Yahoo! News
Oct. 25, 2001
HAVANA, Oct 24 (AFP) - With its currency sliding and the crucial tourism
industry in a free-fall on the heels of the terrorist attacks on the United
States, Cuba's already ailing economy has taken a dramatic turn for the worse.
The Cuban peso Wednesday hit 26 to the US dollar, its lowest level in almost
five years. CADECA, the central bank-authorized currency exchange offices, last
Friday closed with the peso trading for 23 to the greenback.
"The current situation is forcing the government to make some
concessions where the peso's exchange rate is concerned," a western
diplomat based here said privately.
"But it can't let (the rate drop) so dramatically that the population
cannot bear it," the diplomat added. "In any case, it shows that the
government is seriously short of dollars."
Indeed, while Cubans queued up at CADECA windows this week could sell
dollars they typically receive from tourism-related work or relatives'
remittances, they were stunned to learn they at least temporarily could no
longer trade in pesos for US currency.
The lone communist government in the Americas depends on hard currency to
purchase foodstuffs, oil and goods its needs for the tourism industry, in turn
its main hard currency earning enterprise, officially bringing in two billion
dollars last year.
And the slump in the peso comes as bad news for most of the island's workers
who earn their salaries in pesos -- on average about 20 dollars a month -- but
then exchange pesos for dollars to buy imported goods sold in government-run
stores but only for dollars, such as cooking oil, diapers, tampons or beef.
Some 40 percent of Cubans do not have any access to hard currency, diplomats
say.
Analysts say the peso's slide is tied to two factors: a hit to the mainstay
tourism industry, already feeling the effects of a post-terror strike decline in
travel, and lower remittances from Cubans living abroad who send home to family
an estimated 800 million to one billion dollars a year, according to unofficial
data.
With tourism hard hit in the nearby US state of Florida, for example, many
Cuban-Americans living there may have less to send to kin in Cuba.
Over the weekend, Cuba's Tourism Minister Ibrahim Ferradaz acknowledged the
government's earlier annual target of welcoming two million tourists by the
year's end would be missed.
In fact, the number of tourists visiting the island was down 13 percent in
the first two weeks of October compared to the same period a year earlier.
In the first official Cuban reaction to the potential fallout here from the
September 11 terror strikes in the United States, Ferradaz said Cuba would not
be immune from the crisis now crippling international tourism.
But he was upbeat about the future, saying he expected the current scare was
a passing phenomenon and that Cuba's sun-and-sand high season, which starts in
December, would not be a washout.
Ferradaz said Cuba's tourist trade remained attractive in part because of "very
high levels of safety" on the island which relies very little on US
tourism.
Under US sanctions against Havana, US nationals are not allowed to spend
money in Cuba without special permission from the US Treasury Department,
producing an effective travel ban.
But Ferradaz also acknowledged some major cost-cutting efforts were underway
in Cuban tourism including the closing of 20 of the island's 225 hotels since
September 11.
Managers at some of the major hotels in Havana say they have closed down
entire floors for lack of visitors, while some workers have been temporarily
sent home and long lines of empty taxis idle on local streets.
Many Cubans quietly express concern. They say they are spending as little as
possible, with the economic crisis of 1992-1993 -- after the collapse of the
Socialist bloc lost Cuba most of its supply of subsidized oil and other imported
goods -- still fresh in their minds. | 
