[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 27 October, 2004, 04:52 GMT 05:52 UK
Cuba move triggers war of words
Fidel Castro announces the new measures on TV in a Cuban home
Many Cubans rely on dollar remittances from relatives in the US
The US and Cuba have launched into another bitter war of words following Cuba's decision to ban transactions in dollars on the island.

Fidel Castro announced the ban, which takes effect in two weeks, in response to a tightened US embargo.

The US said the move demonstrated Cuba's "economic desperation"; later the Cuban central bank said the move had struck a "forceful blow" at the US.

Meanwhile, queues have begun forming as ordinary Cubans try to change money.

The new measure, announced on Monday, will see dollars banned in commercial transactions in Cuba.

Instead, "convertible pesos", pegged one-to-one against the dollar and available only in Cuba, will be used.

The dollar will not become illegal tender, but Cubans and tourists will have to pay a 10% charge to convert dollars when the measure takes effect on 8 November.

Our correspondent in Havana, Stephen Gibbs, says this measure will enable it to receive and control far more of the hundreds of millions of dollars that tourists and Cubans living abroad bring or send here every year.

'Typical Castro'

Assistant US Treasury Secretary Juan Carlos Zarate called the Cuban move "an act of economic desperation".

"In typical Castro fashion, his solution to this problem is to implement a measure that will directly benefit and bring profit to his regime, while hurting the Cuban people," Mr Zarate said, according to AFP news agency.

The new convertible pesos
Adam Ereli, US State department spokesman, said "it was a confiscatory measure that demonstrates that President [George W] Bush's policy is working".

In May, the US announced it was tightening its embargo on Cuba, with measures including capping the remittances sent to the island by Cubans in the US.

Their words drew a sharp response from Francisco Soberon, president of the Central Bank of Cuba (BCC).

"We feel very happy, very sure of what we have done, we have hit them where it hurts, we have withdrawn its currency in our national territory," news agency Efe quoted him as saying on Cuban TV.

"We have delivered a forceful blow [to the US] and we have at this time absolute monetary sovereignty," he said.

Cubans complain

Meanwhile, some Cuban people complained they were getting caught in the crossfire of an ideological battle.

"Fidel wants to get back the greenbacks and squeeze the people," said a cafeteria worker, Alfredo, who spoke to the news agency Reuters.

But some analysts said it made sense for Cuba to reduce its dependence on the dollar, which was legalised in Cuba in 1993 following its economic crash in the 1990s.

Many Cubans have become dependant on dollars for many goods, including some basic necessities. The convertible peso (popularly known as the "chavito") was originally introduced to plug the gap between supply and demand for dollars on the island.

The government is encouraging tourists to bring and remittances to be sent in other currencies such as euros.

Cubans began to queue on Tuesday to change dollars into pesos, and longer queues are expected on Wednesday when the convertible peso becomes available.

Other Cubans said they would open dollar accounts to hold their money.

Cuba winds back economic clock
26 Oct 04  |  Business
Castro condemns new US sanctions
21 Jun 04  |  Americas
Cuba re-opens hard-currency shops
24 May 04  |  Americas
Cuban dissidents attack Bush plan
10 May 04  |  Americas
Bush approves new squeeze on Cuba
07 May 04  |  Americas
Country profile: Cuba
04 Jun 03  |  Country profiles

The BBC is not responsible for the content of external internet sites


News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific