CUBA NEWS
The Miami Herald

New dollar dictate breeds confusion

Cuban Americans in South Florida began looking for alternative ways to wire money to relatives on the island after Cuba's decision to stop accepting the U.S. dollar.

By Nancy San Martin, Christina Hoag and Pablo Bachelet, nsanmartin@herald.com. Posted on Wed, Oct. 27, 2004

Cuba's decision to eject the U.S. dollar from its domestic economy sent Cuban Americans to banks and money-transfer offices Tuesday seeking ways to wire other hard currencies to relatives. On the island, Cubans told the government the new rules left them thoroughly confused.

In Havana, many flocked to exchange houses to trade in dollars before the greenbacks become unusable at most businesses beginning Nov. 8. That's when the Cuban government also will begin charging a 10 percent exchange fee on dollars entering the Caribbean island, making them less valuable than the ''convertible'' peso that will replace American currency.

''People are very worried and alarmed,'' a Havana academic told The Herald in a telephone interview. "They are afraid of what will come next, if life will get even harder. Some are trying to figure out how to get money out of the country.''

Travelers to Cuba should take euros, not dollars, to spend on the island after Nov. 8 to avoid the exchange fee, but it remained unclear Tuesday whether Cuban Americans will be able to send euros to relatives by remittance to also save money.

''Our advice is don't go with dollars to Cuba after November 8,'' said Francisco Aruca, chairman of Marazul Charters in Miami. "Go to your bank and buy euros. It's perfectly legal, but call around and check the fees first.''

One local bank, he said, charges a flat $15 fee to exchange dollars for euros in cash, which for $500 in spending money for a trip to Cuba works out to a 3 percent fee -- well below the 10 percent Cuba will take off the top.

But other outlets may charge a higher fee, or increase the percentage they charges if the amount being converted is small.

Another way to send other currencies would be to transfer money via a third country, but that would involve paying two transfer fees that may add up to more than 10 percent.

REVIEWING THE RULES

Transfer services in Miami reported business as usual on Tuesday, but noted that next month people may start flocking in to send their remittance before the rule takes effect.

Some Cubans in Miami said they will continue to send remittances despite the new rules.

''What am I going to do? There's nothing I can do about it,'' said Koran Fernandez, a roofer. "If I don't send money, my family will die of hunger.''

But Juan Fernandez, an electrician, said he would likely stop sending cash to his two teenagers.

''How's he going to take 10 percent? He's a fresco [He has a lot of nerve],'' he said, referring to Cuban leader Fidel Castro.

Money-transfer agencies said Tuesday that they were reviewing the new Cuban government edict. Cuban Americans are allowed to send $300 per quarter to immediate family members on the island. The new rule would mean relatives would receive only $270 in convertible pesos every three months.

Western Union and Traveler's Express/MoneyGram International both said that they weren't sure how the new rule would affect their transfer services to Cuba.

''We're still assessing what this all means,'' said Cathy Rebuffoni, communications manager for Traveler's Express/MoneyGram International.

CONCERNS ABOUND

The other key question, Aruca said, is whether euro payouts would be cheaper than the 10 percent dollar-conversion fee.

Cubans have similar questions, many saying that they do not understand how the new scheme will work. The government had to activate two hotlines and dedicate a special radio and television broadcast to the new measure to quell widespread concerns.

''The argument the government is giving is so illogical, people can't make sense of it,'' an independent journalist on the island told The Herald.

Castro said Monday that the new measure was necessary to protect the country's economy from the Bush administration tactics to stem the flow of cash to the island.

Castro urged Cubans to tell relatives to send remittances in euros, British pounds or Canadian dollars. The 10 percent fee will only apply to exchanges on U.S. dollars.

In Washington, State Department spokesman Adam Ereli said Tuesday that Castro's decision was "confiscatory.''

Cuba to take 10% of exiles' cash

By Nancy San Martin, nsanmartin@herald.com. Posted on Tue, Oct. 26, 2004.

The Cuban government turned the economic clock back a decade Monday with an announcement that it would soon stop accepting the U.S. dollar and instead require the so-called ''convertible'' peso as the only form of payment at businesses across the island.

Economists said the new measures, which take effect Nov. 8, was yet another move in a series of steps in recent months to further consolidate control over the circulation of U.S. currency and raise needed money for the government. Under the new rules, the government keeps 10 percent of all money being coverted.

''This is a move that is following a trend: additional control,'' said Paolo Spadoni, of the University of Florida, who has studied Cuba's economy. "All the money circulating will go through the government.''

The announcement was made on Cuban television Monday night and came in the form of a resolution adopted by Cuba's Central Bank. Cuban leader Fidel Castro looked on as his chief aide and a television personality read from the document.

Dollars will be changed into convertible pesos at a one-to-one rate with no extra charge until Nov. 8, according to the resolution. But after that, the 10 percent fee will be added to the exchange transactions. The convertible peso is one-to-one to the U.S. dollar, whereas the Cuba peso is worth much less.

GOVERNMENT'S GAIN

In remittances alone, the new 10 percent charge would provide a substantial profit for the government's coffers. Between $400 million and $1 billion is estimated to flow to the island each year in the form of cash transfers from Cuban Americans, primarily from the United States to relatives in Cuba.

''It's going to be very difficult for a lot of people,'' a Havana resident told The Herald by telephone.

''If somebody sends me $100, then I will get $90 back,'' said Jesús, a Havana street merchant. "Why lose when you have nothing?''

Jesús said he will take advantage of the grace period to trade in the U.S. cash he has saved, but after that, losing 10 percent of his money will feel like "a punishment for something we haven't done.''

Economists predicted that many Cubans, like Jesús, will flock to stores to stock up on merchandise before the new rule kicks in.

ONLY THE DOLLAR

In his announcement, Castro suggested that Cubans tell their relatives living abroad to send them money in other foreign currencies, such as euros, British sterling or Swiss francs, The Associated Press reported. There will not be a fee to exchange other currencies.

Cuba said the new rule was another necessary response to tightened U.S. restrictions on travel and remittances that limit family visits to the island to once every three years, reduce the per diem that can be spent while on the island and restrict money transfers to immediate relatives.

Soon after the new U.S. measures were announced in May, the Cuban government raised prices at stores that accept dollars by as much as 30 percent.

Last year, Cuba ordered state companies to conduct all of their hard-currency transactions through the central bank, providing more money for the government and enabling more centralized control over state enterprises.

Although only relatively few Cubans are estimated to have direct access to U.S. dollars, U.S. currency has become the backbone of the economy, enabling purchases of higher-quality food, clothing, appliances and other products not readily available at peso-only stores.

VITAL TO ECONOMY

U.S. dollars have been the primary currency in Cuba since 1993, when Castro legalized the dollar amid a grinding economic crisis caused by the Soviet Union's 1991 collapse and the loss of about $5 billion in annual subsidies from Moscow.

The government said the latest measure was tied to the U.S. Federal Reserve's decision in May to fine Switzerland's largest bank for allegedly sending U.S. dollars to Cuba and other nations in violation of U.S. sanctions. The United States implemented an economic embargo against Cuba four decades ago.

Miami Republican Rep. Ileana Ros-Lehtinen said that Castro's announcement was ''a desperate act to change the subject'' from his own failings at home at a time when his fall in Santa Clara last week led to speculation about a future fall from power.

''It's a way for him to shift the blame to the United States,'' Ros-Lehtinen said.

Herald staff writers Jennifer Babson, Pablo Bachelet, Jane Bussey, Gail Epstein Nieves and Matthew Haggman contributed to this report.

White House stemming flow of remittances

President Bush has ordered that U.S. nationals be barred from sending money to Cuba through the transfer company SerCuba.

By Pablo Bachelet, pbachelet@herald.com. Posted on Tue, Oct. 26, 2004.

WASHINGTON - The Bush administration announced Monday that it was barring U.S. nationals from using SerCuba, a money-transfer company, to send remittances to the island.

The Treasury Department added SerCuba to its list of Specially Designated Nationals, meaning that U.S. citizens and residents are forbidden from engaging in any transactions with the firm and that any assets belonging to the firm in the hands of U.S. nationals would be blocked.

SerCuba, Treasury said in a statement, operates under Cuban law and is supported by Cimex, a state-run trading company.

SerCuba allows people subject to U.S. jurisdiction to send cash to Cuba via third countries or through its website ( www.sercu ba.com), according to the Bush administration.

''Today, we are financially isolating SerCuba to make it more difficult for the Cuban regime to obtain the hard currency it uses to oppress its own people and to prop up its government,'' said Juan Carlos Zarate, the Treasury's assistant secretary for Terrorist Financing and Financial Crime.

Treasury officials, however, declined to say whether Cuban Americans had used SerCuba to transfer funds.

SerCuba was launched in August by the Cuban Telecommunications Company (ETECSA), just weeks after the Bush administration announced rules aimed at toughening the embargo against the island and hastening the fall of the Fidel Castro government. Anyone found guilty of doing business with SerCuba is subject to criminal prosecution and fines, Treasury Department officials said.

SerCuba allows the island's residents to use a debit card on the remittances they receive from Italy and Spain, the two countries where SerCuba operates outside of Cuba. The debit card is free, and senders pay a transfer fee that starts at 13 euros or $16.50. Europe's Telecom Italia holds a 27 percent stake in ETECSA.

Institutions like the Inter-American Development Bank (IDB) have promoted the use of debit cards as a way to help lower the cost of sending remittances, which tends to benefit the poorer segments of societies. The average cost of sending remittances to Cuba is 12 percent of the money sent, according to a May 2004 IDB study, the highest rate in Latin America.

Remittances are a vital source of income for the island, with yearly estimates varying from $800 million to $1.2 billion, most of it coming from about 1.3 million Cubans in the United States.

The Bush administration says much of that money ends up in state coffers and is used to repress the Cuban people, but it has stopped short of banning remittances outright.

At the end of June, however, it limited the beneficiaries of remittances to immediate family members and forbid sending money to the Cuban Communist Party members.

Saúl González, a spokesman for ETECSA, said SerCuba ws "a private company that is independent of any government.''

Sercuba operates a call center in Havana, 16 offices in Cuba and one each in Italy and Spain.

Flow of vital cash likely to continue

Cuban exiles who send money to relatives on the island will see its value cut by 10 percent on its conversion under new rules announced by Cuba.

By Elaine de Valle and Luisa Yanez, edevalle@herald.com. Posted on Tue, Oct. 26, 2004.

Cuba's decision to refuse U.S. dollars at government stores and businesses will hit thousands of exiles in Miami-Dade County who provide much-needed cash to relatives on the island.

But those who send remittances said they will continue to do so, just at a higher cost.

Beginning Nov. 8, Cubans will have to pay a 10 percent charge to convert U.S. dollars into Cuban pesos.

''Wow! They are taking even more from us,'' said Francisco López, a mechanic in Little Havana who left the island in the 1994 rafter exodus. "They are always looking for ways to take from us.''

López sends about $100 a month to his father and six brothers and sisters. He said he will continue sending the money -- even if the Castro government now will get $10.

''I don't have a choice. It's the only way they survive,'' said López, whose father, a retired cook, is paid 61 pesos a month -- the equivalent of about $3.

CONTROL

Cuban leader Fidel Castro suggested in his announcement that Cubans tell relatives abroad to send them money in other foreign currencies, such as euros, British sterling or Swiss francs.

Jaime Suchlicki, director of the University of Miami's Institute for Cuban and Cuban-American Studies, said Castro's announcement is aimed at better controlling the U.S. currency that enters the island and deflating the black market that trades in it.

''This is all about recentralization of the economy. Castro is tightening things up again and returning to the original idea of the revolution,'' Suchlicki said.

"He's has slowly been doing it in the last few months. It's a growing trend.''

Eddy Levy, a founding member of the Cuban American Commission for Family Rights, created months ago in Miami in reaction to the Bush administration's tightening of sanctions against travel to the Caribbean island, said the Cuban government is doing what it finds necessary to compensate for lost dollars.

''But not only from the Bush administration's measures against the Cuban families,'' Levy said, adding that the government was likely also reeling because of the increased price of oil and two hurricanes that swept across the island in recent months.

The move could be temporary, Levy said.

''I trust that the Cuban government is doing what they think is best for their economy, which is what any responsible government does,'' Levy said. "Let's hope it is only a transitionary measure until the economy gets better on the island.''

MUCH-DISCUSSED ISSUE

In Havana, prominent dissident Vladimiro Roca said the news of the monetary restriction, made public on Mesa Redonda, a nightly government-sponsored television program, was a hot topic of conversation on the island Monday night.

''This means they will squeeze more blood and sweat from the Cuban people,'' Roca said in a telephone interview. "The economy is dead. The government needs funds. The only place to get it, as always, is from the Cuban people.''

Recuperating Castro expected to maintain political power

Cuban President Fidel Castro will have to cut back on his duties, but few think he will give up any political control over the country.

By Nancy San Martin, nsanmartin@herald.com. Posted on Sat, Oct. 23, 2004.

President Fidel Castro will likely be off his feet for several weeks recovering from a fractured knee and arm, but experts said Friday they don't expect the 78-year-old Cuban ruler to delegate any authority beyond ceremonial duties.

Castro's determination to remain in control became abundantly clear in a lengthy letter he sent to ''compatriots'' and was read by radio and TV broadcasters and published in state-controlled newspapers on Friday.

''From the moment of the fall, I have not stopped attending to the most important tasks that I am responsible for, in coordination with the other comrades,'' he wrote. "I'm recovering well and will not lose contact with you.''

Experts on Cuba said the letter was probably also intended to send a message to those who may have ambitions to replace the man who has ruled Cuba for 45 years.

''So long as he is capable of making decisions, I don't think he will open space for anyone, not even his brother,'' said Alcibiades Hidalgo, a former Cuban ambassador to the United Nations and personal secretary to Castro's younger brother and officially designated successor, Raúl Castro.

''And nobody would dare to solicit more political space,'' added Hidalgo, who defected two years ago.

While older people can heal well from bone fractures, Castro can expect several weeks or even months before a complete recovery, which will likely require physical therapy, said Dr. Bruce Troen, a University of Miami geriatrician.

''My bet is that he's going to have significant impairment of his mobility and rehabilitative challenges,'' Troen said. "This will require more than just getting up and walking. Even for vigorous 78-year-olds, it's not so easy to hobble around on crutches and one leg.''

In his letter, Castro said his left kneecap shattered into eight pieces, requiring surgeons to reassemble it during an operation that lasted 3 ¼ hours. Doctors also immobilized his left upper arm, which suffered a hairline fracture.

Throughout the ordeal, Castro wrote, he used a cellphone to issue orders and refused general anesthesia so that he could "attend to numerous important issues.''

''He refuses even to lose consciousness, losing power in effect, for even a few hours,'' said Hans de Salas del Valle, a research associate at UM's Institute for Cuban and Cuban-American Studies.

Should Castro become unfit to rule or dies, his 73-year-old brother would assume control, as outlined in Cuba's constitution. Raúl Castro heads Cuba's armed forces and serves as first vice president to the Communist Party and powerful Council of State.

Beyond Raúl Castro, there is no official designation in the presidential succession, and Cuba watchers said there are only a handful of officials who might fill a No. 3 spot. They include Foreign Minister Felipe Pérez Roque, 39; Vice President Carlos Lage, 53; and National Assembly President Ricardo Alarcón, 67.

Those are the faces likely to become more visible as Castro recuperates, said Edward González, a Cuba expert and consultant at the Rand Corp., a California-based think tank.

''There will be people stepping into more ceremonial roles,'' González said. "I doubt, however, that they're going to do much else. Castro is going to keep a tight reign.''

''They have to be very careful of not overstepping their boundaries,'' he added. "Even communicating with each other could be considered a conspiracy to take over. Until Castro is flat on his back, can't get up or he's dead, they have to be very discreet.''

PRINTER FRIENDLY