Cuba, America’s Sacred Cash Cow


Fidel Alejandro Castro Ruz, the irascible and cunning, 84 year old leader of Cuba, has managed to maintain his stronghold over the vast island country since overthrowing the U.S. backed dictator, Fulgencio Batista in the winter of 1959.   Fidel and his lieutenant Che Guevara immediately transformed the U.S. friendly tourist destination, that was once a haven for American vacationers and an offshore Mecca for Mafia activity, into a communist led regime; nationalizing U.S. owned companies and their property in the process.

Despite frustrated attempts by President J.F. Kennedy and the CIA to assassinate him, he has survived 9 U.S. Presidents and continues to rule, albeit in a much less vociferous manner.    In 2006, following an intestinal surgery, Fidel seceded his powers as commander to his brother, Raul Castro, who was officially appointed President of Cuba in 2008.  However, even in poor health, Castro is still involved in the daily operations, and remains the internationally recognized voice of Cuba.

In an effort to neutralize Castro and his growing allegiance with the now defunct Soviet Union, the United States, implemented a strict embargo against the country in 1960, urging foreign countries to immediately cease shipping and trading with the communist country and forbidding Americans to travel to the country.   The impact of the embargo has severely impacted the people of Cuba, but  has greatly enriched it’s enigmatic leader.    In 2006, Forbes magazine estimated Castro’s net worth at $900 million, ranking him as one of the richest men in the world.  Castro is actually rumored to have 1.4 billion dollars securely tucked away in foreign banks, while his people struggle daily to meet their basic needs.

Dealing with the half century old Cuban embargo, seems to be a perpetual albatross that every President has inherited since JFK’s untimely demise.  Many have tried to bolster diplomatic relations with Cuba, only to find themselves being used by Castro as fodder for his once fiery communist rhetoric.    In 2003, the U.S. Senate drafted a bill that would reopen diplomatic relations with Cuba, and lift the travel restrictions, however, Bush threatened a veto of the bill, claiming that reopening relations with Cuba would only further enrich Castro.  

In 2001, the island of Cuba was hit by Hurricane Michelle, devastating their already fragile infrastructure.  The U.S. and many other countries responded with offers of aid, but Castro seizing an opportunity to further needle his longtime nemesis, insisted that he would not accept aid from America.   But apparently, after some back channel negotiations, he relented and placed restrictions on the type of aid that would be accepted, limiting American donations to medical supplies and medical services.  

This catastrophic event would actually be the unlikely catalyst that would quietly jumpstart trading between the two countries in almost 50 years.   Shortly after the Hurricane, Cuba, a country that typically imports 80% of their food supply, was in desperate need of food and supplies.  The U.S. realizing an opportunity to increase exports to Cuba, began to relax restrictions on American companies doing business there, although, with one very important caveat;  that Cuba must pay cash for all American goods sold there.   

Cuba is required to pay cash, because of their history of stiffing countries such as France, Chile, South Africa, Spain and Thailand on payments.  Requiring Cuba to pay with cash, is obviously a boon to U.S. companies that supply goods and services there, because there’s no need to worry about credit or payment.  

U.S. exports and commerce in Cuba have ballooned from just 6 million dollars a year in 2001, to almost 2 billion dollars a year in 2007, making the U.S. ; the largest food supplier of Cuba  and its fifth largest trading partner.   Seeking to protect their resurrected cash cow, the United States in 2006, announced the creation of a task force made up of officials from several US agencies that aggressively pursue violators of the US trade embargo against Cuba, with severe penalties.   The regulations are still in force and are administered by the U.S. Treasury Department, Office of Foreign Assets Control.    Criminal penalties for violating the embargo range up to ten years in prison, $1 million in corporate fines, and $250,000 in individual fines; civil penalties up to $55,000 per violation, according to Wikipedia.

As part of the increased effort to prevent foreign companies from trading with Cuba, the U.S. prevents foreign cargo ships from docking on U.S. territory for a period of 6 months if they’ve recently visited Cuba.   The U.S. also levies stiff penalties on airlines that ship products to Cuba via U.S. airports, further strangling off foreign competition and allowing the U.S. to monopolize trading with the still communist country.  

So why continue to enforce a superficial embargo on a country that currently generates about 2 billion dollars a year in cash payments for U.S. goods and services?   Part of the reason may have to do with ego, no President wants to see a victorious Fidel Castro, parading around on Cuban television, and mocking the U.S., while maintaining strong trade agreements.    Another factor is the influential Cuban ex-patriot community in South Florida, which continuously lobbies against lifting the embargo, despite the continued economic burden that it places on their relatives who still live on the island.   The U.S. also realizes that it can easily continue to monopolize trading with Cuba if it maintains the current embargo, by limiting the number of foreign companies that trade with Cuba.  

In April 2009, President Obama lifted travel restrictions for Cuban-Americans, allowing them to travel freely to the island to visit their relatives.   Lifting the travel restrictions for all Americans may be the next step in dismantling an embargo that’s ironically served to enrich the surly and oppressive dictator, while impoverishing an entire nation of people, who continue to struggle with inadequate sanitation, poor diets and a lack of reliable public transportation.    But the easing of the ban, would put the U.S. in the precarious position of attempting to justify allowing Americans to travel to Cuba, but preventing foreign companies from trading there.

With the lifting of the ban, Cubans could expect Americans to once again flock to their country, bringing much need tourism revenue and expanded job creation to handle the influx of visitors.  Americans have always been intrigued and enchanted by Cuba, even more so because of its proximity and the aura surrounding restrictions on traveling there.   

No country’s future has ever been so closely associated with one man’s impending death than Cuba.  Many see Fidel’s eventual passing as a gateway to new beginnings in Cuba and an opportunity to shape their own destiny, free from his egotistical and oppressive regime.   

Barrington D.  Ross

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