Cuba's two-currency system adds up to a social divide

She's lived all of her 72 years in a shabby enclave of Marianao, a neighborhood where crude wooden cottages, their rotting boards held together with coats of paint, descend into a gully strewn with refuse and sewage.

Her two-room shack was an early gift of the revolution, back when the idealistic brigades of social levelers were at work lifting the poor and teaching the long-neglected how to read and write and care for their children. Rosa's sturdy metal-framed eyeglasses, a more recent state handout, magnify tired gray eyes that turn to Cuba's three state-run channels for diversion now, having lost the desire to read because of a dearth of books and practice.

Widowed 22 years and left with only a tethered mongrel named Mochito for company, Rosa is among the considerable ranks of Cubans in the country's population of 11.2 million who find themselves lost in poverty as the flow of money from trade, tourism and the black market has broken its once-egalitarian foundation.

The problems faced by Rosa and others like her, complicated by factors such as the country's loss of Soviet aid years ago, appear to be getting worse. Cuba's system of two currencies may be at least partly to blame.

Cuba uses the dominant convertible peso known as the CUC -- introduced four years ago to replace the U.S. dollar, which had been circulating for more than a decade -- and the Cuban peso known as moneda nacional.

Those with jobs in hotels, airlines and shops and on the thriving black market earn CUCs, referred to as "the dollar" and worth about 25 times the peso. The peso is the currency given to all state workers and pensioners, which must be converted to CUCs to purchase most goods. The Cuban government retains the peso because it lacks sufficient foreign reserves to back and circulate only CUCs.

The U.S. dollar, which circulated in Cuba from the mid-1990s to late 2004, was removed by then-President Fidel Castro and now is subject to a 10% tax whenever it is converted to CUCs -- in effect a devaluation by the state. The tax is felt most by tourists and the estimated 10% of Cuban households receiving money from relatives abroad.

Those like Rosa, who have neither foreign benefactors nor the vigor to run their own dollar-earning schemes, watch the buying power of their moneda nacional recede each month as more goods become available only for "dollars."