With Change in the Air, Cubans Speculate on Currency

Rumors of Quick Demise Of 2-Tier System Untrue

By Manuel Roig-Franzia
Washington Post Foreign Service
Wednesday, February 27, 2008; Page A08

HAVANA, Feb. 26 -- Cubans swamped currency exchange offices Monday and early Tuesday in a brief but intense speculative frenzy fueled by rumors that new President Ra¿l Castro would end the island's reviled dual currency system.

Hoping to make a quick profit, many Cubans traded the country's valuable "convertible pesos" -- a currency primarily used by tourists, foreign-owned businesses, the elite and black-market vendors -- for the weak Cuban national peso, which is used for the salaries and pensions of nearly all Cubans. The speculators believed that Castro, who hinted about gradually changing the dual money system after being named president Sunday, would double the value of the weak national peso or abolish the stronger convertible peso.

The money swapping became so intense that some exchange offices ran out of national pesos, according to Cubans who stood in line at the offices and other observers. Faced with what amounted to a small-scale run on its banks, the government aired a report early Tuesday on the morning news program "Buenos Dias" emphasizing that any changes to the money system would be gradual.

As word of the report spread, the speculation seemed to end. Still, the episode illustrated the hair-trigger sensitivities surrounding money in Cuba, where everyone from janitors to Castro himself acknowledges that Cubans do not make enough money to maintain a decent standard of living.

"Look, those convertibles are practically worthless," said Victor Manuel, a parking attendant who declined to give his last name. "We're scared, and when we heard about Ra¿l's plan, it was an opportunity."

The money rumors began Sunday when Castro was named by the National Assembly to succeed his ailing brother, Fidel, who has not appeared in public in 19 months. In his nationally televised acceptance speech, Ra¿l said his government would "keep delving into the phenomenon of the double currency in the economy. . . . To avoid traumatic effects or inconsistencies, any changes related to the currency shall be made with a comprehensive approach."

In a somewhat cryptic passage, he seemed to imply there would be no immediate changes. Nonetheless, the Cuban rumor mill started to spin as lines formed outside exchange offices.

Although nearly all Cubans are paid in national pesos, many here have access to convertible pesos because they get tips from tourists or sell items on the massive black market. The convertible peso -- which is worth $1.08 -- was created in the mid-1990s when Fidel Castro opened the island to tourism to generate hard currency after the collapse of Cuba's biggest financial backer, the Soviet Union. A convertible peso is worth 24 national pesos.

Cubans cannot use national pesos in the island's best stores, which carry products -- such as beef, soap and cooking oil -- that are not available or are in short supply in state-run stores. As a result, the dual monetary system has created resentment among Cubans.

"I don't know any Cuban -- whether it's a businessperson, someone in the government or even the president of the Central Bank -- who doesn't want to change this dual system," Ariel Terrero, an economic columnist at the state-run magazine Bohemia, said Tuesday. "But it's in the best interest of everyone to do it slowly."

Terrero is widely credited here with tamping down the currency system rumors with his appearance Tuesday on "Buenos Dias."

"I am completely convinced that the dual money system will disappear," Terrero said in the interview. "But there is no way to predict when."

Cuba's Raul Castro faces tough reforms challenge

Raul Castro addresses the audience after being elected president of Cuba during a meeting of the National Assembly in Havana February 24, 2008.

Mon Feb 25, 2008 2:26am EST
By Anthony Boadle

HAVANA (Reuters) - Cuba's new president, Raul Castro, faces a delicate balancing act as he tries to improve living standards and food supplies while staying faithful to his brother Fidel Castro's communist revolution.

Raul Castro was named president by the one-party state's National Assembly on Sunday, and is widely seen as willing to enact limited economic reforms in a country where people struggle daily with shortages of food and other basic items.

The 76-year-old general, who has run Cuba as acting president since Fidel Castro fell ill in July 2006, immediately promised to get going on some minor reforms.

But even moderate changes like making the government more efficient, revaluing the peso currency and lifting some state restrictions will take time to churn their way through the political machinery.

And Fidel Castro, 81, who has dominated almost every aspect of life on the island since his 1959 revolution, will remain a powerful force behind the scenes even after resigning last week because of poor health.

Raul Castro stressed he would not deviate far from the socialist path and said he would continue to consult with his brother on important issues. "Fidel is Fidel. Fidel is irreplaceable."

The new leader vowed to keep fighting for the revolution and an elderly Communist Party ideologue Jose Ramon Machado Ventura was picked for the No. 2 job of first vice president.

It is likely to be business as usual for Cuba's 11 million people, the vast majority of whom were born under Fidel Castro's rule after his rebels swept down from the Sierra Maestra mountains to topple U.S.-backed dictator Fulgencio Batista in 1959.

Analysts say Raul Castro will make changes, but move cautiously.

"My feeling is that Raul will do some modest reforms in the near future," said Cuba expert Archibald Ritter of Carleton University in Ottawa, Canada.

He urged Castro to free up restrictions on small business owners such as car mechanics, fishermen, and arts and crafts vendors. "The impact would be beneficial. I think there would be rapid pay off," he said at a conference on Cuba in Miami before Raul Castro was confirmed as president.

EXECUTIONER

Once a hardliner who supervised the execution of enemies of the revolution, Raul Castro has encouraged moderate debate in recent months and asked Cubans to voice their concerns about life on the Caribbean island.

Most complained about hardships in an economy that is 90 percent run by the state.

By hinting at reforms and opening debate, the younger Castro has raised expectations inside Cuba.

"Raul has opened a Pandora's box," said Havana-born Carmelo Mesa-Lago, a professor at the University of Pittsburgh. "If he only introduces marginal, cosmetic change, the frustration of the people will increase."

The president will also likely move slowly on international issues.

He has said he would be open to talks with the United States, which has maintained an economic embargo on Cuba for 46 years, but U.S. officials made clear on Sunday that Washington wants political prisoners freed and multi-party elections called before it will consider changing its stance.

Raul Castro starts work on Monday by hosting Vatican Secretary of State Cardinal Tarcisio Bertone, who is visiting Cuba to improve relations between the communist government and the Roman Catholic Church.

The Church is the only major institution in Cuba which is not controlled by the state, and it is expected to play an important social role in any post-Castro transition.

(Additional reporting by Angus MacSwan in Miami, Editing by Michael Christie and Kieran Murray)

Castro's people yearn to taste the good life

End of an era: A woman works at her desk at a Havana school, watched over by Castro. Photo: AFP

Lillian Swift
February 24, 2008

Through a scruffy doorway off a shabby street in Havana's old town, a pair of 12-year-old boys are pulling on tattered boxing gloves in an attempt to emulate their heroes.

But as they climb into the ring, they are resigned to the fact that the boxer they most admire, Guillermo Rigondeaux, twice Olympic champion and winner of 100 consecutive matches, will not be representing Cuba in the Beijing Olympics. Indeed, he may never compete in his home country again.

In between shouting orders at the boys to "stop failing" and "keep your guard up", their trainer, himself a double Olympic gold medallist, tells the story. Rigondeaux returned to Cuba in disgrace last July after attempting to "defect" to the United States during the Pan-American games in Rio de Janeiro.

"He was one of those who wanted more than Cuba could offer. He wanted to push himself further and, quite simply, he wanted a better way of life," says Hector Vinent, 34, who trains up to two dozen boys at the open-air gymnasium. "Now, like many other sportsmen who tried to leave Cuba, he has been declared a traitor. The dream he worked so hard for is over. This is one of the things that will change now that Fidel has gone."

That word — change — creeps into any discussion of what the future holds for Cuba since Fidel Castro announced his retirement.

The letter published last week in the national Communist newspaper, Granma, came as no surprise. It was always possible Dr Castro, 81, might never resume power after ill health forced him to hand over to his younger brother, Raul, in July 2006.

The man famed for his six-hour speeches has not appeared in public since.

Dr Castro said yesterday he had slept "better than ever before" after stepping down.

Raul, 76, is expected to be chosen as the new president when parliament meets today and he has hinted at a series of reforms. But there is little consensus over how dramatically life will change as the nation considers a future without the leader who ruled with an iron grip for nearly five decades.

"Now there exists a real opportunity to initiate changes that could improve everyday life," says Oscar Espinosa Chepe, an economist who was jailed in 2003 for criticising the regime. "There is no doubt that people are ready."

Mr Chepe, who is now under house arrest, says authorities must address the problems they have acknowledged for the first time. "Raul has admitted that the salaries of many Cubans do not provide them with an acceptable standard of living. That is a huge step."

But he warns that if Raul fails to deliver, the consequences may be devastating. "People will be angry and people will rise up and then we will see a return to the repression of Fidel."

There are still party agents in every apartment block and workplace and tight control of the media. Broadcasters showed reel after reel of footage of Fidel in the glory days of revolution.

"It is the end of an era and it feels like we have lost our father," says one elderly woman as she lines up for rations. "Castro has done great things for this country and I wish he could live forever." Chief among his achievements, she says, was free access to one of the best health services in the world.

That might have been true once but, according to one doctor who gave her name only as Leonora, Cuba has "exported so many health professionals that now we don't have enough left to deal with our own problems".

Cuba's society is divided into those with access to the CUC, the convertible currency used by tourists and the majority who rely on salaries paid in Cuban pesos.

"Luxuries" such as soap, clothes and electrical goods must be bought with convertible currency, and are therefore unavailable to ordinary Cubans except on the black market.

Castro introduced the dual currency in the 1990s after the collapse of the Soviet Union. It was a means of boosting the economy by throwing open Cuba's doors to tourists. Last year nearly 3 million foreigners visited.

Tourism is credited with keeping the economy afloat but it has also created a gulf between those who have convertibles and those who don't. This is one of the issues that Raul and the new generation of party officials have promised to tackle.

The changes will have to be dramatic to discourage the thousands of Cubans who try to cross the 130 kilometres of sea to the US in tiny boats and rafts.

One man says Dr Castro's departure will do nothing to put him off. "I have friends over there," he says, nodding across the water. "They tell me they have a good life. I want some of that."

U.S. Cuba policy could get new look

Marino Ramos holds a sign that reads, "Freedom for Cuba now!" in Miami's Little Havana

By Richard Wolf, USA TODAY
WASHINGTON — Fidel Castro's decision to step down as leader of Cuba has reignited debate over U.S. policy that seeks to isolate the communist-led nation.

President Bush and many in Congress said the leadership move represents little real change and that the United States should continue its limits on travel and trade with the island nation just off the Florida coast.

But some in Congress, including members of both parties, say the change could represent an opportunity for progress on human rights in Cuba and that changes in U.S. policy and attitude could help bring about such a transition.

Bush said he hoped the change would "be the beginning of the democratic transition for the people in Cuba."

"First step, of course, will be for people put in these prisons to be let out. I've met with many of the — or some of the — families of prisoners. It just breaks your heart to realize that people have been thrown in prison because they dared speak out," Bush said.

"The international community should work with the Cuban people to begin to build institutions that are necessary for democracy. And eventually, this transition ought to lead to free and fair elections," he said.

Sen. Mel Martinez, R-Fla., who was born in Cuba, said the change amounts to only "one aging dictator hands power to another aging dictator."

"There really should be no occasion for the United States to change its policy," Martinez said. "The reasons for the policy exist every bit as much today as they did yesterday. … The time for change in our Cuba policy will come when Cuba treats its people differently than it does today."

Sen. Robert Menendez, D-N.J., whose parents were born in Cuba, said the move only makes official what has been in place for some time, with Castro's brother Raúl "continuing to lead the same iron-fisted regime that his brother brought to power almost 50 years ago."

Rep. Adam Putnam, R-Fla., chairman of the House Republican Conference, said, "Sadly, Fidel Castro's announcement changes nothing. That he will relinquish some titles is no comfort for the 11 million Cubans who will continue to suffer under his tyrannical regime."

Rep. Dan Burton, R-Ind., co-author of the law that toughened sanctions against Cuba in the 1990s, said, "I really hope that the resignation of Fidel Castro will be the end of a long, sad chapter in Cuba's history. I call upon the next leader of Cuba to give the Cuban people the freedom they have been denied for so long. Only at that point can the U.S. and Cuba embark upon a new era of friendship and peace."

Menendez said that the move could offer "a moment of hope" for meaningful change in Cuba.

"Here in the United States, it is a time to further nurture the human rights activists, political dissidents and independent-minded journalists inside of Cuba who have the capability to stoke the movement toward freedom."

But others in Congress and foreign-policy leadership roles would like to see the United States change a policy that, they contend, has brought hardship on the Cuban people while achieving little that is in the United States' interest.

"Our policy toward Cuba is a relic from the Cold War," said Rep. Jim McGovern, D-Mass. "It makes no sense, and quite frankly it's an embarrassment.

"We should use this as an opportunity or an excuse to review our entire policy. It is time for a grown-up policy," he said.

He said more than 100 bipartisan members of Congress were signing a letter to the administration asking for a thorough review of U.S. policy toward Cuba.

Among the needed moves, he said, was removal of restrictions on U.S. citizens to visit Cuba: "Enough is enough. The Cold War is over. It's time to move forward."

Retired colonel Lawrence Wilkerson, co-chair of the U.S.-Cuba Policy Initiative and chief of staff to former secretary of State Colin Powell, said it was clear to most Americans that "our Cuba policy is a failure."

Sen. Christopher Dodd, D-Conn., chairman of Senate subcommittee involved in Cuba policy, called the U.S. embargo on Cuba "one of the most backward and ineffective foreign policies in history."

"Today, America has an opportunity to finally turn a new page. We must begin the process of opening up diplomatic and commercial relations with Havana," Dodd said.

Rep. Howard Berman, D-Calif., acting chairman of the House Foreign Affairs Committee, said he plans hearings on reviewing U.S. policy toward Cuba.

"This development may provide an opportunity for the United States to inject creativity and fresh ideas into that policy to better achieve our common goal of bringing freedom to the people of Cuba," Berman said.

Sen. Mike Enzi, R-Wyo., a longtime advocate of Democratic change for Cuba, said nothing is likely to change unless the United States eases its Cuba policy.

"This leadership change is an opportunity to move our strategy into this century," Enzi said. "For nearly 50 years, the United States has had a policy of isolation toward Cuba, but what our administrations have failed to realize is that unilateral boycotts and sanctions don't work. Cuba is getting materials and goods from the rest of the world, but the Cuban people are not getting the exposure to freedom that they should be getting from the U.S.

"If we continue to cut off communication with Cuba, we cannot expect the Cuban people or the Cuban government to strive for the changes that will make their lives better."

Enzi has sponsored legislation that would lift current travel restrictions and worked with Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, to advocate change toward Cuba. They would like to see farmers and ranchers in their western states be allowed to sell agricultural products to Cuba.

"It is time to get our Cuba policy right for America's farmers and ranchers — including those in my home state of Montana, who are ready to sell their goods to Cuban buyers — and for families across the Florida Straits by beginning to ease trade and travel restrictions now," Baucus said.

Commerce Secretary Carlos Gutierrez, who was born in Cuba and has become an administration spokesman on Cuba policy, said, "This isn't a big change. Fidel Castro continues to be in power. They're shuffling some titles around."

"For the average Cuban on the street, this doesn't mean anything."

Sen. Bill Nelson, D-Fla., called for reversing Bush's limits on family visits between the two countries to three years, rather than one, and on remittances sent to Cuba.

"As the flicker fades from the charismatic dictator, the Cuban people are increasingly restive. And sooner or later, they're going to rise up like the people in Europe did, and the Iron Curtain is going to come crashing down."

Contributing: William M. Welch in Los Angeles

Fidel Castro Tells Cuba He Will Step Down

Cuban leader Fidel Castro announced today he will officially step down as President and Commander in Chief, after nearly 50 years in power.

By JEFFREY KOFMAN, ABC News
Feb. 19, 2008

After almost half a century in power, Cuba's Fidel Castro is stepping down.

He made the announcement overnight on the online edition of the Cuban Communist Daily paper Granma.

"I will neither aspire to nor accept the positions of president of the state council and commander in chief."

That means that for the first time since 1959, the 81-year-old will not be officially in charge in Cuba.

His brother Raul, 76, who has been acting president for his ailing brother, since July 2006, will be formally installed this weekend.

The world's longest-serving political leader is leaving on his own terms, having survived efforts by 10 U.S. presidents to bring him down, including a disastrous CIA-backed invasion in 1961 and a missile crisis that brought the world to the brink of nuclear war in 1962.

In the summer of 2006 the fervently anti-Castro community of so-called Cuban exiles in Miami erupted in celebration with word that he was temporarily stepping aside because of failing health. He announced at the time that he had undergone intestinal surgery.

Since then a frail Castro has been seen only sporadically on video in meetings with leftist world leaders, but he has not been seen in public.

Which is why in Havana today it is life as usual. We reached Marc Frank, a journalist who lives in Havana.

"I think the Cuban people slowly, but surely have come to accept that Fidel Castro needs to retire, that he no longer is the man he was and that it's time to move on," Frank told ABC News from Havana this morning. "So I really don't see that there will be any surprise at all in this."

In his letter, Castro conceded he no longer has the strength to continue.

"My wishes have always been to discharge my duties to my last breath. That's all I can offer," Castro wrote, adding "But it would be a betrayal of my conscience to accept a responsibility requiring more mobility and dedication than I am physically able to offer. This I say devoid of all drama."

Taking over from Castro is his younger brother Raul, who has been second-in-command for the last 49 years and acting president since his brother's illness. The transition of power will be ratified at a meeting of the Cuban National Assembly, Sunday.

The biggest question may be, who will be Raul Castro's No. 2? The man designated to succeed Raul when he dies.

It is a momentous moment for the 11.2 million people of Cuba and for more than 1 million Cuban-Americans in the United States, but this is clearly not the way the Cuban exiles had hoped Castro's rule would end.

In many ways, this is the worst possible scenario for the Cuban exiles who have waited so long for Castro's rule to end. A peaceful transition means that the communist party will remain in power on the island and dramatic democratic change isn't likely anytime soon. ...

The end of Castro's rule will not bring an end to U.S. trade sanctions against the island nation. The U.S. sanctions law says they can't be lifted until there is no Castro of any stripe in power in Cuba.

Gleaner February 2008

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