Working Paper # 15 Remittances To Cuba: An Evaluation of Cuban and us government Policy Measures Lorena Barberia September 2002 Abstract



Download 180.55 Kb.
Page9/9
Date conversion15.02.2016
Size180.55 Kb.
1   2   3   4   5   6   7   8   9
Gusano, which means worm in Spanish, is a pejorative term.

15 For further discussion on travel policy and émigré visits see Eckstein and Barberia (2002).

16 For more on the introduction of these stores, see Pérez López (1995).

17 Eventually a select group of Cuban nationals, such as diplomats and artists who earned foreign currency abroad, were also allowed to purchase commodities in these stores. Through Oro stores, Cubans could sell their gold jewelry to the State and receive receipts to use for consumption in state dollar stores.

18 The 1979 Cuban Penal Code replaced the Social Defense Code of 1936. For a detailed discussion, see Pérez López (1995).

19 The penal code was revised in 1987, but no alterations were made to prohibitions on the holding of foreign currencies.

20 A pseudonym, as are all other names used when citing interviewees.

21 During the late 1970s and early 1980s, consumer demand exceeded supply creating a situation of excess liquidity or monetary surplus, but these trends were showing signs of moderate improvement. According to Pérez-Lopez (1995:115), "excess liquidity was equivalent to 35-36% of population income in the mid-1970s and declined to about 29-30% by the mid-1980s."

22 Initially, these reforms were aimed primarily at short-term stabilization policy responses. Over time, the reform package was consolidated. It should be underscored that the policy measures were primarily stabilization measures. However, this study argues that the secondary aim of these policy measures was to further channel remittance flows into the official economy.

23 Based on an interview with President Fidel Castro and Vice President Carlos Lage, reproduced in La Despenalización del dólar (1993) p.15.

24 The Cuban government gradually de-penalized the holding of foreign currency in 1993. In June, the government permitted workers employed in the tourist industries to retain their tips earned in foreign currency. Resolution 153 issued by the National Bank of Cuba (BNC) defined ten categories of Cuban citizens that were allowed to own foreign currencies; these included government officials, artists, and athletes who were traveling abroad, airline and fishing vessel crews, as well as international workers posted abroad.

25 Other portions of the speech are noteworthy as well. Fidel Castro explains, “but forwarding money is something that is done everywhere. There are many countries in the world where most of the income in convertible foreign exchange is money remittances from abroad. Mexicans, for example, send billions back to their country. Dominicans send plenty as well—another group who migrated for economic reasons… We—precisely due to our conflicts with the United States and conflicts with the worst elements of that emigration, those who used to be politicians—had been very strict regarding all this matter of transferal of money, although it was not prohibited and it was carried out in a normal fashion in specific amounts through the banks.”

26 This excerpt is based on the speech published by LANIC’s "Castro Speech" database which contains the full text of English translations of speeches, interviews, and press conferences by Fidel Castro, based upon the records of the Foreign Broadcast Information Service (FBIS), a US government agency.

27 Resolution 140 passed by the National Assembly in August 1993 officially modified Article 235 of Cuba’s Penal Code to permit foreign currency possession, exchange and payments in foreign currencies. The official international fixed exchange rate of one Cuban peso to one US dollar, in effect for more than thirty years, remained unchanged and continued to be used in international trade.

28 For an excellent review of Cuba’s dual monetary policy in the 1990s, see Sánchez Egózcue (2000).

29 Banks had been authorized to conduct currency exchange operations, but had yet to implement these services.

30 The Ministry of Economics and Planning estimates that Cubans exchange one-fifth of their overall earnings in dollars, however it is not clear if these earnings also include remittances (Instituto Nacional de Investigaciones Económicas (INIE):1999).

31 The command over societal resources, or the purchasing power obtained by issuing new money, is known as seigniorage. The reduction in value to holders of existing money balances due to the issuance of new money is termed the inflation tax. The sum of the inflation tax and seigniorage is equal to the real (i.e., inflation-adjusted) change in monetary holdings, or real balances. The relationship between them is: Real Balances = Seigniorage + Inflation Tax.

32 LIBOR (London Interbank Offered Rate) is the rate of interest at which banks borrow funds from other banks in the London interbank market. It is also a widely used benchmark reference rate for short-term interest rates.

33 See Banco Nacional de Cuba’s Informe Económico 1995, p.4.

34 One such bank is the Banco Popular de Ahorro (BPA), which was created in 1983 and has 510 branches throughout Cuba. The Banco Financiero Internacional (BFI) is a private bank created in 1984. Both allowed savings deposits in dollars in 1995.

35 S.W.I.F.T. is a worldwide community with more than 7,000 financial institutions in 197 countries connected to one another through a proprietary software system. The network provides a mechanism to execute payments, securities, treasury, and trade services among members. According to the US-Cuba Trade and Economic Council, Inc. (2000b), Cuba joined S.W.I.F.T. in 1990, after the government-operated National Bank of Cuba (BNC) obtained approval from S.W.I.F.T. to use computer software compatible with S.W.I.F.T., as the S.W.I.F.T. ST-2OO computer operating system used at the time was manufactured within the United States.

36 As will be elaborated in Section IV, direct commercial bank transfers are prohibited by US law and strictly regulated by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C.

37 For further details, see US-Cuba Trade and Economic Council, Inc. (2000b).

38 For further information about MINFAR, see CUBAPOLIDATA’s “Cuban Armed Forces Review”.

39 This was confirmed by interviews conducted by the author with senior representatives working in dollar store management in Havana.

40 For a more detailed discussion, see Ana Julia Jatar Hausmann (1999).

41 Nuñez Moreno (1998:8) details that income taxes paid by 177,436 officially registered self-employed individuals contributed 1% of the 1998 state budget, which totaled 12,502 million pesos (ECLAC 2000). On average, this represents 700 pesos per officially registered self-employed individual in 1998.

42 As will be detailed in section IV, US regulations limit remittances to $300 per quarter.

43 Information published in Transcard Canada Limited “Financial Growth” webpage: http://www.transcardinter.com.

44 MoneyGram is owned by Minneapolis-based Travelers Express Company, Inc.

45 For more details, see http://www.cubatrade.org/2000hlights.html.

46 Although Cuban émigrés are considered Cuban citizens, those who emigrated after 1970 are required to enter the country with a Cuban passport and visa.

47 Confirmed by MINREX’s webiste, see section on “Servicios Consulares” for further discussion.

48 Confidential interview conducted by the author.

49 The Cuban Penal Code still makes "illegal exit" a crime punishable by up to three years' imprisonment, if the attempt to leave is non-violent, or up to eight years if it involves violence or intimidation.

50 Following the nationalization of US-owned banks on September 17th, 1960 and Cuban-owned banks on October 13th, 1960, President Eisenhower issued a comprehensive embargo on Cuban exports under the general authority of the 1949 Export Control Act on October 20 (Morley 1987:121). According to Morley, the decision to invoke this act, rather than the Trading with the Enemy Act that would be invoked in 1962, allowed overseas subsidiaries of US multinationals to escape compliance with US policy.

51 For example, the Eisenhower administration was involved in a campaign to prevent Cuba from receiving loans and credits from Western and Canadian institutions (Morley 1987:88).

52 For more detailed information, see Code of Federal Regulations, Title 31, Chapter V, Part 515 (1963).

53 Under authorization from the Trading with the Enemy Act of 1917, the President of the United States has the power to prohibit financial transactions in time of war. The Cuban Import Regulations of February 1962, which banned the importation of Cuban-origin goods, allowed US subsidiaries to continue to trade with Cuba. The Cuban Assets Control Regulations strengthened the blockade by supplanting the 1962 Cuban Import Regulations with a categoric prohibition on all trade with Cuba by US entities.


54 As mentioned in the introduction, the issue of “going public” and government knowledge about private activity was repeatedly raised as an issue of concern during the interviews with Cuban émigrés conducted for this study.

55 With the death of Jorge Mas Canosa in 1997, the Cuban-American National Foundation also supported these policy changes. As quoted in the New York Times: “Reacting to the news in Miami, the Cuban American National Foundation, a conservative exile group, issued a statement on Monday saying that most of the measures to be announced are consistent with current policy and praised the Administration for refusing to re-evaluate US policy toward Cuba (ibid).”

1   2   3   4   5   6   7   8   9


The database is protected by copyright ©essaydocs.org 2016
send message

    Main page