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sábado, octubre 31, 2020

Day Zero in Cuba’s Monetary Unification

by Mario Valdés Navia

Since I stopped teaching Political Economy in 1993 to return to my preferred field of Cuban History and thought, twenty years went by before I again got involved, academically speaking, in socio-economic subjects. In 2014 I had to attend the Public Administration Course, equipped with a magnificent syllabus devised by professors from the State and Government Higher School for Cadres and the University of Havana. As a student, I recalled, learned, and updated knowledge, and I made many good friends. However, what comes back to memory once and again from that first semester in 2014 is the construction of the Day Zero myth.

Its origin dates from October 25, 2013, when a succinct ‘Official Public Notice by the Government of the Republic of Cuba’ announced that the Council of Ministers had agreed to begin working on the process of monetary unification – although it should have said reunification. The peak of the myth came between the springs of 2014 and 2015, when rumors spread about the imminent proclamation of the anticipated Day Zero, the one in which CUCs would be bought with CUPs by the State from its bearers, legal and natural, at still undisclosed exchange rates.

In March 2014, three resolutions of the Ministry of Finance and Prices were published, which officially established that the CUP would be the ‘functional currency’ of the country and made a breakdown of the concrete measures companies and entities would have to comply with when the unification took place. At the time, even the most relevant economists, both academicians, and government officials stated in their publications and news media appearances that unification was imminent.

The anxiety reached such a point that, in March-April 2014, long lines formed at the CADECAS (Cuba’s government-run bureaus of change) to sell considerable amounts of the so-called ‘mattress’ CUCs (stored by their owners in various conditions and places outside the banks). Their excessive offer made their value drop to 21 CUPs in the informal currency markets in Matanzas and Varadero.

Taking advantage of the collective uncertainty that added to the relative chaos of street bustle, some speculators cashed in big-time on their dealings with the two currencies. Meanwhile, in places which are more conservative and distant from speculative practices, as my beloved Sancti Spiritus, the CUC was almost completely cast off, and since then it’s only grudgingly accepted by sellers and buyers.

The myth had several other revivals, particularly in 2017, when news came out about the creation of thirteen workgroups, with over 200 specialists from several fields, in order to assess the possible variables of what, how, and when it would happen. It was even announced that foreign experts were being consulted, but without ever specifying when the long-awaited reunification would come into effect. That’s the reason why, in the book and two essays I wrote between 2014 and 2019 about current Cuban socio-economic affairs, I always had to use question marks when referring to the much-anticipated date.[1]

Now, more than five years after 2014, we’re witnessing another revival of the myth, and the new herald is the national TV. What’s surprising is that we’re being presented with popular opinions on the pressing need for reunification, as if this were a new issue requiring the creation of collective consensus so it can be dealt with by the government. It’s unbelievable!

Instead of repeating what’s already been said, it would be convenient for economists and other high-level specialists to explain to the people what the foreseeable consequences of this process – both positive and negative – will be. The true thing is that promoting the myth that it will be a beneficial measure for everything and everyone may be counterproductive when the long-awaited Day Zero comes. Although the national economy cannot continue to function without a single currency that would allow us to more precisely express social expenses and newly created value; and companies cannot continue to have the incentive not to export due to the fictitious 1 to 1 exchange rate, and yet be encouraged to cheerfully import as if one peso actually were one American dollar; people also need to be explained the negative side of what’s going to hit them.

Three unfavorable consequences seem likely in any scenario: inflation, substantial loss of the assets of numerous companies and the obligatory closure of many of them due to the impossibility of subsidizing them. The latter effect will create the obligation of making new sources of employment available for thousands of workers who will be released in the short term.

That’s why I believe we should sacrifice some Mesa Redonda airtime now devoted to speculating on the US electoral process, and create some space for explaining to the citizens what will happen after Day Zero: necessary to the point of being essential, important to set the economy on firm domestic tracks, stimulating for the best producers, whether state-owned, cooperative or private; and, at the same time, traumatic for many companies and families, difficult for the wallets of workers on a fixed wage and likely to magnify social differences.

The Cuban people – well-informed, cultured, and self-sacrificing like few others – are in more need of scientific arguments than myths. If this process has taken so long, like others in the long and winding road of reforms in Cuba, the logical thing would be for us to receive it with full awareness and not with illusions. We owe that to the infinite resiliency of Cuban men and women.

Contact the author at: mariojuanvaldes@gmail.com

[1] Essays: “Rousseau, Marx y Braudel en la actualización económica cubana” (“Rousseau, Marx and Braudel in the Cuban economic updating”), Temas No 87-88, July – December, 2016, pp.119-128 and “La tríada burócratas-burocracia-burocratismo y la hora actual de Cuba” (“The bureaucrats-bureaucracy-bureaucratism triad and the current Cuban scenario”) (Award-winning essay in the Social Sciences category of the Temas 2017 contest), Temas No 91, July – September, 2017, pp. 126-134; book: El manto del Rey (The King’s Cloak), Ediciones Matanzas, 2019.

Translated from the original

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