Agribusiness Should Come Clean About 'Trade' With Cuba

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By Mauricio Claver-Carone in The Hill:

Agribusiness should come clean about 'trade' with Cuba

Whether the embattled Export-Import Bank of the United States ("Ex-Im Bank"), which finances and insures U.S. exports, is a needed facilitator or a government agency doling out “corporate welfare” is a debate still raging in Washington. So it’s somewhat ironic that the agribusiness conglomerates who have benefited most from the Ex-Im Bank’s export credits and loan guarantees are lining up to drive the final nail in the bank’s coffin.

Building on the perceived momentum of President Obama’s December announcement that his administration and Cuba are seeking to “normalize” relations, the newly formed U.S. Agriculture Coalition on Cuba ("the Coalition") is pushing Congress to instruct the Ex-Im Bank to finance expanded agricultural sales to the Castro dictatorship in Cuba. Yet Cuba ranks among the world’s worst credit-risks and debtor nations.

While Obama says he will use his executive authority to ease the U.S. embargo and travel restrictions, the extent of that authority is uncertain. Congress codified the embargo and tourism ban into law in 1996 and 2000 and only Congress can actually change the law.

Chaired by Minnesota-based Cargill Inc., the Coalition is eyeing a more immediate “prize”: lifting the prohibition on Ex-Im Bank financing exports of agricultural products to Cuba. It's one thing to lobby to do business with one of the world's last remaining totalitarian dictatorships for the sake of profit; it’s quite another to peddle the deceit to the American public that trade with Cuba serves some public interest here or in Cuba. The Coalition ought to be more forthright about its goals.

Minnesota Sen. Amy Klobuchar (D) delivered the Coalition’s rallying call during its launch at the National Press Club in Washington: "We see Cuba as a market of 11 million people; 11 million new customers that can buy American products." Unfortunately, Klobuchar is not "seeing" the facts very clearly. For five decades, every single "foreign trade" transaction with Cuba has been made with a Cuban-government entity. The Cuban government’s exclusive right to trade and control investment is enshrined in Article 18 of Fidel Castro's 1976 Constitution.

Congress authorized “cash-in-advance” sales of U.S. agricultural product to Cuba in the 2000 Trade Sanctions Reform and Export Enhancement Act. More than 250 privately-owned American companies have since sold $4 billion in agricultural products to Cuba. All of those sales were to a single buyer: the Cuban government. That’s hardly surprising, Cuba is a totalitarian state. The only trade and investment partner on the island is the government, run by Fidel and Raul Castro.

Obama's Secretary of Agriculture Tom Vilsack also waxed enthusiastically about the “opportunities” for agricultural sales to Cuba. Yet, his Department’s report on Cuba notes, “The key difference in exporting to Cuba, compared to other countries in the region, is that all U.S. agricultural exports must be channeled through one Cuban government agency, ALIMPORT." Exporting to Cuba is not about trading with small or mid-size farmers, businesses and manufacturers around the island, as the Coalition would like Americans to believe.

It should be no surprise that U.S. products end up on the shelves of government-owned stores that accept only “hard currencies,” such as the U.S. dollar or Euro, with huge price mark-ups. Shoppers at these “dollar stores” are mainly tourists. Little imported food or medicine ever makes it into stores where Cubans shop; neither is it available on ration cards.

But the coalition doesn't care that ALIMPORT is the only "Cuban market.” It only cares that Cuba’s one customer can buy enough to ensure a profit for exporters. So the question becomes: Is that customer credit-worthy?

The Paris Club is a group of 19 nations that extend credit to trade partners. Cuba ranks No. 2 on the Club’s list of most indebted nations. (Greece, with more than five times Cuba's economic output, is the world’s most indebted nation.) Creditors’ claims against Cuba now total $35.193 billion (a $5 billion increase from the previous year). Moody's Investors Service gives Cuba's sovereign debt a Caa2 rating, which translates into "very high credit risk." How have European and Canadian investors in Cuba fared? In 2000, there were 400 foreign companies operating in Cuba as minority partners in joint ventures with the Castro regime. Today, there are less than 200. The British news service Reuters reports that Cuba “failed to make some debt payments on schedule beginning in 2008, and then froze up to $1 billion in the accounts of foreign suppliers by the start of 2009." During the same time, CEOs of various foreign companies doing business in Cuba were arrested. Some are still sitting in jail, even though no charges have been filed against them.

Lastly, let’s not forget the nearly 6,000 unpaid, certified claims, worth nearly $7 billion arising from the Castro government’s confiscation of American-owned business and properties.

This is the Cuban government the new Coalition wants Congress to authorize the Ex-Im Bank to finance and American taxpayers to subsidize. That may serve the selfish interests of Cuba's dictatorship, Cargill and a few other agribusiness conglomerates, but it’s a heavy price for the American and Cuban people to pay for “normalization.”

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Claver-Carone is a director of the U.S.-Cuba Democracy PAC and host of the foreign-policy show "From Washington al Mundo" on Sirius-XM's Channel 153. He is an attorney who formerly served with the U.S. Department of the Treasury and has served on the full-time faculty of The Catholic University of America's School of Law and adjunct faculty of The George Washington University's National Law Center.