Cuba's Last Gamble? - Debt defaults

Miami Herald ^ | April 8, 2002 | By JUAN O. TAMAYO jtamayo@herald.com

[Bonaparte]

"...it [Cuba] restricted the ability of some foreign investors to pocket their profits."

"Foreign companies running hotels in Cuba reported recently that their once-lax government partners were no longer paying out profits unless the hotels achieved the exact profit margins required by their contracts."

"But Castro so far has shown no signs of favoring new reforms..."
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Abysmal credit ratings, huge defaults on foreign debt, crazy and arbitrary fiscal, monetary and commercial policy. Do you begin to see why any sort of investment in Castro's Cuba is foolhardy? Without civil liberties and true private property ownership, free enterprise is impossible. And without free enterprise, Cuba's economy will always have to be propped up by things like foreign subsidy and government drug trafficking. But civil liberties are what Castro and company understandably fear the most, whether it is extended to foreign investors or to Cubans themselves. Such a government cannot be "worked with" or "cajoled" by encouraging with trade the very conditions that Castro will not permit.

[Bonaparte]

"Anybody advocating credits should put up their own assets for collateral first."

But even there, others have prior legal claims on those assets, ie. the Cuban expats and foreign investors whose property was unlawfully confiscated by Castro, to say nothing of the long defaulted loans from the Russians. Without "new management" in Cuba, that country can't even make the ante to be dealt a hand.

[CUBANACAN]

Furthermore, those investing and trading with Castro are involved, directly of indirectly, in slave labor in cahoots with the regime, thereby, subject to future heavy liability claims as legitimate as the claims won by the Jews against the companies involved with Hitler’s use of slave labor.

[walrus954]

Now is the time to tighten the embargo on Castro. We must not relent.

[Bonaparte]

"...Much of what you saw can be said of other countries where we do not have trade sanctions in place -- Saudi Arabia and China come immediately to mend. No civil liberties in either, Saudi Arabia has a huge debt with which they're struggling."

Yes, you're right. Gross violations of human rights occur in both China and Saudi Arabia. They are institutionalized and routine. However, both of them differ from Cuba in two major respects (and there are others) -- 1) seizure of the property of legitimate foreign investors, and 2) an economy that has been run aground for 40 years by loony pie-in-the-sky marxism. At least economically, China has shown a willingness to adapt to the realities of the marketplace, and despite their continuing outrageous human rights abuses, the property and commercial interests of foreign investment are respected. Even the Taiwanese have been re-locating to the mainland in surprisingly large numbers to run businesses there. And there is reason to be confident that China will continue to provide a stable business environment for these people -- that is, until they've built up their military capability enough to attack us.

The Sauds have also been responsible in their business dealings with us. American property is safe there, and despite their indebtedness, their assets can more than cover it. The same cannot be said of Cuba, which, under Castro, has had an unbroken record of lies, thievery, and spectacularly poor economic management. In another post, you cited figures for hotel occupancy and other aspects of the Cuban tourism industry. But seen in perspective, ie. in comparison to figures for previous years in the past decade, those figures you gave only demonstrate that the health of that sector is declining significantly. With Castro or any of his likely Marxist successors at the helm, this country is a very poor risk for investment of any kind. The "different approach" you suggest is, IMO, unworkable and inadvisable. No American business demands that Saudi Arabia or China pay up front in cash. No, it's only Cuba. And for good reason.

Until and unless Castro, his lieutenants and his cadres are permanently taken out, I can see no hope at all for Cubans.

[Bonaparte]

"And not stick the consumer with higher costs to make up their losses."

Yes. Or stick the taxpayer with the costs of a government bail-out. How nice it must have been for all those bankers who made wild, unsecured loans to unqualified South American borrower countries -- knowing that their reckless gamble was risk-free.

[Cincinatus' Wife]

Bump!

[Cincinatus' Wife]

Paul Greenberg: Fidel and friends**** The problem is that, like any other economy that's been run into the ground by some Communist caudillo, F. Castro and brutal company are a little short of cash just now and always. Cuba is already some $11 billion in debt, it defaulted on its international loans years ago, and so it can't get any more money from the World Bank. Or any other lending agency that has this thing about being repaid. In short, Fidel's is a typical Communist economy, that is, bankrupt -- and not just morally. That's where American banks and credit and you, the American taxpayer, come in. Because all the loans and grants that Cuba's sordid little dictatorship would need to buy our rice and shore up its own power would have to be backed some way by the U.S. government. That's the dirty little secret none of those pushing for an end to this embargo emphasize. They see trade with Cuba as still another farm subsidy.****

[Cincinatus' Wife]

July 1, 2000 Lott vows to fight Cuba trade legislation---"I oppose both, and if I can find a way to kill them, I will," Lott said. The legislation is "not just about Cuba" but also about getting food and medicine to Libya, Iran and other countries "that are tyrannical, do horrible things to their people and in some cases are even a threat to world peace," he said.