Castro Won't Pay His Bills

April 16, 2001 | The Plain Dealer, Cleveland
by Frank Calzon

The campaign to lift the U.S. embargo against Fidel Castro has resumed. Economic sanctions are out of fashion and some believe lifting the embargo will save the achievements of the revolution, while others say that American tourism and trade will bring freedom to Cuba.

Both groups could not be right, and both could be wrong. Some Central Europeans believe that although radio broadcasts and solidarity with the dissidents was important, Western loans and tourism propped their Communist regimes, which otherwise would have collapsed much earlier.

But agribusiness in the Midwest believe there are huge profits to be made by trading with Havana, opening the way to profitable business with the likes of Libya and Iraq. Last year, Congress lifted sanctions on sales of agricultural products and medicine to Cuba. No sales have materialized. And Castro, who suspended payments on his foreign debt in 1986, would like to have U.S. exports paid by U.S. taxpayers in the form of subsidized credits (to Castro) and export insurance to American businesses.

Since the 1960s, when Castro expropriated U.S. and Cuban businesses, Washington has banned all trade with Cuba. Castro now lures businessmen by telling them that they are losing deals. But according to a recent U.S. International Trade Commission report, "U.S. sanctions with respect to Cuba had minimal overall historical impact on the U.S. economy" and "even with massive economic assistance from the Soviet Union, Cuba remained a small global market relative to other Latin American countries."

The commission estimates "that U.S. exports to Cuba in the absence of sanctions, based on average 1996-98 trade data, would have been less than 0.5 percent of total U.S. exports. And that "estimated U.S. imports from Cuba... excluding sugar (U.S. sugar imports are government regulated) would have been approximately $69 million to $146 million annually, or less than 0.5 percent of total U.S. imports."

The report, requested by Congressman Charles Rangel, (D-NY) and a long-standing opponent of sanctions, says "U.S. wheat exports to Cuba could total between $32 million and $52 million annually, about one percent of recent U.S. wheat exports." But consider this: France recently withheld a shipment of grain due to Castro's inability to pay for earlier transactions, canceling $160 million in new credits to Havana. Chile is attempting to establish "a payment plan" for a $20-million debt for mackerel imports from last year. South Africa, according to the Johannesburg Sunday Times is "frustrated" by Havana's failure to settle a $13-million debt, and the Trade and Industry Ministry will not approve credit guarantees to Cuba until the debt is settled.

Since 1986 Castro's Western creditors (Canadians, French, Spanish, etc.) have attempted to recover at least part of their loans amounting to more than $10 billion. Havana refuses to repay Moscow's loans, saying that debt was to the Soviet Union, "a country that no longer exists."

One of the best-kept secrets about the American embargo is that it has saved millions of dollars for U.S. taxpayers. Due to the embargo there are no American banks in the Paris Club, a consortium of creditors. Otherwise U.S. banks through their allied in Congress would have found a way to hit U.S. taxpayers for their losses in Cuba.

According to the report, rice exports to Cuba would be worth between $40 million and $59 million, increasing the value of U.S. rice exports from 4 to 6 percent: "U.S. exporters would be highly competitive with current suppliers." But it cautions that Castro's trade decisions are based on politics, not on economic efficiency. Castro is unlikely to give the Americans the market share that he gives his ideological allies: China and Vietnam.
Furthermore, the United States should expect to supply Cuba between $40,000 and $72,000 thousand worth of tropical fruits annually. The fruit exports would be geared entirely to Cuba's foreign tourists in the special hotels reserved for them.
Castro's trade partners become apologists for the regime, fearful of anything their governments could say that could endanger their investments in Cuba. They have found out the hard way. Louisiana rice and Illinois wheat producers should stop assuming that "selling" to Havana is synonymous with getting paid. U.S.

Tax payers should be wary
Castro desperately needs credits and subsidies. Washington is under pressure from agri-businessmen. If we accept the estimates of $100 million per year total exports, five years from now the American taxpayer would have guaranteed $500 million in credits that would be repaid with their taxes. Real money in all places - except Washington.

Before extending Castro credit, Americans should visit any street corner in downtown Manhattan and observe a game often played there called three-card monte. It consists of convincing the player that he knows exactly where the card carrying his money is-until it disappears. In this game, the gambler takes his chances. Where trade with Castro is concerned, the U.S. taxpayer will be left holding the losing card.

Frank Calzon is Executive Director of the Center for a Free Cuba, a non-profit organization based in Washington, D.C., that promotes human rights and democracy for Cuba.