Threshing Out a Deal Between the
Farmers and Fidel
September 20, 2002
By MARY ANASTASIA O'GRADY
If recent opinion polls are to be believed, a slim majority of Americans
have come around to the view that the U.S. embargo of Cuba should be relegated
to the circular file of history.
What is less clear is how many Americans know that since 2000 Cuba has
been able to buy as much food and medicine as it wants from the U.S. as long
as it pays for it in cash.
In other words, what the media broadly refers to as "lifting" the trade
embargo is not about granting the U.S. farm lobby the right to sell its
products to Cuba. It is about the right to provide credit to Fidel Castro.
The effort to allow credit to Fidel was advanced in July when the House
attached an amendment to the general appropriations bill prohibiting funding
to enforce any sanction on private commercial sales of agricultural
commodities or medicines. The bill has two other amendments designed to
withhold the Treasury's Office of Foreign Assets Control (OFAC) budget for
enforcing the ban on travel by U.S. citizens to Cuba and limits on monthly
dollar remittances to the island. None of this changes the embargo law. It
merely restricts the availability of funds to enforce certain parts of it.
Regardless of whether you are for or against the embargo, there are two
huge problems with this approach. The first is that a conscious decision by
the legislative body to simply end enforcement of U.S. law, rather than
legitimately change it, undermines the rule of law. If Congress wishes to
alter the embargo it should do so through the proper process.
Second, given Castro's inability to pay these days and the farm
industry's addiction to federal subsidies and guarantees, it is logical to
wonder whether U.S. agricultural interests aren't just teaming up with Fidel
to stiff the U.S. taxpayer. That would explain why so many Republican
politicians from farm states, who pay lip service to free markets even while
funneling federal money to constituents, are so gung-ho about allowing
"private" credit to one of the world's most notorious deadbeats.
For libertarians, the goal of ending embargo prohibitions is second
nature. They say that U.S. citizens should be free to move about where they
want and trade with whomever they like, even if it is distasteful to human
rights activists. Many libertarians believe too that more engagement with
Cubans would accelerate the fall of Fidel by removing his favorite excuse for
the pathetic mess he has made of the country. Liberalizing remittances
would mean that Cuban-Americans could legally send their imprisoned relatives
the amount of money they need. The overriding effect of all of this would be
less isolation of the Cuban people.
Such are the legitimate arguments against the embargo, which in no way
can be construed as sympathy for the regime. The only question left is what
the U.S. farm lobby, famous for its dependence on government guarantees,
subsidies and protections, is suddenly doing on the side of free markets?
The farm industry's gargantuan push for the right to finance Fidel is
especially strange because it comes at a time when other lenders are shutting
him off. Indeed, this seems to be the reason why there is now an "opportunity"
to sell to him on credit.
Earlier this month, a Reuters report said "France has frozen $175
million in short-term trade cover to Cuba after the island's government failed
to pay back money owed from a similar 2000 agreement," according to a European
diplomat. Cuba has also fallen into arrears with South Africa, Panama and
On March 10, Miami's El Nuevo Herald reported on an impounded Cuban ship
sitting in Sheveningen Bay, outside The Hague. The Dutch had seized the ship
for non-payment from the Cuban government. The story cited the
Belgian newspaper Tijd which said that Cuban "cargo ships are poorly
ventilated and poorly maintained, are environmentally contaminated, and
leave behind them a trail of unpaid creditors at every port they visit."
The University of Miami's Institute for Cuban and Cuban-American Studies
has compiled a list of Cuba's bad debts. It says that Fidel owes the European
Union at least $10.9 billion and hasn't paid principal or interest on its
Paris Club debt since 1986. The former Soviet Union lent some $25 billion.
Cuba is in arrears to its single largest creditor, Japan, to the tune of $1.7
billion. Argentina is its next biggest creditor and is owed $1.58 billion.
Cuba has debts to Chile of $20 million for unpaid fish imports, a "typical
case of default on a foreign government's short-term food export credit
program," according to the report. The United Kingdom's Export Credits
Guarantee Program, it says, "has refused to underwrite any further British
exports to Cuba due to the island's poor payment history." According to Juan
O. Tamayo, in an April edition of the Miami Herald's Business Monday, Cuba
"defaulted on $500 million in loans" last year.
We're supposed to believe that into this morass of defaults the U.S.
agriculture industry wants to jump, taking on "private" risk and boldly going
where so many have gone before and lost their shirts.
This is a little hard to swallow and even more so because the effort is
being led by such heroes of government largess for farmers as Nebraska Senator
Chuck Hagel. Throw in the plethora of farm export credits and guarantees in
the federal system and even casual observers of Washington politics would know
enough to be suspicious.
Critics of the amendment are concerned about the potential for abuse of
the Overseas Private Investment Corporation, Export/Import Bank and various
agriculture subsidy programs.
Virginia Democrat Jerry Moran who introduced the agricultural amendment
says not to worry, that he has been "advised" that its language "sufficiently
prohibits public entity financing." And Arizona Republican Jeff Flake, who
introduced the other amendments, insists that if there is any effort to
provide public financing he will fight it.
Mr. Flake might be believable if he were operating on his own in a land
of limited government such as James Madison once envisioned. But he's in 2002
Washington and has teamed up with the farm lobby. He needs to do more than
simply express his own pure intentions.
Copyright 2002 Dow Jones & Company, Inc. All Rights