Castro on the Skids
Date: Mon, 30 Sep 2002 20:35:07 EDT
Outside View: Castro on the Skids
By Frank Calzon
A UPI Outside View commentary
>From the International Desk
Published 9/28/2002
WASHINGTON, Sept. 28 (UPI) -- A longtime thorn in America's side is wilting,
and fast. Fidel Castro's government is broke. Foreign investment in Cuba is
down an almost unbelievable 92 percent over the last year. Castro can't pay
his bills, and several of his most important trading partners have suspended
credits and export insurance to his government.
Yet, like the second-to-last scene of a banal Hollywood western, some are out
trying to muster a cavalry to save his desperate regime. This time, the
cavalry is American tourist and special farming interests who seek U.S.
taxpayers as infantry, but their objectives will only strengthen the Western
Hemisphere's most enduring dictatorship.
At the end of July, the House of Representatives voted on two amendments,
each approved by 95 vote margins, to end restrictions on travel and lift
restrictions on financing exports to Cuba. The Senate will consider the
legislation soon.
President George W. Bush has threatened to veto any legislation that would
"bolster the Cuban dictatorship," but the anti-embargo lobby has argued
successfully that trade with Havana means American profits and Cuban
prosperity.
Since last year, U.S. companies have been allowed to trade with Castro's
government on a cash-and-carry basis; that is, Cuba must pay for American
products, generally agricultural items, with cash only, but not with credit.
But the new legislation will extend American export credit and export
insurance to Castro's government --- both of which are funded by American
taxpayers. Under the proposed policy, when Castro defaults on his purchases
American taxpayers will have the burden of picking up his tab. And like the
wretched farm bill that passed last spring, this legislation is good for the
green triangle, but a raw deal for American taxpayers.
In a July 11 letter to the House Appropriations Committee, Secretary of State
Colin Powell and Treasury Secretary Paul O'Neill wrote: "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. France, Spain, Italy and Venezuela have suspended
official credits to Cuba because Castro has failed to make payments on its
debt, including debt incurred on agricultural purchases. In fact, according
to Powell and O'Neill's letter, two foreign governments have approached the
United States to complain that Cuba's payments of cash for U.S. agricultural
products have meant that they are not getting paid at all.
In international capital markets, reputation is everything. So it was little
surprise when Reuters reported on July 8 that, "Direct foreign investment in
Cuba plummeted to $38.9 million in 2001 from $488 million the year before."
And earlier in the year, despite Castro's tantrum, Russia closed its spy
facility near Havana, which will cost the Cuban government $200 million per
year in foregone rent payments.
Castro's current creditors are far from happy with these circumstances, as
many have not received payment on interest of principal credit since 1986.
Without even counting Castro's debt to Russia, which he will not pay because
he declares his debt is to a country that "no longer exists," Havana owes
billions of dollars to western banks and former socialist countries.
If this is not enough evidence, the cavalry lobbying for American credits and
imminent subsidies should ask the Canadians for their advice. On Aug. 7,
2002, the Montreal Gazette reported that a 15,000 ton Cuban-owned ship has
been held in the port of Conakry, the Guinean capital, for the past month
"while an Ontario company, armed with legal judgments, pursues Cuba for more
than $3 million U.S." Guinea's Court of Appeals upheld the ship's detention,
pending the payment of more than $275,000 in debt to the Ontario company.
Imagine U.S. companies chasing down Cuban cargo ships in international waters
to collect payment, while American taxpayers sit on the sidelines knowing
that they will pick up the bill when the debtor doesn't pay. Castro pricks
America's side again.
Critics of current policy claim that Cuba is purely a matter of Florida's
electoral politics, but the facts show otherwise. While announcing his "U.S.
Initiative for a New Free Cuba" in May, President Bush declared that, "Cuban
purchases of U.S. agricultural goods ... would be a foreign aid program in
disguise." Current policy toward Cuba has saved taxpayers millions in export
insurance, subsidies, and de facto foreign aid.
All, because 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. National Security Advisor Condoleezza
Rice, recently wrote that, "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."
Capital markets lie only when con artists run the show. And forcing taxpayers
to subsidize Cuba, which has seen a 92 percent decrease in foreign investment
over the last year is a leap from a precipice trumping Enron and WorldCom
combined.
But American taxpayers did not have to bail out those companies. Why should
we be forced to bail out the head of an openly hostile government -- one of
seven nations listed by the State Department as state supporters of
international terrorism?
A Castro bailout under the proposed policy is more a question of "when" than
"if." And policymakers should seek to protect the interest of taxpayers
before propping up a regime that is openly hostile to the United States.
(Frank Calzon is executive director of the Center for a Free Cuba. "Outside
View" commentaries are written for UPI by outside writers who specialize in a
variety of important global issues.)
Lillian Martinez
PO Box 293
Round Rock Texas USA 78680-0293
512 246-2597 - Voice
512 246-1478 - Fax
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