HAVANA, March 10 (Reuters) — Michel Lopez, a 41-year-old Cuban entrepreneur, spent the night on a sidewalk in old Havana queuing up for an inexpensive packet of chicken that might feed his family for a few days.
Life would be easier if he earned in dollars.
Cubans with access to foreign currency, through tourism or remittances, can buy everything from diapers to refrigerators and car parts at well-stocked but pricier dollar stores, known as “MLC shops” in Cuba.
Everyone else waits in line at bare-bones markets that accept the national currency, the Cuban peso.
“I’ve been here since midnight and I still haven’t shopped,” Lopez said in an interview, noting he had no choice without access to dollars. “It’s crazy.”
Cuba’s cash-strapped communist-led government says the so-called “MLC,” or hard currency, shops are necessary to raise much needed foreign currency to import food and underwrite social programs at a time of crisis. But the shops are increasingly driving a wedge among Cubans, stoking anger in a socialist country that has long prided itself on equality.
During widespread anti-government rallies last year, the largest since Fidel Castro’s 1959 revolution, protesters hurled rocks at MLC shop windows and in several cases looted them, chanting “Down with MLC stores.”
“The stores ... are a palpable example of inequality,” said Cuba-based economist David Pajon. “They have become a source of discontent.”
Dollar shops were revived in 2019 after a 15-year hiatus, but the current economic predicament is different, said Pajon and two other Cuban economists consulted by Reuters.
At the stores, Cubans use special cards loaded with foreign currency to purchase goods marked in dollars. But a tourism industry hurting from the pandemic and U.S. sanctions that restrict remittances have made greenbacks hard to come by.
That leaves many with no option but the black market, said Cuban economist Oscar Fernandez. Many basic products, from powdered milk and cooking oil to toilet paper, can be often be found only in hard currency.
The government does not sell dollars at banks or exchange houses. Cubans who trade pesos to dollars on the black market face jail sentences of up to five years.
“So if I earn in pesos, and I want to go to an MLC store, there is no way to do so. It is illegal,” said Fernandez. “That is a very strong source of discrimination.”
The Cuban government did not respond to a request for comment.
SORE SPOT
Economy Minister Alejandro Gil said in February he understood Cubans’ “genuine concern” over the MLC shops, but warned the alternative was worse.
The stores aim to capture remittances from abroad, he said, then use that hard currency to buy much needed goods ranging from fuel to the food sold at reduced prices in peso shops.
“We ask for understanding, because right now, (MLC shops) are a lifeline,” Gil said on state-run television.
Last year, $300 million from the hard currency shops helped the government stock the shelves of peso shops, Gil said. This year Cuba expects 23% of hard currency sales to help subsidize an estimated 77% of sales in pesos.
The dollar shops, largely operated by companies overseen by the Cuban military and on a U.S. black list, have become a magnet for the few Cubans with tourism dollars or remittances to spend.
Economists said that could complicate efforts by the administration of U.S. President Joe Biden to develop a way to send money to Cubans while keeping it away from black-listed companies.
“How can remittances that reach the Cuban people not get spent at state institutions?” said economist Fernandez. “Is the (U.S. government) going to set up a store in the American embassy, so that Cubans can go there to buy an air conditioner?”
A U.S. State department spokesman told Reuters the administration continued to weigh alternatives to remittance restrictions imposed by Biden’s predecessor, Donald Trump.
“The Administration encourages avenues for remittances that directly benefit the Cuban people and avoid — to the extent possible — benefits to the Cuban regime and its military and security services, in compliance with U.S. regulations,” the spokesman said.
For Cubans caught in the middle, the politics matter less than their daily ordeal.
“In the MLC shops, you can find everything, detergent, condensed milk, tomato sauce. But I don’t have dollars or euros,” said Amparo Rubio, a retired Havana resident.
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