Greenbacks Give Communist Cuba a Capitalist Hue

There are occasional lines now at the ATMs that have been popping up here this year, and the automated teller machines are dispensing American dollars to Cubans with cash cards sent from abroad.

There also is a wait outside the new Western Union office that advertises “Money in Minutes” at Havana’s modern Carlos III Shopping Mall, where Cubans wander through state-owned music shops, appliance stores, supermarkets and video rental counters that accept only U.S. currency.

And there’s an after-school rush at the government’s Sylvain Bakery, where fresh-faced, uniformed children hand over nickels and dimes for doughnuts, pastry and Barbie chewing gum.

Those are but a few glimpses of Cuba’s dollar economy, a phenomenon that is growing at a quiet but exponential rate and giving this once-isolated Communist island a capitalist hue that seems to be deepening by the day.

Driven largely by remittances from relatives and friends in the United States, the dollar economy has become by some estimates a $1-billion-a-year marketplace that Havana concedes is transforming one of the world’s last Communist outposts. Dollars have fueled a new prosperity and upward mobility while increasing frustration and ideological erosion, especially among a new generation of Cubans.

Born of disparate policies for survival ad-libbed by President Fidel Castro’s government after the Soviet Union collapsed eight years ago, Cuba’s decision to legalize ownership of dollars in July 1993 was seen here and abroad as a quick fix. It was considered a temporary solution that allowed U.S. currency to coexist with the Cuban peso while helping to compensate for the loss of Soviet aid.

But that decision, combined with the Clinton administration’s increase last year in the amount of money that Cuban American families can legally send relatives here each month, has spawned not merely a dollar economy but also a dollar culture that economists, sociologists and Communist Party analysts agree has passed the point of no return.

“The genie has come out of the bottle,” said prominent Cuban economist Pedro Monreal, “and there’s no putting it back.”

This emerging new economy also is making an increasing mockery of the 39-year-old U.S. embargo, which remains the centerpiece of Washington’s policy toward Cuba. Yet it is simultaneously contributing to the strain on the most admirable legacies of Castro’s revolution.

Estimates on the amount of U.S. money flowing through private hands into this nation of 11 million people vary widely, ranging from $500 million to more than $1 billion annually. Economists agree that most of the cash is coming from the fiercely anti-Castro immigrants concentrated in southern Florida.

What is more, the economists also estimate that about 70% of that largess is being retained in Cuban hands, rather than financing imports. And the government here, which ultimately absorbs most of those retained dollars through state stores, institutions and taxes, is using them to build new light industry, businesses and consumer-oriented technology.

“Assuming that is the case, we have a really strange situation,” said Monreal, a professor at Havana University’s Center for International Economic Research. “It means that one of the most important sources of the money financing Cuba’s industrial modernization is the country that has embargoed Cuba economically, and primarily it’s coming from the people who are the strongest supporters of that embargo.”

The phenomenon--which has given Cubans with dollars access to the latest Back Street Boys tapes, Tommy Hilfiger T-shirts, Sony Trinitrons, Gucci shoes, German beer and a lobster dinner in a five-star hotel--also is skewing Cuba’s political landscape.

In a nation where teens now admire Ricky Martin and Reebok as much as Karl Marx and collectivism, and where many peso-salaried government surgeons and scholars aspire to be bartenders and bellhops to earn dollar tips, the ideologues are struggling to integrate this new consumerism with nearly 41 years of communism.

Combined with a $1.4-billion-a-year state-controlled tourism industry that has opened Cuba’s hermetic society to the social evils of the capitalist world, this new consumer age has spawned a flurry of essays, editorials and social programs by the ruling Communist Party, attacking everything from high heels and prostitution to the mall culture and video games.

Yet even the Communist Party and the youth wing that represents its future appear to be resigned to the new direction of Cuba’s economy and society. In a nation where the state runs all mass media, a recent issue of the party’s Rebel Youth newspaper reported a landmark step: The government is setting up a permanent Consumer Protection Bureau.

“Is it sinful to be a consumer?” the writers asked in a story that conceded “the changes in the last decade have complicated the panorama.” In an economy that was once entirely controlled by the state, an array of goods and services is now offered by private businesses, including farmers and artisan markets, restaurants, taxis, repair shops, street vendors, beauty salons and real estate.

Although this relatively new private sector straddles the peso and dollar economies, with most merchants accepting either currency, all prices are pegged to the dollar’s value, which has held steady at about 20 pesos. With the increasing influx of dollars, though, many entrepreneurs say it is eclipsing the peso.

The state’s contribution to the rise of the dollar has been profound. Through an array of government corporations, it owns all the major hotels, restaurants and shopping centers, all of which accept only dollars.

Most of the banks offering cash machines also are state-owned. They skirt Washington’s sanctions and currency controls by permitting Cubans to withdraw funds that relatives in the U.S. wire into accounts in Canada, Europe or Latin America.

Cuba also tightly controls the nascent private sector through taxes and license fees. And that, in turn, has spawned a black market that serves Cubans and tourists alike in an underground economy that is difficult to measure or monitor.

“These are only the first steps on a very long road on which other countries are decades ahead of us,” the Rebel Youth essay noted in explaining the need to protect consumers from unscrupulous practices and to police the black market. “This is a problem no one can ignore because all of us, in one way or another, have become consumers. And from that ‘crime,’ no one escapes.”

But the rip currents of economic changes have raised concerns among government officials, church leaders and parents. They fear rising alienation, frustration and even ideological corruption, which are seen here as old woes in the capitalist world but new to Cuba’s younger generation.

“Our young people never saw the capitalist Cuba that existed before the revolution. They see this, and they’re fascinated,” said Violeta Ramos, 60, as she and her husband, Sergio Vazquez, stood outside the Western Union office. They were waiting to claim $300 that Vazquez’s sister had sent from Miami.

“They’re overwhelmed by the capitalist life,” she said of today’s youth. “They can’t imagine that any other system could be better. I worry about my three kids. We parents and the state must explain all this to them.”

But children of families that receive few or no remittances, especially those in professions most valued by the socialist system, can only watch while their peers move up the economic ladder.

“My life is like that of my shadow,” said a 30-year-old high school teacher. His government salary--equivalent to about $10 a month--is paid in pesos, and his family gets only a few hundred dollars a year from abroad.

Asking not to be identified by name for fear of reprisals, he added: “I go to school. I teach. I study. I go to church. But that’s my shadow’s life; my real life is trapped without a future. The reality, I fear, is [that] the only way to get rid of this burden is to fly or swim away from here.”

Cuba’s newly emboldened Roman Catholic Church is seeking to address such frustration, part of a new focus on morality and values that has followed Pope John Paul II’s visit here in January 1998.

In a pastoral letter last month, Cuban Cardinal Jaime Ortega spoke of a “lack of hope” in the nation today and new threats of alcoholism, drug abuse, individualism and escapism, especially among its youth.

“Today, there are few among us who can conceive of some kind of future, and that is fundamental for the youth,” the cardinal declared in a document little-noticed outside Cuba. “The sociological signs of despair already are among us: Few children being born. . . . Youth deciding not to marry, to live together instead.

“It worries me that Cuban adolescents and youth cannot even imagine an answer to this question: ‘How do you see Cuba in the next 20 years?’ ”

That question is of equal concern to Cuba’s long-governing Communist regime. Its ideologues are searching for a balance between, on one hand, a system that had given the nation 100% literacy and record-low infant mortality rates and, on the other hand, a new economic reality that is changing the aspirations of society.

A fourth-year Havana University student who identified himself only as Karrel was a case in point. The 20-year-old remains a committed member of the Communist Party’s youth wing and has every intention of joining the party when he turns 21.

Asked his plans after graduation, though, Karrel said he now has two options. He can follow tradition and work for the government as a diplomat, translator or bureaucrat. Or he can seek a job in the state’s tourism industry that would give him direct access to dollars.

“My situation is very personal,” he said, explaining that his parents have retired and his family lives on a tight budget. “So I’ll probably choose tourism.

“Look, I’m a Marxist,” he said. “I still believe very deeply in the ideals of socialism and the Cuban Revolution. But even Marx said, first you must eat and sleep. Only then can you begin to think.”