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As Diplomatic Thaw Settles In, Currency Crisis Looms In Cuba


For 20 years, Cuba has had two types of money in circulation - the national peso and the convertible peso, or CUC. The value of the CUC is pegged to the U.S. dollar, making it 25 times more valuable than the national peso.

PATRICK SYMMES: People are paid in the low-value national peso, but most things that you need in life are only available in government-run stores that accept the CUCs.

RATH: That's Patrick Symmes. In a recent piece for Bloomberg Businessweek, he writes about what might happen when Cuba eliminates the two-currency system sometime in the next year. The uncertainty is driving a hunger for U.S. dollars traded on the black market. On a recent trip to Cuba, Symmes encountered that black market before he'd even left the airport.

SYMMES: I was only about 75 feet inside Cuba. I'd just cleared customs and immigration. And when I asked a uniformed attendant where can I change money, her answer was come with me. And she didn't take me to the official government-run foreign currency exchange post. She took me up an escalator and out of sight and whispered in my ear, saying I'm going to give you a better rate than the government gives you.

So she convinced me to go into the men's room and count out my money. And she was so eager to do this deal, this black-market deal, that she actually went into the men's room not once, but twice, looking for me. You know, that's the extent people - what people will do in order to get that tiny, little advantage in an exchange rate. You see people building up their cash reserves in anticipation of what's coming.

RATH: So the president, President Raul Castro, is planning to do away with this two-currency system later this year. Why are they getting rid of it?

SYMMES: That valuable so-called kook peso, the convertible peso, is the most hated thing in Cuba because people don't get it. They say a privileged class of Cubans who are in the tourism business get it, but most people don't. The old currency system simply doesn't pay for people to survive, so somebody has to. And they think they can create export value, get a much more rational economic system going, increase tourism and bring a kind of stability to the economy by pegging the original traditional peso at a higher value and maybe even floating it on international markets, which is a pretty radical step for a socialist country.

RATH: So there have been changes in the Cuban economy in recent years that have allowed for an entrepreneur class to come up. You've written about the people who are running their own businesses. How do they feel about this coming change?

SYMMES: The currency issue for them is less scary because they already have an outside source, a second source of income. For people who are stuck on that government payroll, which is most Cubans, getting somewhere between - you know, the average national salary is $20 a month. Some people get only $12 or $14. So to live on that little money, it's a very close, precarious situation now. What if their salary becomes worthless? So those people are much more concerned about it than the tourist class, a new, emerging middle class, the professionals who can charge a little on the side for services.

RATH: Patrick, you've been writing about Cuba for 20 years. What are the most dramatic changes you've seen since the start of this recent thaw in U.S.-Cuba relations?

SYMMES: I think this is the most solid, developed economy I have seen in 23 years in Cuba. You know, the last year, they've added a couple hundred-thousand licensed entrepreneurs. You see hundreds of restaurants where there used to be dozens. And that's not just for tourists. That's even in remote towns.

So I do feel like blood is beginning to pump through the body that was in such poor condition. It's imbalanced right now, and it is mostly in the tourism sector, but it's spreading into other parts of Cuba and affecting more and more people.

RATH: Patrick Symmes is the author of two books on Cuba, "Chasing Che" and "The Boys From Dolores." His piece, "The Cuban Money Crisis," is in the current issue of Bloomberg Businessweek. Patrick, thanks very much.

SYMMES: Thank you. Transcript provided by NPR, Copyright NPR.