Cubans fortunate enough to own American dollars are enjoying preferential treatment island which is causing resentment and even violence from Cubans who only have local currency, the pesos.
Cubans with access to foreign currency, through tourism or remittances, can buy everything from diapers, refrigerators and car parts at well-stocked but pricier dollar stores, known as “MLC shops” in Cuba.
Everyone else waits in line at basic markets that accept the national currency, the Cuban peso. “I’ve been here since midnight and I still haven’t shopped,” Michel Lopez said, noting he had no choice without access to dollars. “It’s crazy.”
Cuba’s cash-strapped communist-led government says the MLC shops are necessary to raise much needed foreign currency to import food and underwrite social programs at a time of crisis. But the shops are increasing resentment and hatred between Cubans, stoking anger in a socialist country that has long prided itself on equality.
During widespread anti-government rallies last year, the largest since Fidel Castro’s 1959 revolution, protesters hurled rocks at MLC shop windows and even looted some, chanting “Down with MLC stores.”
“The stores are a palpable example of inequality,” said Cuba-based economist David Pajon. “They have become a source of discontent.”
Dollar shops were revived in 2019 after a 15-year hiatus, but the current economic predicament is different, said Pajon. The Cuban dilemma is salaries are paid in ordinary pesos, and average just $20 a month, even though the cost of survival runs around $50 a month, and must be paid for with Cuban pesos at government stores that, until now, accepted nothing else. As crazily inefficient as the existing two-currency system appears, it has allowed the government to maintain near-total dominance of the economy
At the MLC stores, Cubans use special cards loaded with foreign currency to purchase goods marked in dollars. But a tourism industry hurting from the pandemic and US sanctions that restrict remittances have made dollars hard to come by.
That leaves many with no option but the black market, said Cuban economist Oscar Fernandez. Many basic products, from powdered milk and cooking oil to toilet paper, can be often be found only in hard currency.
The government does not sell dollars at banks or exchange houses. Cubans who trade pesos to dollars on the black market face jail sentences of up to five years.
“So if I earn in pesos, and I want to go to an MLC store, there is no way to do so. It is illegal,” said Fernandez. “That is a very strong source of discrimination.”
The Cuban government did not respond to a request for comment.
Economy Minister Alejandro Gil said in February he understood Cubans’ “genuine concern” over the MLC shops, but warned the alternative was worse.
The stores aim to capture remittances from abroad, he said, then use that hard currency to buy much needed goods ranging from fuel to the food sold at reduced prices in peso shops.
“We ask for understanding, because right now, (MLC shops) are a lifeline,” Gil said on state-run television.
Last year, $300 million from the hard currency shops helped the government stock the shelves of peso shops, Gil said. This year Cuba expects 23 percent of hard currency sales to help subsidize an estimated 77 percent of sales in pesos.