Cuban Music to enjoy: Compay

Monetary reunification — complex, gradual and slow

 

The following is the translation of an essay written by José Luis Rodríguez, a Soviet-trained economist, former minister of finance and one of the architects of Cuba’s dual monetary system in the 1990s, as well as a former minister of economy. Rodríguez is now an advisor to the Centro de Investigaciones de la Economía Mundial (CIEM) in Havana. The analysis first appeared in Cuba Contemporánea in November.

 

By José Luis Rodríguez

The introduction of the dual currency system in the 1990s created a segmentation of domestic markets. One of them operated in Cuban pesos (CUP), both on the enterprise level and between individuals, while the other first operated in US dollars and, beginning in 2004, in convertible Cuban pesos (CUC).

 

The segment that worked with hard currency had a different monetary policy; for operations between legal persons, a 1:1 exchange rate was maintained between the CUP and the dollar or CUC. Meanwhile, for natural persons the exchange rate was handled by CADECA, according to the domestic market, through a rate that began at 35 CUP in 1995 and that currently is at 25 CUP per CUP.

 

The cost of these decisions in the relations between legal persons — discounting the positive effects of the dual currency system in the short run — manifested itself in the difficulty of measuring economic facts in two currencies that were linked to each other in an exchange rate that overvalued the Cuban peso vis-a-vis the dollar. In that sense, when the two currencies were inserted into the accounting of enterprises, their true situation was distorted, leading to a high level of imported components that appeared to make fiscal sense, as the external cost was accounted for in CUP. Inversely, exportable production appeared to be unprofitable, as the external income was minimized when accounted for in that currency.

 

Eventually, the official exchange rate tended to stimulate imports and discourage exports, worsening the trade deficit.

For the people, on the other hand, the CADECA exchange rate reflected a very devalued CUP vis-a-vis the dollar or CUC, as it was regulated by offer and demand in the domestic market. An excess in monetary liquidity of the CUP put upward pressure on the exchange rate, making hard currency more expensive.

 

This situation has continued until today, if we take into account that liquidity in the hands of people in 2012 represented about 42 percent of GDP, reflecting latent inflationary pressure.

 

In the current circumstances, the monetary reunification process requires an adjustment of the two exchange rates. On one hand, it will be necessary to first devalue the official exchange rate for legal persons, to achieve its convergence with the CADECA exchange rate. Due to that, the adjustment will possibly take three years or more.

 

The speed and the way in which the devaluation of the official exchange rate is done are of great importance. In a Socialist society, a sudden devaluation — with the negative side effects typical for neoliberal policies — is not possible.

 

The gradual approach announced in the currency reunification must guarantee the highest possible economic stability and security for all members of society. Therefore, we should expect the step-by-step introduction of different exchange rates by sector. This, in turn, will bring about a complex process of creation of financial reserves, accompanied by transformations of the legal, accounting and statistical framework.

 

Already, since 2011, exchange rates of 10 CUP per CUC have been tried in sales of agricultural products to the tourism sector. In the sugar industry a system of multiple exchange rates is being used; the enterprises included in the experiment are working with a 10:1 exchange rate.

 

The impact of this course of action, logically, will be different according to the economic activity in question. Once the CUP is devalued, enterprises that show negative results should be undergoing an analysis to determine whether the state should assume a short-term compensation through its fiscal and credit policy, with the aim of giving them time to adapt to the new circumstances.

 

Exporting entities, and those able to substitute imports, should achieve a relative improvement in their competitiveness in the short run.

 

In any case, the elimination of the dual monetary system for judicial persons will have a certain short-term cost and benefit that will manifest itself in the mid-term.

 

As far as people are concerned, the expectations of natural persons for the elimination of the dual system tend to be higher than what should be expected to really happen. The majority of citizens associate the dual system with unequal distribution of income and rising cost of living; many expect that its suppression will eliminate those negative effects.

 

It’s correct that, when remittances by a part of the population (that does not exceed 25 percent of the total) were approved in 1993, inequality in the distribution of income inequality rose. Likewise, when a high tax on the sale of goods and services in hard currency was introduced as part of the state policy to socially redistribute part of that income in a population segment, prices turned out to be very high for the median income of the country.

 

Nevertheless, these harmful side effects were inevitable in the face of the urgent need of hard currency for the survival of the nation in the worst years of the Special Period. This was a painful decision, but the Cuban government had no alternatives. The dual system was conceived as a transitional policy to eventually be overcome, as the economy recovered.

 

However, due to existing economic malformation, the crisis of the Special Period, as well as increased pressure of the U.S. blockade, together with an international economic crisis that became recurrent in the next decade, and the errors in the economic policy of the country, the dual system was extended during 20 years.

 

Today, it’s possible to begin to revert the situation.

In the current circumstances, and based on the profound transformation of economic policy that is being carried out — and only using it as a premise — it’s feasible to undertake a gradual process that allows aligning the true value of the Cuban peso with the level of development reached by the country, making it comparable with the international economy. This process should count on a program that allows confronting the different obstacles that will present themselves along the way, to reach the best possible results.

 

In summary, the decision adopted to begin on the path that allows a correction of the deformations that resulted from the dual monetary system is indispensable to advance towards the updating of the Cuban economic model. This correction will allow to measure with higher precision the economic facts and will create the conditions to reorder the Cuban economy — including prices and salaries — by emitting the right signals for decision-making.

 

A correct understanding of this process is necessary, because monetary reunification by itself is possibly the most complex process in the update of the Cuban economic model, and it requires a high level of organization, foresight and flexibility to reach its objectives.

 

We must not lose sight of the fact that monetary unification will only create the conditions to improve economic management and its measurement, but overcoming the problems that today affect the production of goods and services and people’s income will only be possible with a profound structural change in the economy, which will move through a stage of higher investment of resources and an increase of work productivity, the only alternatives available to make use of more wealth.

Moncada Day in Halifax POSTPONED

The Moncada Day event at Victoria Park is being postponed to next Friday, August 2 due to the threat of rain and the resulting problem with the live music in a wet environment.  What is a Cuban event without live music.....

 

The following showing will still be taking place:

 

MOMENTS WITH FIDEL 
A film screening

6:30pm, Friday, July 26
Rm 303 Dalhousie Student Union Building
6136 University Avenue

Fidel Castro served as the leader of Cuba's government for over five decades, since revolutionary forces toppled the Batista regime in 1959. Castro has had to survive over 600 assassination attempts. Cuban director Rebeca Chávez uses archival film and audio material to create a collage of important moments in Castro’s political and personal life, including his re-definition of Cuba’s role after the collapse of the Communist Bloc.

"An exceptional history of the Cuban Revolution. Timely not only as an emblematic collection about one of the most passionate and controversial episodes in modern history, but also because it cleans the way of lies and myths manufactured and repeated by the media." -CubaNow.net

A free event organized by the Nova Scotia Cuba Association. Other sponsors include: Canadian Network on Cuba, Canadian Union of Postal Workers,  Nova Scotia Public Interest Research Group, Nor Harbour for War Committee.

Mikowsky’s Return to Cuba

Solomon Mikowsky is a legendary professor of music, presently teaching at the Manhattan School of Music in New York City. He is widely recognized as one of the greatest piano teachers in the world. He is originally from Cuba, and he still feels Cuban; he supports and defends Cuba.

This year, professor Mikowsky (born in 1936) brought to Havana some of the greatest names in classical music. These include his former students, Yuan Sheng (China), Alexander Moutouzkine (Russia), Simone Dinnerstein (United States), and Wael Farouk (Egypt), as well as the many younger ones, his present-day students.

Under a surprisingly modest heading, “Encounter of Young Pianists”, musicians and the general public of Havana are now having a unique chance, between May 25 and June 9, 2013, to enjoy performances by some the world’s best concert pianists in the splendid surroundings of the Basilica Menor, of the San Francisco de Asis Convent, in the center of old Havana.

I spent several evenings with Professor Mikowsky. And it is not only music that we discussed, but also socialism, revolution, education and Western imperialism.

Solomon Gadles Mikowsky in Havana

Culture and arts… They appear to be constantly shaping this city, the entire country, and the Cuban psyche. They are part of the everyday life of the people. Havana is all about culture: its architecture, history and music are all alive, literally lining every street of the city; they can be seen, felt and heard at every corner. Music blares out from the open doors of historic bars. There are countless concert halls, theatres… The city is always vibrant, day and night. There is hardly any ‘junk’ here, almost no cheap ‘pop’. Even contemporary music is of a very high quality.

“I have not lived here for so many years”, says Professor Mieklowsky. “But every time I come here, I am amazed. The amount of concerts, lectures, presentations… It is such a cultured and educated country!”

“In terms of music, they have everything here: even baroque and pre-baroque… There is so little of it in the United States; you have to go to Europe to encounter similar quality and quantity of historic music, as they have in Cuba. In the US, you can find something like this only in places like Harvard or Yale.”

Solomon is very proud of how the festival was arranged, how sophisticated it is, how full of information it is for Cuban public.

But it is not just the festival, of course!

“Cuba with its lack of resources… You would think that Cubans would not be aware of what is happening in Europe, in North America, Asia, rest of the world… But they know; they follow everything, all the important trends and events. What is happening here is amazing, and it is not designed to ‘please the audience’, it is designed to educate, to make people what they are now.”

We speak about Cuba’s position in the world. Solomon says that Havana is to Latin America, what Athens was to Europe, in ancient times. It is respected and admired all over Central and South America, as the center of learning, and arts.

But how is this determined and proud country managing to create masterpieces, to understand the world, with such limited resources?

Solomon is passionate about this topic:

“There are priorities! Culture, education, arts – all those are great priorities in Cuba. Look at the number of the theatres, museums, concert halls here, look at even the number of Steinway grand pianos in Havana! In the West, particularly in the United States, most of the people, even the students, are deprived of real education. There is a vicious circle: the government is constantly talking about cutting taxes… and then the people demand tax cuts. But free and great education is paid for from taxes, and so is the great, non-commercial culture. Look at China: now they are building opera houses, concert halls, schools… they are building them all over the country! It is very similar to what is happening here.”

The Cuba of Solomon’s childhood, is very different from Cuba that we all know now.

“I left this island when I was only 18 years old… Before, I was based in Havana, so I can’t tell you how things were in the countryside… But what I know is that there used to be so much racism and under-development: a black boy approaching me then would not even know how to talk, forget about reading and writing. Chances were that he would be barefoot… Then once, after I came back, after the revolution, they placed a very young black man at my table and we talked and talked and he was so articulate and he was so clever; he spoke so well and he spoke about the future. Everything changed!”

To both Solomon and I, much of Cuba’s success is connected to education.

We discuss Cuban doctors, some of the greatest in the world. I tell him that I met them in all the corners of the globe: in Kiribati and South Africa, and in Chile right after the devastating earthquake.

He agrees: “Hospitals are now all over Cuba. Before you could find them only in Havana, maybe in Santiago. Now great doctors are working in all neighborhoods… real family doctors. And Cuba is the home to a great international medical school, which is totally free. You see, the US is sponsoring corruption, all over the world… Cuba can’t send money abroad, and so it is sending doctors.”

Back to the United States, back to New York.

Solomon’s face becomes pensive, almost melancholic.

“At Manhattan School of Music… I often open the window and ask my students: ‘What do you see?’ Some describe people walking… I have a very talented young man who likes to speak about the buildings, about architecture… and then the discussion leads to philosophy and to arts. This is what I teach them… And this is what Cuba tries to achieve through its education: for people to think, to appreciate arts, to think about the world…”

“In the US, there is so much racism… and students often get no support… they are not taught how to work hard. I recently had a girl attempting to enter the school… 16 years old, an African-American girl, very talented… but she was deprived… Not well prepared… It was clear she would never make it. At the end she was not accepted. It was so sad!”

Then the legendary professor becomes passionate again, almost angry:

“How come I teach in New York, and for years I don’t have one single North American student? It is ridiculous! I came from Cuba to New York, I teach in one of the best schools in the world! But now, if not for China, our school, as well as Julliard, would have to close down!”

“Why China?” I ask him, although we both know the answer.

“Because of discipline, determination and talent”, he replies immediately.

“Most of great students come from China… and also from Korea. Some are extremely talented… In China, talented students are nurtured by the state, by the education system. They come to me: they are skilled, determined, and ready to grow… In the US they keep talking about freedom… But what is hiding behind those slogans of freedom, so often: is a lack of education, an unwillingness to work hard…”

“Solomon”, I say, before we both return to the Basilica, this time to hear his young and talented Chinese student Ruiqi Fang, who flew from Beijing for two days each way, just to play here Bach, Schubert, Albeniz and Schumann. “How do you see Cuba, politically?”

“Yesterday the US described Cuba as a terrorist state, again”, he replied. “This is of course the only excuse they have, for torturing this country… But just think about it: as we speak, a man walks around somewhere in Miami… he walks and he eats breakfast, lunch, and dinner… he lives a normal life… this is the man responsible for blowing up a Cuban passenger airliner out of the sky, killing 76 people. Cuba is not a terrorist country; the terrorist country is the United States. We all know it!”

Andre Vltchek / June 8th, 2013 Dissident Voice

When the lens is on Cuba...

 
Omar Perez Salomon[i] brings us information about Cuban economy as it compares to 2011 directly from President Raul Castro’ speech at the closing of the National Assembly of Cuban Popular Power on December 13, 2012. The theme for this past year has been the need to potentiate the development of Cuban production through increased efficiency and more rational approaches. This perspective was adopted as the best way to make sustainable for Cuba the provision of social services free of charge to all its citizens. For those who do not believe this possible, we have news, it is working!

 Although such news, how a focus on the local economy and development can in fact improve the lives of people, should be important international news --particularly in times of crisis of the Global Frankenstein Project, information about Cuba is not easy to find. Perez Salomon points to the argument that in the past Uruguayan writer Eduardo Galeano raised, that when Cuba is the topic most media use a magnifying lens focusing on anything negative and distracting from any positive advance. It is a fairly true statement, Cuban advances are rarely the focus of international media attention; thus, it becomes particularly important for us to provide information about the advances Cuba continues to make in favour of its people.

 And yet, it seems it is more than just “ignore Cuba” like always this time, it may even be beyond Cuba and the US. Just imagine that a little Caribbean country could be showing the way to a new way of living in the world: local living. And doing it at a time when the monster idea “global village on steroids” is collapsing, or on its way to collapse, before our very eyes. Then, the reasons to ignore Cuba become even more important: ignore Cuba and all those who are trying to make it work locally, those who already realize that the global village on steroids is unsustainable -nature cannot bear it, undesirable -it does not ensure better living for people but just the opposite, and it is on its way to extinction, eating itself up, poisoning itself and us, as gone as the Dodo bird but still jumping up and down fully armed as those ghost whose sins do not allow them to go to the light –and are not ready to go to the darkness, leaving us in peace and once and for all. End of the movie.

 Therefore, it becomes particularly important to notice that in spite of the systematic increase of the international prices of food and other basic items, in spite of the global crisis and the chronic crisis of capitalism throughout the world, in spite of the increasing blockade of Cuba by the US, Cuba has shown positive, encouraging signs. And here is the list of some of those signs:

• Surprisingly, for a world with falling GDPs, at the closing of 2012 Cuban economy has increased its GDP 3.1%. Work Productivity has also increased (2.1%) and the Cuban state budget deficit is surprisingly low, a 3.8% of their GDP calculated at today’s prices.

• Cuba continues to be a very attractive and safe place for tourists and Tourism reached 2.874.000 visitors in 2012–a growth of 4.9% with respect to 2011.
• Gross income in Cuba reached 2 000 million dollars.
• Cuba shows economic growth when compared to 2011: Agriculture grew 2%, Manufacturing grew 4.4%, Transport and Communications grew 5%, Commerce grew 5.9% and Sugar production grew more than 20%.
• Cuba produced more than 4.000.000 tons of oil and gas in 2012 –supplying about 40% of the oil required by the country and almost the entire gas required for their power plants and domestic consumption.
• In a world besieged by two digits unemployment rates, Cuba’s current unemployment level is 3.8%. Furthermore, new policies approved are expected to increase the effectiveness of cooperative agricultural centers so better performance in this area is expected for 2013.

Government plans for 2013:

• An estimated growth of 3.7% in the GDP is expected, a 4.5% expected growth in Agriculture and a 4.7% expected growth in Manufacturing are highlighted as very positive advances by Cubans.

• Total capital to be invested by the estate in 2013 will be 7 756 million Cuban pesos, already a 34% increased respect of 2012, government plans to destined 79% of this amount to productive areas.

• Electricity available to the country is expected to increase 2%. Number of tourists visiting Cuba is expected to reach 3.2 million –an increase of 8.6% respect of 2012. Productivity is expected to increase 2.6%. Number of workers in the private sector is expected to increase 1%. Productive efficiency is expected to increase 2.2%. Furthermore, the contributions by Self Employed Cubans and those working under the new legislation are also expected to grow in a 14% in 2013.


• Expenses will reach 50 000 million Cuban pesos, a growth of 1.6% compared to  2012 –of those, more than 32 000 million Cuban pesos will subsidize families with low income through home building and repair and measures warranting levels of needed support and activities in the social sector. Government will continue subsidizing the “Canasta Familiar Normada” (food family basket) in 2013 with close to 3 000 million Cuban pesos; and, Social Security will receive more than 5 000 million Cuban pesos which will benefit close to 2 million Cubans.


• Monies in the amount of 532 million Cuban pesos will go to a Development Fund –backing government decisions to favour the productive sector and services. In 2013, 230 new cooperatives in non-agricultural sectors will start working. From January 2013 experiments towards increasing autonomy and capacity in the economic and financial management of more than 100 Cuban firms will be implemented.


• Cuba continues to be very concerned about Cuban children, their health and their education and Cuba continues helping with international health efforts. Infant mortality in Cuba continues to be below 5 for 1000 infants born alive and life expectancy is 78 years. Cuban budget ensures school education to 1.864.100 students –preschool, elementary and secondary levels and of 233 300 at university level. The budget includes also 152 hospitals, 452 poly-clinics y 11 504 medical clinics. More than 40 thousand Cuban health workers are involved in health missions around the world, working in more than 70 countries.


• In social development Cuban celebrated the second anniversary of EcuRed in December 14, 2012. EcuRed is Cuban first social network carrying more than 100 000 encyclopaedic articles and with more than 90 thousand visitors daily.


• Internationally, Cuba continues to receive much support and in November 2012 188 countries at the UN General Assembly condemned the Cuban blockade (188 países condenaron el bloqueo) imposed by the USA.


• Furthermore, Cuba continues to perform well in international competitions and indexes. Cuba obtained place number 15^th in the Olympic Games in London, with 14 medals. And, most importantly, Cuba occupies the 51^st post among in the world in human development by the UN report on Human Development –it is a high human development place for a country blockaded by the most powerful country in the world. Cuba is proud of it.  

Cuba continues to travel a not very traveled road and this maybe just making all the difference. Others are starting to realize that following their own paths, honoring their own ways and histories may be particularly important when imposed, questionable models start to show their cracks and falling to pieces…

“Two roads diverged in a yellow wood…

Two roads diverged in a wood, and I,
I took the one less traveled by,
And that has made all the difference

 From: The road not Taken, by Robert Frost

Nora Fernandez

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[i] http://lapupilainsomne.wordpress.com/2012/12/26/cuba-mas-datos-sin-lupa/