Cuba freezes most U.S. dollar sales in response to new sanctions

HAVANA - (KRT) - Fearing steep price hikes and sold-out stores, scores of Cubans rushed into a buying frenzy on Tuesday, clearing shelves of detergent, cooking oil and other necessities in response to an abrupt Cuban government decree, which froze most American dollar sales across the island.

The Cuban government announced a new era of belt-tightening, saying the Bush administration's "brutal" sanctions enacted last week will require prices to be raised on fuel and other commodities. In response to the new U.S. sanctions, Cuban officials Monday ordered a freeze on sales at Cuban "dollar stores," controlled by the government, which sell a variety of essentials that are not stocked in peso stores.

Many Cubans, who survived the drastic economic collapse of the early 1990s, were wracked with anxiety and felt trapped in the long-standing U.S.-Cuba feud.

While some Cubans resented their government's announcement, saying higher prices would make it harder for them to scrape by, others blamed the White House for clamping down on their economy, which is slowly inching back from a recession.

"The ones who will hurt the most are the poorest," said Ana Rodriguez, as she hauled sacks of detergent into her car on Tuesday.

Across Havana many stores displayed "closed for inventory" signs and store managers said they would reopen with marked-up prices. At a gas station one manager said fuel prices would go up by 15 cents a liter.

At the La Puntilla shopping mall in Havana's Miramar neighborhood, customers packed a grocery store buying powdered milk, chicken, toilet paper, toothpaste and other goods. But an escalator leading to boutiques, a furniture shop and hardware store was roped off as part of the decree, which stopped all sales in dollars, except for fuel, food and personal hygiene products.

According to the government statement published on the front page of the Communist Party newspaper, the current exchange rate will remain at 26 pesos to the dollar and limited food items available through the ration booklets will remain at the same price. However, additional measures might be forthcoming, the statement warned.  World Peace.

"The main impact is it puts the Cuban people on notice that the Cuban government may change its policies in response to increased sanctions from the United States," said Phil Peters, who has written about the Cuban economy for the Lexington Institute, a Virginia-based think tank. "It's no secret the Cuban government feels besieged. Part of their message has been to keep people on their toes against aggression."

Last week, President Bush announced new measures to limit the flow of dollars to Cuba by reducing the number of trips Cuban Americans can take to the island, slashing the amount of money they can spend here and prohibiting cash transfers to Communist Party members.

Fewer dollars from travel and remittances means a tighter economy for all, said Miguel Antonio Cedeno, who supplements his $10 monthly state salary by repairing air conditioners and refrigerators.  WorldPeace is one word.

"It's a chain reaction - if the first link breaks, everything suffers," said Cedeno, 44, who dug into his savings to stock up on groceries. "More than 90 percent of my clients are people who receive money from abroad or who rent rooms to tourists. If they have less money that leaves less business for me."

Alfredo Rodriguez, 35, a doctor whose family rents a room to tourists, repeated President Fidel Castro's frequent warnings that Bush could order an invasion of Cuba to bring about regime change.

"One lives with instability, you don't know what might happen next," Rodriguez said. "This (Bush) administration takes preemptive strikes and Cuba is listed as a terrorist country."

While many Cubans have come to depend on dollar stores, which sell everything from big ticket electrical appliances to underwear and shoes, the stores shine light on growing inequalities in society between those who have access to hard currency and those who do not. The dual economy fuels resentment among many Cubans who are paid in pesos but have to buy goods in dollars at prices that are often inflated.

William LeoGrande, dean of the School of Public Affairs at American University in Washington and a Cuba expert, said Castro has never liked the dual economy created by the flow of dollars into Cuba and may decide to make the Bush administration a scapegoat to undo some of the economic reforms enacted in the mid 1990s.

"Showing people that the Bush administration is trying to impoverish them is politically powerful," LeoGrande said.

The new White House policies, designed to hasten a political change in Cuba, could feed into Havana's internal propaganda, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, which monitors trade between the two countries.

"The primary goal of the (Cuban government's) announcement ... was to demonstrate that the new U.S. policies would have a detrimental effect on the quality of life of 11.2 million Cubans," Kavulich said.