ECONOMY-CUBA: Hard Times Eased by Remittances from Abroad

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Feb 23 2000 (IPS) - Cubans living abroad, vilified as “traitors” or “scum” in the past, have become the chief source of hard currency for residents here as well as state coffers.

Amounting to somewhere between 500 and 900 million dollars a year – depending on the source of the estimate – remittances play a role in the Cuban economy similar in magnitude to foreign trade and investment, according to experts.

The money is also a means of survival for a large number of people in this Caribbean island nation, caught since 1990 – with the collapse of the east European socialist bloc – in the grip of the worst economic crisis in the 41 years since Fidel Castro took power.

The aim of helping support the family is one of the main reasons cited by people who have decided to leave Cuba in the past few years. Meanwhile, those who stay behind expect much more than just souvenirs from their family members abroad.

Most Cubans believe it a duty of emigrating relatives to help support the family with packages of clothing and medicine and, above all, the foreign exchange needed to purchase products that can only be bought in dollars.

“I didn’t see or talk to my brother for 12 years, didn’t even receive a single letter, and all because of political reasons,” says Mariela Gómez, 62. “Now I get by thanks to the bit of money he sends me every month.”

With a monthly pension of 110 pesos (the dollar is worth 22 pesos in the government exchange bureaux), Gómez could not quite scrape by despite free health services and foodstuffs sold at subsidised prices, because she needed dollars to buy essentials like milk, oil and detergent.

Earning an average monthly salary of 220 pesos, Cubans have a hard time getting their hands on a number of products that are only sold in the government network of stores designed to draw hard currency.

Long past are the 1960s and 1970s, when corresponding with a family member abroad was a symptom of “ideological deviation.” Today, opinion polls show that Cuban families maintain strong ties, independently of where their members live.

In late 1997, 1.4 to 1.5 million Cubans, including the descendants of emigrants, lived outside of Cuba, 1.2 million of them in the United States.

A 1995 survey carried out in Havana found that 60 percent of respondents had family members abroad. And most of those with relatives living outside of Cuba stayed in close contact with them.

Official Cuban sources indicate that the proportion of the local population with access to dollars grew from 40 percent in the mid-1990s to 62 percent in 1999. But in most cases, small quantities were involved.

Besides remittances, Cuba’s 11.1 million people have access to dollars through incentives provided by the government in certain sectors of the economy and from limited private sector services offered to tourists, like small family restaurants.

Financial support from relatives abroad, a phenomenon common to much of the developing world, takes on special characteristics in Cuba, where the extreme politicization kept many families divided for nearly 20 years.

The situation began to change in 1978, after a dialogue between government officials and a group of Cuban exiles. However, the radical shift in how the phenomenon of emigration was seen did not take place until the 1990s.

Instead of seeing the urge to emigrate as a sign of political dissidence, local authorities and experts began to discuss the economic reasons underlying the phenomenon, the desire for better living conditions.

Remittances play “an economic and social role without parallel in the recent history” of Cuba, said Pedro Monreal with the Centre of Studies on the International Economy at the University of Havana.

In his paper “Migration and Family Remittances: 20 Hypotheses on the Case of Cuba”, Monreal stated that remittances had become Cuba’s main source of foreign exchange.

“The annual rate of growth of in-flows of such money during the 1992-96 period was 242 percent, more than 10 times higher than the rate of growth of the tourism sector in that period,” he wrote.

The government considers tourism the most dynamic sector of the economy, with an annual growth rate of around 20 percent.

Based on the conservative estimate of 500 million dollars a year, Monreal asserted that in 1998 the net inflow of foreign exchange in the form of remittances was equivalent to 35 percent of Cuba’s exports.

The economist, the author of various studies on the economic reforms implemented in Cuba, considered the money sent by emigrants to their families at home “a decisive factor in attenuating the impoverishment” of broad sectors of the population.

However, he maintained that the manner in which the remittances entered the Cuban economy contributed to “the stratification of consumption, segmentation of the markets and social exclusion.”

Black or mixed-race Cubans, who account for a significant part of the population, benefit the least from remittances, as most Cubans who leave the country are white.

Academic studies have found that emigrants who left in the 1990s assume their perceived duty of helping their families back home more rigorously than any other generation of emigrants.