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Clash over payment imperils
US sales to Cuba
By Marc Frank, Financial
Times, UK, December 20 2004.
The first battle over US policy on Cuba
since President George W. Bush's re-election
blew up in Havana and Washington this month
concerning the future of booming US agricultural
sales to the otherwise embargoed Caribbean
island.
Cuban payments for food are being held
up for the first time since the trade began
three years ago. Sales depend on licences
from the US Treasury Department, which oversees
the embargo.
The Trade Sanctions Reform and Export Enhancement
Act of 2000 created a crack in the embargo,
allowing Cuba to import agricultural produce
for cash in advance. That was enough to
catapult the country from last to 22nd place
among US agricultural export markets, with
sales of about $400m (€301m, £206m)
this year and $1bn since 2001.
Some officials in the Bush administration
are questioning the practice of paying after
cargo is dispatched from the US but before
it is released to the Cuban importers, saying
that payment should arrive before the goods
leave port. Cuba has made clear it will
buy elsewhere if that happens. The administration
says it will issue new guidance on the trade
before the end of the year.
"The Bush administration has a two-pronged
strategy relating to Cuba," says John
Kavulich, the president of the US-Cuba Trade
and Economic Council, a group that monitors
commercial activity. "First, use every
available regulatory means to lessen the
foreign exchange earnings by the government
of Cuba. Second, use every available regulatory
means to increase the cost to the government
of Cuba of all imported products and services."
Pedro Alvarez, head of Cuba's food-importing
agency, Alimport, suggests he will turn
to other suppliers if he is forced to pay
while goods remain in US ports. "Such
a requirement makes our purchases almost
impossible to proceed," Mr Alvarez
told 350 US politicians and business executives
in Havana last week to mark the third anniversary
of the food trade.
Washington's Cuba policy, once the exclusive
domain of cold warriors and anti-Castro
exiles, has become a bread-and-butter issue
for farmers in the rice-growing Mississippi
delta, the corn and soya fields of Iowa
and apple orchards and cattle ranches of
the north-east. Gulf Coast port workers,
employees of Georgia's chicken-processing
plants and executives of agribusinesses
now link jobs and income with the land many
knew only for its trouble-making president,
Fidel Castro, and a revolutionary called
Che Guevara.
"This issue has galvanised and energised
everyone in the industry because you are
dealing with serious money and a serious
economic consequences on farmers, businesses
and communities," said Kirby Jones,
the president of Washington-based consulting
firm Alamar Associates. "Events over
the past few weeks have shown us how tenuous
and fragile what we have achieved over these
years is, subject to the interpretation
of just three words: cash in advance."
Inside the Havana convention centre, Mr
Alvarez, banned from visiting the US as
a security risk, was on first-name terms
with a host of state-level agriculture officials
and just about everyone else. But beyond
the conference confines it was obvious that
the US-Cuba relationship, always tense,
could deteriorate during Mr Bush's second
term.
Cuba's largest defence manoeuvres in 18
years were under way across the country
in response to a hypothetical "imperial
fascist invasion". The US's top diplomat
was embroiled in his latest scrap with authorities
for including a reference to imprisoned
dissidents in a Christmas display fronting
Havana's seafront drive. Cuba retaliated
by placing hoardings in front of the US
mission with red swastikas and photos of
Iraqi prisoners being tortured and children
accosted by US troops.
"The egg and chicken industries have
benefited greatly from this business that
is now at about $60m," says David Radlow
of United Egg producers. The organisation
has joined 30 other farm groups to demand
that the trade be left alone.
"We certainly hope the president will
hear our prayers. Cuba is now our eighth
market for chicken exports," Mr Radlow
says.
The president of the US Rice Producers'
Association, Dwight Roberts, adds that his
group is also lobbying hard for the status
quo.
"We've gone from zero exports three
years ago to 160,000 tonnes in 2004. Cuba
is now our third export market after Mexico
and Japan," he says "We are taking
this issue very seriously. Here we are with
a $400m market 90 miles off our coast that
we can grow and it just does not make economic
sense to damage that."
© Copyright
The Financial Times Ltd 2004. "FT"
and "Financial Times"
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