Since the Spanish American War, the United States has always had some form of economic influence in Cuba. However, beginning November 8, this could all change.
President Fidel Castro announced that the U.S. dollar will no longer be accepted at stores, banks, and other businesses in Cuba.
According to ABC News, the Cuban government said that the measure was necessary to protect the Cuban economy from a U.S. government that decided to punish banks that ship American dollars to the communist country, which has been under an U.S. trade and financial embargo for more than 43 years.
Some have said that Castro’s currency decision was a ploy to anger Cuban Americans and convince them to vote against President Bush.
The U.S. government, under the Bush administration, has reduced the amount of hard currency on the island by limiting how often Cuban-Americans can visit their relatives, and by decreasing how much they can spend, and prohibiting money transfers to Cuban officials and Communist Party members.
A press release from the U.S. Department of the Treasury describes Bush’s actions, in Cuba, as part of an on-going effort by President Bush to choke off dollars streaming to the Castro regime, making it more difficult for the Cuban government to harden its internal security and military infrastructure.
These measures are part of Bush’s overall strategy to hasten the day when the people of Cuba can live free, democratic lives. In May 2004, President Bush announced that he planned to strengthen enforcement of U.S. laws prohibiting travel-related transactions with the island.
A 10 percent exchange fee on U.S. currency will present an enormous problem for thousands of Cubans who rely on Americans remittances back to Cuba. Castro has encouraged Cubans to tell relatives living abroad to send them money in other foreign currencies, such as euros, British sterling or Swiss francs. These currencies will not be taxed.
Dr. Antonio Rodriguez, a Spanish teacher and political activist at Howard University said, "In an attempt to solidify the Cuban vote, Bush has tried to be extremely aggressive in his dealings with Castro. But I believe his attempts have backfired. Cubans now can’t visit their families in Cuba. That does not please them."
Cubans on the island will be able to hold U.S. currency indefinitely, however after November 7, it will hold no value. Hotels, restaurants, car rental agencies and taxi drivers will only accept Cuban convertible pesos, the local currency.
If U.S. currency holders exchange their dollars for convertible pesos before the new policy takes effect there will be no penalty suffered. However, after November 7, if U.S. currency holders do not exchange their dollars, they will be forced to pay a 10 percent exchange tax.
U.S. currency has been the staple currency for Cuba since the 1990s when the communist Soviet Union collapsed. Only the future will tell what implications of complete U.S. currency removal will be.