Trading With the Enemy Fool's Gold Cuban Style

September 7, 2003 | San Francisco Chronicle
by Frank Calzon

Since 2001, Cuba has purchased American grain, food and medicine on a cash-and-carry basis, but Fidel Castro is broke and would like the U.S. taxpayers to replace his lost Soviet subsidies. Under proposals being advanced in Washington, when Castro defaults on his purchases, American taxpayers will have to pick up the tab.

Nine American presidents from both parties have supported restrictions on trade and travel to Cuba. The U.S. Supreme Court has determined the restrictions are legal. While some try to explain policy toward Cuba in terms of domestic political considerations (i.e. the Cuban American vote), the issue is more complex than that.

In July 2002, Reuters reported that, "Direct foreign investment in Cuba plummeted to $39.8 million in 2001 from $488 million the year before." That same year, Russia closed its spy facility near Havana, thus denying Castro's government $200 million a year in rent payments. For various other reasons, France, Spain and Italy suspended official credits. Castro has closed more than half of Cuba's sugar mills and after the European Union raised the issue of human rights, Havana withdrew its request for admission to the Cotonou Agreement: the EU accord which provides tariff benefits to developing countries.

That same month, Secretary of State Colin Powell wrote to a congressional committee to say that "Trade by other nations with Cuba has brought no change to Cuba's despotic practices, and it has frequently proved to be an unprofitable enterprise."
Unprofitable indeed. Two weeks ago, Mexico's Bancomext, which is owed more than $400 million by Havana, said it hopes to restart negotiations to get Cuba to pay its debt. The Mexican bank has frozen Cuban assets in at least three countries, just in case Havana fails to renew the payments it stopped more than a year ago.

Last year, the Montreal Gazette reported that "Lilac Islands, a 15,000 ton Cuban-owned ship, has been held in the port of Conakry, the Guinean capital-- while an Ontario company armed with legal judgments pursues Cuba for more than $3 million." Imagine U.S. companies chasing down Cuban cargo ships around the world to collect payment, while American taxpayers wait to pick up the bill when the debtor doesn't pay.

The United States "will continue to prohibit U.S. financing for Cuban purchases of U.S. agricultural goods because this would just be a foreign aid program in disguise, which would benefit the current regime," said President Bush in May 2002.

Trade with Cuba does not represent trade with Cuban business owners, entrepreneurs or consumers; trade with Cuba is trade with the Castro government itself, which monopolizes virtually all enterprises and exploits Cuban workers as their sole employer. As National Security Adviser Condoleezza Rice has said: "In Cuba, Fidel Castro is still the one man through whom everything has to go. Any trade that goes through Cuba is going to strengthen Cuba's regime."

While some insist on the right of American tourists to travel to Cuba, they ignore other rights and national security considerations. Each right must be weighted against its impact on other rights. As Oliver Wendell Holmes once wrote, "The right to swing my fist ends where the other man's nose begins." In this case, the desire to travel must be weighed against the risks of subsidizing a regime that poses a national security threat to the United States. For example, in May 2001, Agence France Presse quoted Castro at the University of Tehran saying, "Iran and Cuba, in cooperation with each other, can bring America to its knees."
The State Department lists Cuba, North Korea, Syria and Iran as supporters of terrorism. Castro also provides refuge to more than 70 fugitives from American justice, including some accused of killing American police officers.

In his letter to Congress, Powell said that, "The lack of sound economic rationale makes it more likely that Castro would use any liberalizing of our trade position for his political benefit." Providing trade benefits to America's enemies, especially those on the State Department list of terrorist nations, makes as much sense as selling U.S. scrap metal to Japan in the 1930s -- some of which was used later to build up the Japanese military and later, attack Pearl Harbor.

Apart from security considerations, perhaps the greatest advantage of the U. S. embargo is that it has saved U.S. taxpayers millions of dollars. American banks are not among the consortium of creditors, like those in Canada and Europe, who have waited for years to be paid what they are owed.
Fidel Castro is broke. He cannot pay his debts. Several of his trading partners have suspended credits, but there are some who wish American tourists would come to his rescue.

Capital markets lie when con artists run the show. A policy of moving exports from a cash-and-carry basis to credits and export insurance is like sentencing taxpayers to investing in Enron or WorldCom right before those stocks plummeted. American taxpayers did not have to bail out those companies. They should not be forced to bail out the head of an openly anti-American regime, especially when his default is more a question of "when" than "if."

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.