CyberCuba published on Thursday, exclusively, that the Western Union company is assessing the possibility of delivering in US dollars (USD) remittances sent to people in Cuba, which would allow both to make direct deposits in the new magnetic cards enabled for payment in the stores of home appliances in foreign currency. So far these deliveries are made in the currency of exchange, the CUC, and Cubans carry out the operations in cash.
The cards require an endorsement in the form of bank deposits in a number of entities chosen by the regime, and also, in currencies, so that all transactions made with the card referred to the account do not have to be changed to Cuban pesos or convertible pesos, but prices are set in the corresponding currency.
If this finally happens, the Western Union would launch a major change in the processes of remittance delivery in cash to the residents of the island, which are currently made in convertible pesos (CUC) and the fixed exchange stipulated by the government that maintains from the already distant times of the special period, to 1 by 24.
Apparently, this option has been offered by the regime, specifically by the Central Bank of Cuba, to the Western Union, which undoubtedly represents a further step by the government, in the line of exercising absolute control over the entry of foreign exchange. In the economy.
The operation also means removing from the circulation an abundant amount of CUC, which was the currency obtained by changes with the dollar by people who received remittances in cash. In essence, the proposal of the Central Bank is that remittances in dollars be deposited on magnetic cards and that the money can be used later through payments to goods and services in establishments with point-of-sale terminals.
For Cubans, there is no doubt that, if this were possible, they would be facing a significant step forward, in the modernization of the economic system, since the use of cards and electronic means of payment presents a bleak panorama on the island and clearly overdue with respect to other countries. The reality is very different. Most of the retail circulation of the economy, what in the market economy is called sales, takes place in Cuba in establishments and commercial forms that, in general, lack these electronic means of payment and therefore do not accept cards and They operate in cash.
Think of the warehouses where a large part of the transactions are formalized or the state stores where regulated agricultural products are sold or not. Most of the sales are made in cash, which explains why in Cuba the currency indicators reach the highest percentages of GDP in Latin America and the Caribbean. Only in the exclusive stores where products are sold at international prices and in convertible currency can card payments be made, and even in hotels and restaurants, but when you leave those circles open to tourism, the card payment option descends from very significant way.
Therefore, to the Cuban who receives the remittances the option to operate with cards at the present time, it can be more of a setback than an advantage, especially if a good part of the transactions that will be made with the money that comes from the Foreign occur in the informal economy, where cash circulates in a generalized manner, and where you can find almost everything that is needed since the hardest times of rationing in the 60s of the last century.
On the other hand, self-employed workers in most authorized activities and trades do not worry too much about this card payment option because, for example, carriers charge prices that can hardly be paid by card, and even a meal on a good palate is more easily paid in cash and thus avoids banking control of the activity, which is like putting business figures in the hands of state security.
We can ask who is interested in this measure. And the answer is obvious: to the regime, which thus has another instrument at its service to control the circulation of foreign currency entering the economy. To the extent that the Western Union decision is still in the air, I consider that this company also has no interest in moving towards these operations, since it offers a better service by paying the customer in cash, so that it can freely dispose of the amount of the remittance, after the discounts required by the communist regime.
The government has been closing all the cracks through which the strong currency that enters the economy escapes, and thus the sale of household appliances, motorcycles and auto parts arose, in stores authorized to operate with currencies throughout the national territory.
It was said that this measure tries to face the obstacles and sanctions of the US government, but the reality is that they are linked to transactions from that country, which also apply to Cubans who send euros from Spain or those who send Canadian dollars. The objective is to collect as it is.
Western Union should take into account, as a company that provides services to its customers, these considerations and take a break from the proposals of the communist government. Moreover, if you have to make operational adjustments to be able to change the way you provide the service.
I have no doubt that in the coming months, and given the stagnation of the economy, the authorities will impose harsh mechanisms on all foreign currency traders that operate on the island to control the entry of strong currency. While Cubans will continue to opt for cash operations, which grant greater freedom of choice, the regime will seek to encircle any space for economic freedom, as it has done with the “mules” dedicated to the appliance business, which have been market sweeps.
It is not advisable to lose sight of the fact that with almost queued engines, the remittances that the diaspora families send to theirs in Cuba have become the main source of income for the economy, allowing Cubans an additional expense in goods and services that would be impossible with the low salaries and pensions paid by the government on the island. Although the Trump administration has reduced the average amount of remittances to $ 1,000 quarterly, the sending of family remittances continues at a good pace and this has allowed the communist government to open the doors of tourism to Cubans, in an exercise in which neither of far will be reached 4.5 million planned foreign tourists.
The need to control the currencies is of such magnitude that the authorities are silently accepting a phenomenon of dollarization in the economy that clashes with the eternal argument of confrontation and harassment of the northern neighbor and also coincides with a process in which they have taken the first steps towards the unification of the two currencies, so it seems that the historic Cuban peso will finally survive. No one is hidden that all this can create very strong distortions in monetary control that further aggravate the current situation of the economy.
Finally, there is the issue of hereditary flows granted in the United States to residents of Cuba, which are sent through Western Union from accounts frozen in banks in that country. It is true that currently, up to $ 10,000 per day can be sent to Cuban beneficiaries on the island, because the restrictions on the quarterly amount of remittances, imposed by the Office of Foreign Assets Control (OFAC) last year, are not established in the case of hereditary flows, which are property rights in favor of a testator.
In any case, with the available data, I do not believe that this can become a very important volume of remittance shipments, especially when the options to invest in Cuba remain limited for amounts such as those that can be derived from the will of An American Cuban. In addition, the rupture of family ties makes it clear that many heirs are living in the United States, which limits the sending of money to the island. It would be necessary to make estimates, but I don’t think this could be a determining factor to change anything.
The alleged stoppage of money transfers from blocked accounts in inheritance cases has limits. I know cases of Cubans who upon receiving an inheritance in the US have addressed the initiative to leave the country and settle in South Florida to start a new life in freedom. I consider that the most important part of the remittances, the ones that most interest the communist regime, is formed by the periodic remittances sent to families for their survival on the island, which constitute the main axis of the Western Union business and Other companies
In addition, FINCIMEX, which is the state agency that grants authorizations to foreign companies engaged in remittances to the island, including Western Union, can change partners at any time. Sometimes the best saying is not to change things that work well, you are absolutely right in the world. This can be a good example.
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