Announcing the implementation of the foreign exchange market by the Minister of Economy Alejandro Gil It brought the message that the regime intends to fight the informal market and to seize foreign currency to invest in the development of the country. The scale is an example of the urgent need for foreign exchange in the face of the inefficiency of the Castro model of production and export. It’s also the last minute answer Try to mitigate bankruptcyrepresented by the lack of liquidity and international credits due to non-payment of external debt creditors.
But the foreign exchange market proposal put forward by the minister is incomplete, mediocre and It will not reduce inflation levels or stabilize the national currency. With the new formula, the government will only buy foreign currency, not sell it, hurting citizens who need it to buy food and products that can only be bought with hard currency.
Nor does the action release refusal to allow dollars to be deposited in cash in MLC accounts. A very important detail: Banks can buy dollars, but citizens cannot deposit them into their MLC accounts. Therefore, we are not talking about the exchange system, but about A scheme that will further impoverish Cubans.
Said’s plan was born lame, because it lacked the accompanying measures that favored building that monetary stability in the short and medium term. The most reasonable thing is to implement such deep measures as, for example, liberalization of the productive forces, full entry into the real market economy and free enterprise. Without this step, the bet remains to apply corrections to solve specific crises.
After Gil’s announcement, the reaction was not long in coming: The black market exchange rate has already reached the number 130 CUP It will see an increasing trend in the coming months. If the regime insists on doing this kind of ridiculous competition without unleashing a serious package of accompanying measures, this fight against the black market will turn into disastrous consequences.
However, the most important thing is to reveal what’s behind this move Alejandro Gil and Miguel Diaz-Canelwhich at first glance seems clumsy, but apparently hides other intentions.
Attempted financial coup
In fact, what hides behind this announcement is that with the passing of General Luis Alberto Rodriguez López Calleja, CEO of GAESA, A struggle for financial power has begun to ferment in the country.
GAESA controls 90% of the rolling market and captures the currency in circulation in the country through three primary sources: MLC stores (Pan-American STORES, TRD Caribe, gas station network, etc.); FINCIMEX, to reap remittances arriving from abroad, and GAVIOTA, with its network of more than 110 hotels (accommodating more than 70% of what the hotel market generates) and its ancillary services (car rentals, restaurants, etc.). for several years, This scheme deprived the government bureaucracy of direct access to the foreign exchange market, directly under the jurisdiction of the GAESA military empire. All this influx of hard currency deposits, as well as financial operations of other sectors of the dollarized economy, were concentrated in Banco Financiero Internacional (BFI). This was how Lopez Calleja controlled most of the foreign currency that entered the country. When he dies, the financial lock no longer has an owner. This event opens Window began the struggle for financial control of the nation. As the saying goes, “He who controls money controls power.”
For years, the Cuban bureaucracy was denied access to foreign currency and was always subject to superior vertical control, first by Fidel Castro and later by Raúl, via López Calleja. Most of the government companies operate with the discounted peso and it is not efficient at all. They were also supported by the state itself, so they do not contribute much to the country’s economy, but rather generate great losses.
Under this circumstance that Alejandro Gil, with the support of Diaz-Canel, launched the idea of a mechanism to capture the circulating currency. Neither Alejandro Gil nor Díaz-Canel dare to get their hands on GAESA’s field and control its operations. However, factors such as the decline in exports from the main sectors of the economy to critical levels, the stagnation in the recovery of tourism and the significant decrease in the income of remittances through official channels (FINCIMEX), as well as the sudden drop in income from the export of medical services were used as an excuse to launch this modest system that He tries to collect the circulating currency that is floating in the streets and which GAESA cannot reach.
On the other hand, along with the measure, Alejandro Gil hinted that in the future, prices for products and services will be dealt with in Cuban pesos.. This means that at some point, existing MLC stores will have to offer their products and services in the national currency (CUP), which would be the minister’s dream. According to the logic of its strategy, GAESA will not have a mechanism to receive foreign currency directly and be able to buy goods that it normally sells abroad in its extensive and semi-monopolistic network of stores in the country’s dollar retail market. in this way, The Cuban bureaucracy is trying to trace a path to control the collection of foreign currency, forcing GAESA to direct purchases abroad through the central bank.
In his TV appearance to explain the take-off of the foreign exchange market, Alexandre Gil Expressed: “How should work consistently foreign exchange market? Logic says that the state Buy more coins of those they sell, and this positive result is invested in the economy, generating offers of goods and services that are marketed in the national currency, so that there is another incentive to replace the currency.”
He later said: “This is not a magical measure, it can be seen in isolation from the rest of the advertisers. The success lies in the presence of a level of supply in the national currency, which creates an incentive for people receiving foreign currency from abroad or international travelers who want to exchange it for the Cuban pesos. ” With this argument, the Minister intends to make it clear that it will be the foreign exchange market that will take over the capture of foreign exchange, leaving aside the market that GAESA has hitherto owned.
Gill also acknowledged the main goal he intends to achieve with this action: “The strategic goal is to work in the economy in Cuban pesobut at an exchange rate that ensures the internal convertibility of the currency and gives real purchasing power.”
In other words, the Minister made a future projection of how the national market would work with an economy managed in Cuban peso, which would mean the disappearance of the dollarized market, and thus, That would dry up the GAESA sources. In this hypothetical scenario, GAESA will not be able to access the dollar collection directly through its network of stores. Therefore, to make your purchases abroad, you will have to rely on the currencies of the Central Bank.
Given the accumulated frustration since they took office as President and Minister of Economy, respectively – without access to foreign currency, not even in times of an epidemic, to allocate resources to the purchase of medicines and vaccines and improving hospital conditions -, Díaz-Canel and Alejandro Gil took advantage of the physical disappearance of Raúl’s strongman to try to control finances and plot a financial coup against GAESA..
However, Diaz-Canel and Gil made the mistake of launching this ridiculous measure which, apart from exacerbating financial chaos, shows ignorance of the laws of the market. A clumsy will cost them dearly, because all of a sudden, They put control of the country’s finances in the hands of the black market. Far from weakening the black market, they have strengthened it.
with measure, Diaz-Canel and Gil officially devalue the coin by 400% Henceforth, this has led to a vortex of barter war that will lead, in one direction, to a mechanism to inject the currency into the Cuban peso and which will quickly become another factor in high inflation.
At the moment, the market response was clear: there are no queues or crowds in banks and exchange centers for the sale of foreign currency to the state. There are no attractive offers in Cuban peso to encourage citizens to exchange their currencies in government banking networks. Why would they want to do that, if the only place they could buy what they really needed was everything sold for dollars?
For the population, The effect of this action will be brutal. Salaries will evaporate in a couple of lunches. Pensioners will be completely unprotected. Prices will go up in both the casual market and MLC stores. People’s frustration will escalate further, protests will increase and chaos will begin. The country’s drift is no longer a perception, but a reality.
In the business sector, on the other hand, the blow will be devastating. Maintaining the official rate of $1 x 24 kopecks would permanently bury the corporate network of government. For foreign companies, it will be a blow that increases the financial shock and the shock caused by the implementation of the order mission. The meager output that is still present in some sectors of the economy will decline further. If production decreases, export levels decrease with it.
The foreign exchange market was hastily implemented as a measure to attract foreign exchange, due to the bankruptcy of the country in the midst of a multi-system crisis, to which the collapse of the energy matrix, besides being a wrong measure, added countless disastrous consequences, it is a clumsy and clumsy attempt at a financial coup against GAESA. reveal it The death of General Luis Alberto Rodríguez López Calleja unleashed a struggle for power, and that this struggle began in the financial sector.
Judging by what happened in the past two years, The Minister of Economy, Alejandro Gil, and even President Miguel Diaz-Canel, their days can be numbered. It would not be unusual for a separation to occur at any time. The vortex of mistakes and follies of these two characters with their patchwork has plunged the country into a crisis not seen in 63 years and put Raúl at a terrible crossroads, at 91 years old and unwilling to take the helm of failure no one can avoid.
All the economic measures taken by the Díaz-Canel government in the past two years have achieved the goal. Between the MLC stores, the task of cash demand and now the one-way exchange market, they put the country in a quagmire that would be impossible to get out of under the present conditions.
From now on, power grabs can come from all angles. Meanwhile, the multi-system crisis is deepening and the collapse of the regime could come at any time, at the hands of an unstoppable popular revolution or even at the hands of the armed forces themselves.