Minister Alejandro Gil. Public disclosure on this matter has been minimal, seemingly an attempt by the regime to let time erase the collective memory of Cubans.
Over the past five years, not only have CUC stores vanished, but now Moneda Libremente Convertible (MLC) stores are also facing shortages and are expected to gradually close. Meanwhile, the government is prioritizing establishments that exclusively accept cash dollars or cards loaded with foreign currency.
From MLC Stores to Dollar Exclusivity
In a sharp turn of events, Cuba's informal currency market has witnessed a spike in prices in recent weeks, reflecting economic uncertainty and high demand for foreign currencies.
The opening of a new supermarket at 3rd and 70th in Havana has sparked outrage. This new venue is well-stocked with both local and international products but only accepts cash dollars or cards linked to foreign currency accounts, effectively excluding the Cuban peso and the much-touted MLC.
"It's a total disrespect. First it was MLC, they didn't take USD, only euros, and now it's USD, no euros accepted in that store. The one across, which is MLC, is completely empty, while the new USD store is stocked to the brim. Damn, how long will this go on? Where are they taking us?" expressed a frustrated customer on social media.
Change in Candy
One of the most controversial practices at this supermarket is giving change in candy. If the change is less than a dollar, customers have to accept sweets as compensation, reminiscent of other instances of arbitrary monetary changes in Cuba.
From the elimination of the original Cuban peso in the 1960s to the recent switch from CUC to MLC, Cubans have lost savings and faced restrictions. Episodes like the "House of Gold" in the 90s, where citizens traded their jewelry for "chavitos," exemplify an abusive economic policy.
Currency Stores in a Dollarized Cuban Economy
The supermarket at 3rd and 70th belongs to the Hotel Gran Muthu Habana, managed by MGM Muthu Hotels and the GAESA-controlled Gaviota Group. This exclusive market model underscores an increasing dollarization, contrary to Díaz-Canel's 2020 assurances: "They have said we are going to close CUC stores, leaving only currency stores, in MLC, and that's not true," he claimed then.
In reality, the situation has diverged significantly. While most Cubans must endure with a devalued peso, the government is focused on capturing foreign currency through exclusive markets that limit access to essential goods.
This economic landscape further erodes the Cuban people's trust in their monetary system and government, amplifying discontent with the communist regime's unfulfilled promises.
Understanding Cuba's Partial Dollarization
What does partial dollarization mean for Cuba?
Partial dollarization in Cuba means that certain sectors of the economy are operating with foreign currencies, primarily the U.S. dollar, while the Cuban peso remains in use for other transactions.
How has the Cuban government responded to the criticism of dollarization?
The Cuban government has often downplayed the extent of dollarization, attributing criticism to opposition groups and claiming that the economy is not fully dollarized despite evidence to the contrary.
Why are some Cuban stores only accepting dollars?
Some Cuban stores only accept dollars to attract foreign currency, which is crucial for the government amid economic challenges and a struggling local currency.