Cuba's Fidel Castro announced today that the U.S. dollar -- which has been legal tender in Cuba for the last decade-- will no longer be accepted for consumer purchases. Cubans will now have to trade their dollars for funny money scrip issued by the state. The exchange is one to one MINUS A 10% "fee."
Let me translate: Castro has just imposed a highly regressive 10% flat sales tax on an already impoverished population. For those among you who have never been to Cuba let me tell you that ALL consumer goods are accessible only in dollars. And so are most foodstuffs beyond the minimal rice and beans on the ration card.
A huge percentage of the Cuban population is wholly dependent on the $1 billion a year in hard currency sent them by relatives living abroad. The average wage in Cuba is the equivalent of $15-$20 a month. Prices on most consumer goods, meanwhile, are about 25% higher than in the U.S.
You can do the math. This is a massive transfer of scarce hard currency from the pockets of ordinary and threadbare people into the coffers of a bankrupt state at the cost of everyone's standard of living. All Cubans who have been saving up dollars -- the ONLY form of savings in Cuba-- just lost 10% of their wealth [sic].
Surprise, surprise. Fidel blamed the decision on the Bush administration, citing restrictions placed recently on dollar remittances to Cuban families by Cuban American relatives, and attempts to prevent international banks to provide Cuba with dollars. Said Fidel: "The empire is determined to create more difficulties for us."
Fidel's remedy: to create more economic distress for the workers of Cuba. No question the Bush administration is squeezing Cuba. It's unconscionable. So is the way Fidel squeezes his own people.
The most likely outcome is a new black market in dollars.
In doing this story tonight on MSNBC tonight, Keith Olbermann obliquely referred to the classic Woody Allen comedy Bananas saying Fidel also annnounced from now on underwear must be worn outside your clothes.
Viva la revolucion!
Update: Here's Randy Paul's take on the story.