Re: The Other Side of the Western Union Story
- From: Karen Lee Wald <wlk@...>
Subject: Postcards from Cuba --sometimes there's no way to understand
Date: Dec 23, 2010 9:37 AM
This isn't the first time, and won't be the last time, that things happen here that I do't understand. (Well, I guess that happens among lovers and spouses and parents and children, too....)
In this case, after as much digging as I could do (given this isn't exactly the kind of thing I usually dig into, like health or education or sustainable agriculture, for instance), it seems that for whatever their reasons, the government entity here that has to do with relations with Western Union (Fincimex) did in fact authorize the company to pay out in CUCs here.
All that I wrote yesterday remains true. I can't second guess them as to why, despite this, they consider it in Cuba's interest to allow this. (Well, I can guess some reasons but since it would be pure speculation, I won't).
In any case, they apparently analyzed the matter and decided the positives overrode the negatives. So it is apparently true that people will pay in dollars in Miami (and elsewhere) and that will be converted into CUCs without the Cubans on the receiving end having to go to a bank or money-exchange office and pay the extra 10% fee.
(Western Union will, presumably, still charge its own fee plus the normal 8% Cuba charges for all money exchanges, and take into account the daily international exchange rate, but recipients will receive 10% more than they would have if they'd received dollars here).
Now, wouldn't it be nice for the rest of us, who actually come here, if we could do the same thing? Maybe this is a first step towards the promised unification of the Cuban money....
Some of you may have read Western Union's announcement (repeated in wire
services and Miami Herald) that it had permission (from the US government; no
mention was made of having permission from the Cuban government, or
acknowledgment that this would be necessary, too) to begin paying Cubans on the
island remittances sent by their US relatives in Cuban currency -- not,
apparently, in Cuban national pesos, but in the dollar-equivalent "CUCs".
That would be fine and I would have just nodded and passed it on if Western
Union weren't claiming that by doing so [the recipients] would be relieved of
having to pay the 10% tax imposed on changing U.S. dollars.
Western Union said: "Previously, Western Union was prohibited from paying out in
CUC due to [US] government restrictions. However, with the recent approval of
local currency pay out, there is no longer a need to pay out in U.S.
dollars"..."Consumers were required to convert all U.S. dollars to local
currency upon receipt. These dollars were previously subject to a local tax
that was incurred by the recipient of these funds. By removing the
[requirement] to pay out in U.S. dollars and implementing local currency pay
out, Receivers will no longer incur any additional fees when picking up funds in
I don't believe this. Western Union is either defrauding Cuba or defrauding its
customers. If they got their CUCs legally, by exchanging US dollars, it means
they paid the extra 10% fee and will certainly be passing that cost on to their
But the only way Western Union could have gotten CUCs without paying the
additional 10% is for them to have exchanged other currencies such as Euros or
British pounds, which only have an 8.5% exchange fee. In other words, they got
the dollars but avoided putting them in the hands of the Cuban government and
paying Cuba the fee.
For those who haven't been following this -- and most of us don't normally pay
attention to money exchange except when we are traveling -- I should explain
that when you are exchanging US dollars in Cuba for pesos or CUCs, you have to
pay the 8.5% fee charged for exchanging other currencies, PLUS an additional
This is because the US government has made it much more difficult and costly for
Cuba to use US dollars in banks and businesses around the world by imposing huge
fines and penalties on them for accepting dollars from Cuba.
But if they are then giving CUCs to Cubans at the European rate although they
came originally from USD, it is a backdoor way of preventing the Cuban
government from collecting that fee. And also a way to keep dollars out of Cuba.
Cubans I've talked to here had a number of thoughts on the subject (no one has
indicated that Cuba has agreed to this procedure, by the way). On an economic
level, one analyst suggested this was similar to many other situations where the
dollars actually stay in US bank accounts that those who are benefiting from
some illicit or backdoor transaction hope to be able to access some day.
Another senior political analyst felt this was one more instance when Washington
(the Obama administration) made statements that make the US look like the good
guys ("we'll deliver remittances in CUCs with no extra fees") and Cuba look like
the bad guys ("It can't be done without paying the standard fee").
It will be interesting to see what Cuba has to say officially in response to
this. Meanwhile, I'm hoping I can get some feedback from some more informed
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