As is well known Raul Castro - Head of State and leader of the Government of the Republic of Cuba – has said he wants to unify the two _pesos_ in use in Cuba. The _Cuban peso_, which is the functioning currency, is used to pay wages, salaries and pensions in the public sector, while the _convertible Cuban peso_ is used by tourists and Cubans to pay for _luxury goods_ such as petrol, restaurants, hotels, all tourist services and most imported goods. The _Cuban peso_, is worth about 5 cents but cannot be converted into any foreign currency, especially dollars. The _Cuban convertible peso_ instead has a fixed relationship with the U.S. dollar equal to $1.08.

The two monetary systems have played a dual role for decades. The first acts as a coefficient of exchange between goods within the domestic market and is used to calculate what state employees get, or don’t get, in wages. The second counteracts the drain of hard currency (dollars, in particular) and is used as a means of buying the raw materials and technology which Cuba lacks on the international market.

For those who - unlike ourselves - have always believed that Cuba has been and still is a socialist country this reform will certainly not change their minds. Among other things, the reform has not yet been technically formulated nor have they stated how long it will be before the old system expires. Probably they will move towards a single convertible currency with a huge damaging impact on the purchasing power of the domestic population.

The supporters of “Fidel” in Cuba do not realise that none of the economic categories of capitalism have ever been abolished. From capital to wages, from the production of goods to prices and the existence of the market, even if all of these categories have their political and administrative "dominus" in the central government. You could call it the Caribbean version of _state capitalism_ and that, in some ways, it was "better" (less oppressive) than the Asian version (Stalinism), without losing its capitalist character and its main actor, the "great leader", that of the dictator, but this is another issue that only marginally concerns us here

In relation to the overall economy the issue of the dual monetary system and its possible unification is a detail which fits in with everything else. It is a change brought about by the need of a small _state capitalist country_ to survive. In order to do so it is forced to adapt itself more and more to the more or less private capitalism that surrounds it. This is why we have seen the privatisations that have occurred in some sectors of the economy as well as this change in the _peso_.

-- FD