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Fidel: Happy Days Are Here Again

This story was written by CBS News Producer Portia Siegelbaum
For the fourth time in as many weeks, Cuban President Fidel Castro will take to the airwaves on Thursday. His last three speeches were upbeat, promising improvements in the standard of living.

Most Cubans stayed glued to their TV sets for appearances that lasted from three to five hours. At some bus stops, people were seen following his words on transistor radios.

"It's been a long time since we've heard any good news. Let's just hope its all true," said one Havana City postal worker as he hopped on the #190 bus heading home after making his rounds.

Besides announcing the imminent arrival of home appliances such as pressure cookers and electric rice pots at affordable prices or on an installment plan, Castro revealed new measures to strengthen the local currency.

This new peso power, he declared, would boost consumer buying power, while improvements in the economy would allow the nation to import more of what consumers need.

It was also the first time in many years that Castro referred to official opinion polls taken regularly, but rarely made public. "Of course, he's doing it now. When was the last time Fidel had anything good for the public to react to?" commented one Foreign Ministry official.

According to the Cuban leader, more than 26,000 opinions were collected on the first of the speeches delivered March 8 to a convention of women. Of the 28,000 plus opinions collected on his March 17 speech, Castro claimed only 253 were critical. In a buoyant and optimistic mood, he volunteered to read only the critical opinions.

"Every time Fidel speaks they cut the electricity, it appears intentional," read one opinion shared by Castro, referring to blackouts that occurred in several parts of the country in recent weeks. Probably not "intentional" but certainly ironic since the Cuban president had just pledged, "Blackouts will be history" within a year.

Power outages have been the bane of Cubans existence since the Soviet Union collapsed and Moscow cut off its heavily subsidized oil shipments. Today Cuba is receiving 53,000 barrels a day on high favorable terms from oil-rich Venezuela.

So it was with great interest that Cubans listened as Castro gave a detailed explanation of ongoing government investments to upgrade the country's ailing power grid, including construction of 300 new small generating plants and the purchase of $34 million in spare parts and equipment from Japan for one of Cuba's largest power plants.

A major breakdown at just one plant last year inflicted five and six hour daily blackouts, resulting in spoiled food and short tempers in this Caribbean island, where temperatures hover in high eighties year round. So one Cuban now opined, "So much trouble with the electricity and you're talking about electric rice pots!"

Castro insists there will be more than enough electricity to meet demands. Improved trade deals with Venezuela and China, increased nickel and cobalt production with both the Chinese and the Canadian company Sherritt International, and the recent discovery of oil deposits off the island's western coast, were cited by Castro as being behind the economic advances making the improvements possible.

Other opinions read by the Comandante included: "Fidel is crazy if he thinks he will solve the housing problem"; "What Fidel says we're going to get is fine but I'd prefer cooking oil and soap", a reference to items that disappeared from the shelves in the early 1990s and which for years have only been available at special stores in U.S. dollars; and "He talks about chocolate when what we need is food".

Weighing in on the side of the critics is Cuban-American scholar Marifeli Perez Stable who has written extensively on the Revolution.

"None of the good news is coming from within the Cuban economy -- no restructuring, a return to centralization, a peso revaluation that has nothing to do with reality - and, instead, is originating in Venezuela's oil and supposedly splendid accords with China," she says. "Sure, ECLA is projecting a 5 percent growth this year but that's pretty meaningless if the bodegas [grocery stores] are still rationed and what average Cubans can buy with pesos is either scarce or overpriced. When Cuban women can get a week's groceries and other necessities in peso stores without sweating it out, then five percent growth will be meaningful."

Castro says that's exactly what he's doing, making life easier for the average woman, which is one of the reasons he began making his announcements on International Women's Day.

Boosting the value of the peso and importing everything from more foodstuffs to the much mentioned pressure cookers will mean that people won't be so dependent on shops that only take the Cuban Convertible Pesos (CUC), introduced in 1994.

From 1994 until nearly the end of 2004, three currencies circulated in Cuba. One was the U.S. dollar whose circulation Castro was reluctantly forced by the depths of the economic crisis to approve in 1993. The other was the CUC, more commonly called the chavito or play money. Those two could be used interchangeably and had a one-to-one value on the island, although the CUC has absolutely no value abroad.

The original Cuban peso remained the "official" currency with which the Cuban States pays workers and which were and continue to be used in the poorly stocked groceries and pharmacies, to pay rent, utility bills, for movie and theater tickets or sports events, among other things.

In two moves by the Central Bank, and announced by Castro in his latest speeches, Cuba first upped by 7 percent the value of the original Cuban peso against the CUC and then raised the value of the CUC by 8 percent against the dollar effective April 9.

Castro pointed out the benefits of this by explaining how he'd just brought down the price of the new pressure cooker by 15 percent. His reasoning was as follows: the state picked up half the cost of the imported pots and converted the remaining 50 percent into its price in Cuban pesos.

By raising the value of the peso 15 percent, the state was also lowering the cost of the pot 15 percent so that instead of paying 150 pesos, consumers would only have to pay 122.50.

The day after Castro spoke, Cuba's Central Bank President Francisco Soberón elaborated on the measures.

"The decision to reevaluate as of April 9, the rate of exchange between the Cuban Convertible Peso and foreign currencies, and to eliminate the parity between this national currency and the U.S. dollar is part of a coherent, gradual and prudent strategy that the country will continue for the benefit of the people," he said.

Like Castro, Soberón charged that the sustained depreciation in the value of the U.S. dollar plus the Bush administration's increasing hostility toward the island has made it risky for Cuba to use the dollar as a means of payment or in its national reserve.

But the moves have unnerved many of the estimated 60 percent of the Cuban public with access to either U.S. dollars or other convertible currencies, such as the EURO, sent by relatives living outside the island or earned through their work. Estimates on just how much Cubans receive range widely from $400 million to over $1 billion.

"Fidel's speech was great but he dropped a bomb at the end, the reduction of the chavito, people lost thousands of pesos," went one opinion read by Castro on the 7 percent increase.

Previously people who bought Cuban pesos with CUCs received 26 for one, now they are only receiving 24. It doesn't sound like much of a difference but if they changed 100 CUCs they got 200 pesos less under the new rate. And many people count on the dollars sent by their relatives to help them pay the often high prices at the farmers markets where private vendors sell everything from lettuce and tomatoes to pork in pesos.

The state, aware of this, opened CADECA, the semi-official money exchanges at the entrances to farmers' markets.

Cubans depending on remittances to get them through the month already took a blow last November when a 10 percent commission was introduced on the U.S. dollar. Since then every CUC they buy costs them U.S. $1.10.

Cubans rushed to CADECA to exchange their dollars before the November deadline, changing an estimated $1.2 billion. But some Cubans wary of the chavitos and reluctant to put all their money in the bank have hung on to their U.S. dollars.

A retired veterinarian, who prefers not to be identified, says she has $3,000 squirreled away. Now with the threat of the further 8 percent devaluation of the dollar hovering over her head she will either have to put the money in the bank or find each dollar worth only .80 cents.

State-run Cuban TV broadcast an hour-an-a-half program the night after Castro last speech in which Soberón and other bank officials discussed the practical impact of the moves.

"We have nothing against citizens who have and receive dollars from abroad," said Soberón. "It's legal and it's normal that people living in other countries want to help their relatives in Cuba. But the possession of dollars," he insisted, "puts Cubans and foreigners in positions of advantage and the Revolution has the moral obligation to seek improvements for all the people."

Soberón claimed that personal income in the United States has gone up 48 percent, so Cuban Americans are able to absorb the 18 percent difference. "If they want their families here to maintain the same standard they can send them more money," he said as TV viewers listened astounded.

Even Andres Gomez, an extremely outspoken anti-embargo, pro-dialogue Cuban American was surprised by those remarks. "Only the rich in the U.S. have increased their personal income. Workers haven't experienced any increase in the last ten years. Cuban Americans are being squeezed," he said.

Remittances undoubtedly have kept many Cuban families going through the difficult years of the post-Soviet era and have certainly bolstered the national economy. Nevertheless, Cubans consider the legalization of the dollar in 1993 to be the first inequality established by the Revolution.

The most revolutionary Cubans, who had broken relations with relatives that left the country, were the ones to suffer most for the past 14 years. Retirees whose state pensions could be as low as 60 pesos a month felt abandoned. These are the folks who are eager to hear Castro's new message.

"When he said 'there's a forgotten sector' in our society, he was talking about us," said Eunice, a retired nurse like her mother Olivia with whom she lives. Both women, widowed and struggling to feed and clothe Eunice's 38-year-old mentally challenged son on their pensions, had tears in their eyes as watched Castro on television.

Olivia can't wait to buy a new electric rice pot. "We had one years ago but it broke and we could never afford to replace it." That and new rubber seals for her aging pressure cooker and 1940s American refrigerator will make a big difference in their lives, said Eunice.

Still these two women are lucky. They have an old but functioning four burner gas range in their kitchen. A large percentage of Cubans only have two burner cookers. An electric rice pot will free up one burner-Cubans eat rice every day-for preparing dinner and for heating water for bathing as most Cuban homes only have cold running water.

There was also widespread interest in the hints of wage and pension increases dropped by Castro during his speeches but so far he has shied short of announcing any. Economist Nidia Alfonso thinks such increases are unlikely. "Fidel doesn't want to put more money into circulation. He wants to raise the value of our existing salaries, bring us back to a time when you could buy a pound of ham for 6 pesos, instead of the 30 we now pay."

Castro has repeatedly alluded to his desire for Cuba to have a single currency and eliminate inequalities. "All roads lead to a peso with value," he said.

In recent months the government has tightened State power over the economy, particularly the cash cow tourism sector. The roll-back that has eliminated many of the economic openings of the 1990s has also cutback on corruption and given the central government better control of much needed convertible currency reserves.

Castro's recent speeches make clear the direction in which he is taking the country. "I find myself increasingly attracted to the ideas of Marx, Lenin and Engel's. Their time is not past," he declared, going on to say he wanted Cubans to be in a position to enjoy a socialist society not measured by how many cars people have but by our potential."