Tuesday, May 11, 2004

Cubans stunned as dollar-only stores are closed

HAVANA, Cuba (AP) -- Cuba's dollar-only stores displayed "closed for inventory" signs Tuesday after the communist government suddenly shut them down, blaming new U.S. measures aimed at squeezing the island's economy.

Long lines stretched from state stores with food and personal hygiene products -- nearly the only items still sold to Cubans in dollars -- as people scrambled to buy shampoo and soap from rapidly emptying shelves.

"This is insanity," said 64-year-old Odila Morales, waiting to buy laundry detergent. "Politics are filthy."

The government did not say whether the stores would reopen. But Julio Perez, the administrator of Harris Brothers department store, said they were merely giving dollar-only stores time to mark up the prices of all their goods.

"It really isn't anything serious," said Perez. "Maybe it will only be three, four, five days."

Some questioned how the closure -- which prevents Cubans from spending dollars at the government stores -- would counteract the U.S. proposals announced last week, which aim to reduce hard currency on the island by limiting how often Cuban-Americans can visit relatives, decreasing how much they can spend, and prohibiting money transfers to Cuban officials and Communist Party members.

"It's not helping the Cuban people, and it's not helping the Cuban government," said Carmelo Mesa-Lago, an expert on the Cuban economy at the University of Pittsburgh. "All this is bad -- bad economics, bad social welfare."

Mesa-Lago said the measures could strengthen the Cuban government's control over the economy.

Cuba was forced to implement liberal reforms in the early 1990s to cope with the loss of Soviet aid and trade. Possession of dollars was legalized in 1993 to draw hard currency from growing tourism and family purchases at the state stores.

The government has steadily offered more and more goods in U.S. currency while the Cuban ration book of items available in pesos has withered.

For many Cubans, rations now cover eight eggs, a pound of chicken, about a pint of cooking oil, six pounds of rice, a half-pound of a ground meat-soy mixture, and a few other goods each month. The rest must be purchased at far higher prices either in pesos or in dollars.

The dollar-only shops have been associated with social inequalities that have worried Cuban leaders. The elite, with access to greenbacks, can easily buy everyday goods that a doctor cannot on a salary equivalent to $25 a month.

Three floors selling clothes, mattresses and electrical goods were cordoned off in Harris Brothers, where employees stood behind empty counters looking confused. Other workers catered to dozens of shoppers buying cooking oil, Spam and deodorant in the store's only open section.

Dozens of stores along Old Havana's commercial Obispo Street selling toys, shoes and fancy furniture never opened Tuesday. Gift shops in upscale hotels and other tourist stores, however, were still selling T-shirts, crafts and camera film in dollars.

Laura Pernez, a 25-year-old gift shop clerk, said tourists would not be affected by the measures. Cubans, on the other hand, were very uncertain.

"I am worried, of course, since we don't know if this is going to be for a week, a month, or seven years," Pernez said. "But we need to wait. One shouldn't go into a panic."

The government said that dollar prices would be raised on food and gasoline and perhaps other products.

But it assured Cubans that other aspects of the economy would not be affected: people will still be able to change money, buy food in pesos at private farmers' markets, and have access to such government services as health care and education.

Mesa-Lago said the dollar stores were opened in 1993 in large part to fight a growing black market in which goods were traded in dollars without passing through the state's hands.

"Once they close this window, then the black market is going to expand," he said.

Copyright 2004 The Associated Press.