Wednesday, October 30, 2013

Back to a Single Currency - Preparing Cubans Psychologically for What’s to Come

Back to a Single Currency: Preparing Cubans Psychologically for What's
to Come
October 28, 2013
Vicente Morin Aguado

HAVANA TIMES — The recent decision of Cuba's Council of Ministers to
re-establish a single currency system in the country has, first of all,
a psychological aim with a clear political motivation: getting us used
to the high retail prices we will be seeing when this one currency, most
likely the Cuban Peso (the "CUP", in bank jargon), becomes generalized.

In practice, however, it makes no difference whether one pays 500 Cuban
Pesos (CUP) or 20 Convertible Pesos (CUC) for a pair of shoes. The
self-employed, in fact, do not object to being paid in pesos. They even
exchange the CUC for 24 pesos and, after some haggling, they may end up
selling the article in question for a few less CUP so as to end the day
with a good sale.

Let us imagine that a hard-working man from the countryside (a guajiro,
as they are known in Havana) has sold four well-fattened pigs and
arrives at the capital with twenty thousand Cuban pesos. Nowadays, he is
forced to go to a currency exchange locale (CADECA) in order to acquire
Convertible Pesos. There, he exchanges his money for 800 of the latter,
which circulate throughout the country (as do the regular pesos).

The gentleman heads to a hard-currency store (known as TRDs) to purchase
a variety of products, today sold exclusively in CUCs. Quite a different
story is that of a pensioner who receives maybe 250 CUP a month, the
equivalent of 10 CUC. Mathematics has no feelings and, in both cases, we
have a common denominator which does not alter the earnings of the
self-employed or the TRDs in the least.

The psychological effect of this measure, however, is very real,
because, in the course of many years, we Cubans became used to paying
for things in Cuban pesos and are totally put off by the notion of
having to pay, say, 25 thousand pesos for a plasma TV, which would be
the rough equivalent of the one thousand Convertible Pesos this TV costs

The numbers are shocking, they get to you, they remind you how screwed
you are, that they've hit you with the double currency, paying you for
your day's work in one and selling you products in the other.

So, now they are giving us the option – first on an experimental basis,
before the measure is implemented throughout the country – to pay for
products and services in any of the two currencies, as though they were
actually changing the country's economic situation with that, when, in
fact, it's a simple mathematical equivalence, in a world where everyone
has an electronic calculator at hand.

What they are in fact doing is accustoming our minds to what we will be
heading towards in the near future. We will have a single currency, it
doesn't matter whether it's the CUP or CUC (though, for
"prestige-related" reasons, I suppose it will be the old Cuban Peso).
The point now is to accustom us to thinking in high figures, something
common in other countries, but until now unthinkable under the
revolutionary government.

As they do in Venezuela, Mexico or Japan, we will speak in hundreds or
thousands of pesos about things we regard as having a small value, a
pack of candy, a chocolate bar, a fan or a bicycle. The idea is to
prepare Cubans psychologically for the hard reality that there are no
magical solutions out there, that things cannot be changed by
presidential decrees. We've had a single currency for a very long time,
now we're simply giving this reality legal expression.

Before concluding, however, I would like to point out that, in addition
to the "prestige" I mentioned, there are a number of services that
Cubans pay in CUP (like electricity, gas, water, subsidized products
offered at ration stores, bread and others), which justify the choice of
the CUP as the single currency that will remain.

Cuba is slowly moving towards a limited market economy whose subsequent
growth appears unavoidable. There are no magic-wand or immediate solutions.

For the time being, they're "preparing" us for the coming step, the
implementation of a single currency system, without altering the current
relations between consumer item prices and salaries (as a government
decree cannot change a country's economy). It is a question of softening
the psychological impact of things to come.

Another aspect of this measure is actually positive, even though it has
nothing to do with the purchasing power of the population: the
unification of the country's accounting system will give rise to more
reliable financial mechanisms, which will henceforth have a single referent.

This will put an end to numerous arbitrary phenomena which today result
in conflict, embezzlement, scams and other contradictions inherent to
the absurd two-currency system.

A single price for Cubans and tourists, a single payment obligation in
any establishment: this will close the door on blackmailing inspectors,
eliminate a double accounting system for the payment of products, their
preparation and sale and do away with a number of prerogatives enjoyed
today by the bureaucracy that has become enthroned in Cuba.

I applaud the measure aimed at re-establishing a single currency system
because it will legalize what is already a reality and will curtail the
"swindles" of those who take advantage of the sweat of workers. I
realize this is still too little, but it is nonetheless a step forward.
I can only hope we won't be seeing any steps backward, as tends to
happen in my unpredictable country.

Source: "Back to a Single Currency: Preparing Cubans Psychologically for
What's to Come - Havana" -

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