Threshing Out a Deal Between the Farmers and Fidel September 20

      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 Spain.

      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 Reserved