Re: Cuba: Dealing with the dollar
Diane Monaco wrote: How far Cuba can be regarded as an independent and socialist nation-state, if there is extensive dollarisation of Cuban economy? I'm not sure what independent really means, True, the Left no longer seems know what independence really means ! :) Cuba is communist/socialist in the mechanisms it uses to attempt to ensure that the means of producing goods and services are owned by the community as a whole, and that all citizens enjoy social/economic equality. Cuba invites and accepts foreign investment, encourages tourism and receives remittances from Cubans settled abroad. Cuba also trades with other countries. (I don't know what is Cuba's external indebtedness.) These things would erode Cuba's autonomy. Is Cuba's relationship with the World Economy any different from that of other developing countries? Dollarization is a mechanism that Cuba is forced to use to circumvent the US embargo against Cuba on all trade Cuba was forced to do it, but wouldn't that imply loss of control over monetary policy? including basic necessities to facilitate the acquisition the goods and services in sufficient amounts for all its citizens. It's my impression that Cuba wasn't able to reduce it's dependence on sugar between 1960-1990. I wonder why. Ulhas Yahoo! India Matrimony: Find your life partner online Go to: http://yahoo.shaadi.com/india-matrimony
Re: Cuba: Dealing with the dollar
Ulhas Joglekar wrote: Cuba invites and accepts foreign investment, encourages tourism and receives remittances from Cubans settled abroad. Cuba also trades with other countries. (I don't know what is Cuba's external indebtedness.) These things would erode Cuba's autonomy. Is Cuba's relationship with the World Economy any different from that of other developing countries? To start with, Cuba has no ties to the IMF. Furthermore, the Heritage Foundation, the key think tank of the ultraright, understands clearly why Cuba should not be confused with China, for example--let alone completely dependent entities such as Jamaica or The Dominican Republic. --- Those who favor lifting the embargo often point to the examples of Vietnam and China to justify their position, claiming that eliminating the embargo will encourage the growth of a free-market economy which will undermine the communist regime. Such comparisons are not valid. Capitalism is destroying communism in China, but the driving force is not international trade. It is a strong domestic market economy tolerated by the communist government. China's market economy is dominated by many millions of small entrepreneurs who are devouring the communist command economy. Moreover, China's market economy has been growing in depth and diversity since the mid-1980s. Free trade is promoting faster market growth and expanding the personal freedom of millions of Chinese, encouraged by entrepreneurs and investors from Taiwan, Hong Kong, and elsewhere who are providing the capital, entrepreneurial skills, and international trade contacts which are compelling China to transform its economy. In the process, a vast and prosperous middle class is being created. In Cuba, however, the Castro regime is not willing to liberalize the economy and create a free market. Cuban exile communities in the United States, Latin America, and Europe are not willing to work with Castro, and market initiatives by the Castro regime to encourage them to do so are very recent, dating from 1993 for the most part. The basic orientation of the hard-liners surrounding Castro is to contain and restrict all initiatives that unleash individual entrepreneurship and creativity. For example, the government has arrested people for earning too much money in the dollarized informal economy, the variety of legally permitted family businesses has been restricted, and tax rates on the income of self-employed Cubans have been increased. Moreover, Cuba's constitution and legislation specifically prohibit all private initiative, notwithstanding recent reforms allowing self-employment by Cubans in approximately 140 categories of economic activity from which all professionals (the core of any middle class) are expressly barred. For over three decades, the regime has operated on the basis of divide and rule. Castro's bitter enmity toward the Cuban exile community precludes the possibility of replicating in the Caribbean what China's exile community has accomplished in China. None of the alleged market reforms undertaken to date in Cuba are true free-market initiatives. Free enterprise remains highly restricted. Foreign investors doing business in Cuba today deal mainly with Castro's regime. Cuban partners in joint ventures and mixed companies are approved by Castro as safe. Moreover, unlike China, Cuba has barely started to open up its economy, and what little has been done to date has been permitted with great official reluctance and with the objective of assuring the communist government's political survival. China's economic transformation has been under way since 1978, when important agricultural reforms were introduced, including the right of peasant farmers to grow the crops they wished and retain some of their profit. Moreover, the government of China has encouraged the marketization of the country's coastal provinces, and since 1992 the Chinese constitution has incorporated the concept of the socialist market economy. Although China remains a communist nation where political freedoms are sharply restricted, the ruling regime has permitted vigorous development of the private sector, thus laying the seeds for its eventual demise and potential replacement by a politically pluralist, more open society. (From Backgrounder #1010 titled WHY THE CUBAN TRADE EMBARGO SHOULD BE MAINTAINED, By John P. Sweeney, November 10, 1994. This is not the trade union bureaucrat, btw.) -- The Marxism list: www.marxmail.org
Re: Cuba: Dealing with the dollar
Ulhas wrote: Diane Monaco wrote: There are three -- actually four if you include the euro that is now accepted at a few tourist locations in Havana -- currencies used in Cuba: the Cuban peso, the convertible peso (equivalent to the dollar), and dollars. All three of these currencies circulate freely in Cuba. How far Cuba can be regarded as an independent and socialist nation-state, if there is extensive dollarisation of Cuban economy? I'm not sure what independent really means, but Cuba is communist/socialist in the mechanisms it uses to attempt to ensure that the means of producing goods and services are owned by the community as a whole, and that all citizens enjoy social/economic equality. Dollarization is a mechanism that Cuba is forced to use to circumvent the US embargo against Cuba on all trade including basic necessities to facilitate the acquisition the goods and services in sufficient amounts for all its citizens. Diane
Re: Cuba: Dealing with the dollar
The article forwarded by Ulhas states: Food, medicines, inputs and fuel can be accessed in adequate volumes only with foreign exchange, making the effort at restoring the health of a devastated economy and protecting the quality of life of its citizens dependent on dollar earnings. Fidel Castro's Government is committed to ensuring that the entire population has access to basic necessities. But the definition of what goods and services and how much of them constitute basic necessities depends in turn on the amount of foreign exchange that could be drawn into the economy and soaked up by the Government. With no supporter of the Soviet kind in sight, recovery became synonymous with the pursuit of the dollar. [ ] The faster rate of growth of the supply of dollars relative to demand is reflected in the fact that the regular peso, which is the principal form of income for the average Cuban, has improved its position vis-a-vis the dollar over time. From an all-time low of 130 pesos to the dollar in 1994, its value rose to 40 pesos to the dollar in November 1995, 30 pesos to the dollar in July 1995 and an unusual seven pesos to the dollar, in August 1995. Since then the rate has stabilised at 20 pesos to the dollar, where it currently stands. There have been several recent posts on the HDI and Cubas admirable ranking in so many aspects of this index which obviously points to how committed the Cuba government is in ensuring that ALL Cubans have adequate supplies of basic necessities: food, medicine, etc. But adequate supplies require imports, for smaller countries like Cuba, and imports require foreign currency. The US embargo on trade with Cuba explicitly includes food and medicine. Dollarization is helping to establish that mechanism in Cuba, but at the same time and as we well know (Enron and others), accounting practices and accounts in hard currencies at the corporate level can make the currency (dollars in the case of Cuba) very difficult to keep track of -- corporate corruption. Dollars are needed for the imported goods (food and medicine). There are three -- actually four if you include the euro that is now accepted at a few tourist locations in Havana -- currencies used in Cuba: the Cuban peso, the convertible peso (equivalent to the dollar), and dollars. All three of these currencies circulate freely in Cuba. The convertible peso was created in 1994, but just last year the Cuban Central Bank established new rules that require firms to exchange their dollars for convertible pesos to conduct their business within Cuba, and then purchase dollars with their convertible pesos for the their import needs. The convertible peso is equivalent to the dollar within Cuba, but it has no value outside of Cuba. This action by the Cuban Central Bank has lessened the problem of getting adequate supplies of medicine and basic necessities, but Cubans are still in dire need. The US embargo includes all trade -- including trade in food and medicine -- which also restricts the flow of hard currencies. Currency is needed to import anything including food and medicine. See the 1997 report, DENIAL OF FOOD AND MEDICINE: THE IMPACT OF THE U.S EMBARGO ON HEALTH AND NUTRITION IN CUBA. A Report from the American Association for World Health at http://www.ifconews.org/aawh.html Diane
Re: Cuba: Dealing with the dollar
Diane Monaco wrote: There are three -- actually four if you include the euro that is now accepted at a few tourist locations in Havana -- currencies used in Cuba: the Cuban peso, the convertible peso (equivalent to the dollar), and dollars. All three of these currencies circulate freely in Cuba. How far Cuba can be regarded as an independent and socialist nation-state, if there is extensive dollarisation of Cuban economy? Ulhas Yahoo! India Careers: Over 65,000 jobs online Go to: http://yahoo.naukri.com/
