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Cuba Stunned As Dollar-Only Stores Close

By Vanessa Arrington, Associated Press Writer. Tue May 11, 7:08 PM ET.

HAVANA - Cuba's dollar-only stores displayed "closed for inventory" signs Tuesday after the communist government suddenly shut them down, blaming new U.S. measures aimed at squeezing the island's economy.

Long lines stretched from state stores with food and personal hygiene products - nearly the only items still sold to Cubans in dollars - as people scrambled to buy shampoo and soap from rapidly emptying shelves.

"This is insanity," said 64-year-old Odila Morales, waiting to buy laundry detergent. "Politics are filthy."

The government did not say whether the stores would reopen. But Julio Perez, the administrator of Harris Brothers department store, said they were merely giving dollar-only stores time to mark up the prices of all their goods.

"It really isn't anything serious," said Perez. "Maybe it will only be three, four, five days."

Some questioned how the closure - which prevents Cubans from spending dollars at the government stores - would counteract the U.S. proposals announced last week, which aim to reduce hard currency on the island by limiting how often Cuban-Americans can visit relatives, decreasing how much they can spend, and prohibiting money transfers to Cuban officials and Communist Party members.

"It's not helping the Cuban people, and it's not helping the Cuban government," said Carmelo Mesa-Lago, an expert on the Cuban economy at the University of Pittsburgh. "All this is bad - bad economics, bad social welfare."

Mesa-Lago said the measures could strengthen the Cuban government's control over the economy.

Cuba was forced to implement liberal reforms in the early 1990s to cope with the loss of Soviet aid and trade. Possession of dollars was legalized in 1993 to draw hard currency from growing tourism and family purchases at the state stores.

The government has steadily offered more and more goods in U.S. currency while the Cuban ration book of items available in pesos has withered.

For many Cubans, rations now cover eight eggs, a pound of chicken, about a pint of cooking oil, six pounds of rice, a half-pound of a ground meat-soy mixture, and a few other goods each month. The rest must be purchased at far higher prices either in pesos or in dollars.

The dollar-only shops have been associated with social inequalities that have worried Cuban leaders. The elite, with access to greenbacks, can easily buy everyday goods that a doctor cannot on a salary equivalent to $25 a month.

Three floors selling clothes, mattresses and electrical goods were cordoned off in Harris Brothers, where employees stood behind empty counters looking confused. Other workers catered to dozens of shoppers buying cooking oil, Spam and deodorant in the store's only open section.

Dozens of stores along Old Havana's commercial Obispo Street selling toys, shoes and fancy furniture never opened Tuesday. Gift shops in upscale hotels and other tourist stores, however, were still selling T-shirts, crafts and camera film in dollars.

Laura Pernez, a 25-year-old gift shop clerk, said tourists would not be affected by the measures. Cubans, on the other hand, were very uncertain.

"I am worried, of course, since we don't know if this is going to be for a week, a month, or seven years," Pernez said. "But we need to wait. One shouldn't go into a panic."

While most stores were shut tight, many of those inside hotels remained open to serve tourists. Some Cubans took advantage of that on Tuesday as officials tried to work out how to apply the new rules.

Rolando Hernandez, a salesman at a store connected to the Comodoro Hotel, said it sold about 10 washing machines, 10 refrigerators and about the same number of stereo sets. Usually they sell one or two of each, if any.

"They lined up and bought and bought," he said.

The government said that dollar prices would be raised on food and gasoline and perhaps other products.

But it assured Cubans that other aspects of the economy would not be affected: people will still be able to change money, buy food in pesos at private farmers' markets, and have access to such government services as health care and education.

Mesa-Lago said the dollar stores were opened in 1993 in large part to fight a growing black market in which goods were traded in dollars without passing through the state's hands.

"Once they close this window, then the black market is going to expand," he said.

Cash-strapped Cuba counters tighter US sanctions with more austerity measures

HAVANA, 11 (AFP) - Cuba has countered US plans to tighten its embargo on the island by imposing tough new austerity measures, insisting its people heroically confront grim economic hardship.

"Days of work and sacrifice await us, but so do glory and victory for our heroic fatherland," the communist government said late Monday announcing plans which range from sharply reducing sales at stores where purchases are in dollars, to increasing nickel and cobalt mining, and pushing for greater energy self-sufficiency.

Last week, US President George W. Bush endorsed measures aimed at speeding the end of President Fidel Castro's rule, which include using US military airplanes to broadcast pro-democracy radio and television programs into Cuba.

The United States also plans to further restrict Cuban-Americans' cash remittances to relatives on the island and to limit family visits between the United States and Cuba to one every three years.

The remittances are a pillar of the Cuban economy worth some 1.2 billion dollars a year.

US funds also will be used to spread information worldwide relating to Washington's accusations that Havana harbors terrorists, foments subversion in Latin America and has at least a limited developmental biological weapons research capability, according to the US report.

Goals of the US initiative are to undermine the 77-year-old Castro's plans that his brother Raul Castro succeed him; to prepare for what Washington sees as the eventual defeat of Cuban communism; and to speed Cuba's "transition to democracy" US officials have said.

In Washington, Cuba's top diplomat Dagoberto Rodriguez on Monday called the US measures "a destabilization plan (against) a legitimate government."

Hours later, the Cuban plan was announced including notice that "until further notice sales at stores offering products for sale in dollars are hereby suspended, except for food and personal hygeine products."

That would mean Cubans would no longer to be able to buy "non-essential" goods such as clothing and appliances in hard currency from such stores, which are run by companies tied to the state.

Food and hygiene product prices at the stores are to be raised, as will the price of gasoline. Cuba, with 11.2 million people, is the Americas' only one-party communist country.

Caught by surprise, long lines of Cubans snaked outside the stores before dawn Tuesday as people scrambled to stock up on supplies with price hikes coming. Non-essential goods including cigarettes and liquors were pulled from store shelves until re-pricing could be completed.

"Nobody is talking about anything else but nobody is sure just how high the price hikes are going to go," said Nelia Castellanos, a retired graphic designer waiting in line at a Havana market.

Dayna Cintra, a young woman in her nurse's gear waiting in line at a Havana store, grumbled that "really, the Americans are trying to give us democracy by punishing our families."

The rationing card that grants Cubans small amounts of food handouts was not changed nor were health and education programs. The exchange rate at official currency exchange outlets remained at 26 pesos to the US dollar, and peso- and dollar-denominated bank account rules were unchanged.

But, in mining, "nickel and cobalt production will be increased, as will exploration for oil and natural gas, using new extraction techniques aimed at achieving (energy) self-sufficiency," the government statement said.

"In agriculture, priority will be given to export sectors, and the orderly production of food, using greater numbers of working animals, reducing imported goods and reducing spending on fuel."

The United States has had a comprehensive economic embargo clamped on Cuba since 1962.

Washington's bid to boost pressure on Castro comes as Bush raises funds among Cuban-Americans in Florida, widely viewed as a must-win state in the November 2 presidential election.

"Bush could even order a military invasion of our country to improve his damaged image ahead of the elections," warned the Juventud Rebelde (Rebel Youth) newspaper.

Cuba Freezes Most Sales at Dollar Stores

By JOHN RICE, Associated Press Writer, Tue May 11.

HAVANA - Officials suddenly halted most of the dollar sales that Cubans have come to count on and warned of higher dollar prices for food and gasoline. They blamed new U.S. measures meant to undermine the island's communist government.

Dollar stores all across the Cuban capital were closed Tuesday morning, many displaying identical "closed for inventory" notices.

Scores of agitated people lined up for last-minute purchases at late-night variety stores after the official declaration was read on Cuban state television shortly before 8 p.m. Monday night.

The measure could have dramatic effect on everyday life in Cuba, where hard-currency stores offer plentiful goods - from soap to spark plugs - that are available in scant quantities, if at all, at highly subsidized prices in Cuban pesos.

Except for food, gasoline and personal hygiene products, the announcement said, sales in dollars "are suspended until further notice." It was not clear if they would resume at some point.

It also said that dollar prices would be raised on food and gasoline - and perhaps other products if the stores reopen. Prices in pesos, the government said, would remain stable.

Sales of goods at dollar stores "are suspended until further notice," announcers on state television announced, reading an "official notice." Crucially, food and personal hygiene products were exempted.

Cuba blamed the measure on "the brutal and cruel" measures adopted last week by President Bush to strengthen the embargo of Cuba and to hasten the end of the communist government here.

The announcement said the U.S. proposals "are directly aimed at strangling our development and reducing to a minimum the resources in hard currency that are essential for the necessities of food, medical and educational services and other essentials."

Many analysts had seen the Bush measures as a relatively modest tweak to the broad U.S. economic embargo that has been in place against Cuba since the early 1960s.

Bush said Cuban-Americans now can visit relatives on the island once every three years rather than once a year. They can spend $50 a day rather than the earlier limit of $164.

Visits and money transfers are limited to immediate family members - excluding uncles and cousins - and officials and Communist Party members cannot receive funds. More money would be allotted for dissidents.

Cuban officials have warned the measures could be a possible prelude to stronger U.S. attacks, possibly even an invasion.

They warned Cubans Monday night that "days of work and sacrifice await" and said further measures could follow if the new steps are insufficient.

A permanent closure of the dollar stores could be another step back from the liberal reforms enacted in the early 1990s to cope with the loss of aid and trade Cuba had enjoyed with the Soviet Union.

Possession of dollars was legalized in 1993 to draw dollars from growing tourism and family remittances into the state stores. The government has steadily offered more and more goods in the U.S. currency while the Cuban ration book of items available in pesos has withered.

For many Cubans, rations now cover eight eggs, a pound of chicken, a half-liter of cooking oil, six pounds of rice a half-pound of a ground meat-soy mixture and a few other goods each month.

The rest must be purchased at far higher prices either in pesos or in dollars.

Many of those lined up Monday night at shops built into gas stations were buying cooking oil and soap before prices rise. Most expressed frustration at the measures. Some said they blamed Bush. Nearly all declined to give their names and a few physically threatened foreign camera crews.

The announcement did not make clear whether dollar-only shops in hotels and other tourist areas crucial to Cuba's economy would also be closed. Many until now have catered to Cubans as well as to foreigners.

The government assured Cubans that other aspects of the economy would not be affected: they can still change money, buy food in pesos at private farmers markets and use the socialist health, education, free rent, cultural and sports services.

It was not immediately clear what would happen to the goods now sold at dollar stores.

The dollar-only shops have been associated with social inequalities that have worried Cuban leaders. An elite of people with access to greenbacks can easily buy everyday goods that a doctor cannot on a salary equivalent to $25 a month.

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