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HavanaJournal.com: Cuba Business

Crackdown hurts opening of trade

Posted June 10, 2003 by publisher in Cuba Business.
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By Mike Williams | COX NEWS SERVICE

Three months ago, the movement to end the U.S. trade embargo against Cuba was gaining support, with a growing list of American companies lobbying for Cuban business and a bipartisan group in Congress promising to reverse the 4-decade-old policy.

Then came Cuban dictator Fidel Castro’s April crackdown on his island’s dissident movement. More than 70 people were jailed with long sentences, and three men who hijacked a ferry and headed for the Florida coast were summarily executed.

The repression stirred a storm of international protest, unnerved many American companies doing — or considering — business in Cuba and threw new fuel on the always-volatile debate about the United States’ Cuba policy.

“Everything was going very favorably, and then they did this stupid thing,” said Georgia Agricultural Commissioner Tommy Irvin, a longtime advocate of opening trade with Cuba.
  Mr. Irvin said Mr. Castro’s heavy hand has hurt efforts to roll back the U.S. embargo. “It’s made it extremely more difficult. Had he not done this, I think we would’ve moved more rapidly. Now it’s slowed down the process. But I think it’s still possible, and we should pursue it.”
  Although there are no reports of American companies withdrawing from contracts to supply food to Cuba, officials in Virginia, Iowa and Maryland have canceled trips to the island to seek new business, Cuba watchers say. Food and medicine are the only goods Americans are allowed to sell to Cuba.
  “The events of the last 60 days resulted in some businesses postponing visits to Cuba,” said John Kavulich, head of the independent U.S.-Cuba Trade and Economic Council. “People are becoming a lot more sober, and companies are generally reviewing how they are operating relating to Cuba.”
  The U.S. embargo dates to the 1960s and the aftermath of the Cuban missile crisis, when communism was the United States’ worldwide enemy and the presence of a Marxist state 90 miles off the Florida coast was a chilling prospect.
  Relations between the two nations remained ice cold until the breakup of the Soviet Union in 1989. Suddenly, the Cubans lost billions of dollars in annual subsidies, and Mr. Castro’s government was pushed to the brink as his economy imploded and hunger spread among Cuba’s 11 million residents.
  Mr. Castro managed to hold onto power, turning to tourism as the island’s salvation. Partnering with companies from Canada, Italy, Spain and other countries, he embarked on a pell-mell rush to restore the island’s faded charms and build resorts and hotels.
  With foreign money flooding into Cuba, the American embargo came under serious fire, with critics arguing that it was an ineffective relic of the Cold War. In 1992 Congress allowed the sale of medicines to Cuba, followed by a 2000 law that allowed food sales.
  The past several years have seen a steady parade of American farmers, food companies, agriculture officials and members of Congress visiting the island. Many of them are entertained in person by the charismatic Mr. Castro. At a large trade show in the fall, the aging but agile strongman dazzled many American visitors, climbing into a pen with bison, trading stories with American farmers and keeping up a steady stream of jokes.
  U.S. food exports to Cuba, meanwhile, have mushroomed, nearing $200 million in the 19 months since the shipments began. Although that number isn’t large on the world economic scene, there are estimates that Cuba might buy as much as $1 billion annually from the United States, especially if the bipartisan Cuba Working Group in Congress succeeds in lifting restrictions on Americans traveling to Cuba as tourists.
  Bob Reed, a rice farmer from Bay City, Texas, has traveled twice to Cuba in hope of gaining new markets for his product.
  “Cuba consumes more rice than is produced in the state of Texas in a year,” he said. “They’ve been buying from Asia, and we have a strong competitive advantage. Our rice can be in Cuba in less than a week, while it takes 45 days from Asia. The Cubans know they could buy a lot more rice for the freight they’re paying to get Asian rice.”
  Like many others, Reed was appalled by Mr. Castro’s crackdown but believes that opening trade is a more effective weapon than the embargo.
  “I believe the simplest and best way to change Cuba to democracy is to sell our goods there, and let Americans go down there and mingle with the Cubans,” he said. “It wouldn’t happen overnight, but the embargo has had 40 years and it has failed miserably.”
  Jim Sumner of the USA Poultry and Egg Export Council, based in Stone Mountain, Ga., agrees.
  “All of American agriculture agrees that we shouldn’t use food as a tool to punish foreign countries,” he said. “I think our government realizes there would be a big backlash from agriculture if we lost this market.”
  Mr. Sumner’s group has seen the Cuban market grow to more than $15 million, most of it for frozen chicken. The council is sponsoring a trade show in Havana in July to promote more sales to the Cuban service industry, which supplies the hotels and restaurants that cater to tourism. They also hope to bring some Cuban agricultural inspectors to the United States to certify more American producers for shipment to Cuba.
  But the new chill that has fallen over U.S.-Cuban relations could be a problem. Cuban officials must get visas to travel to the United States, and such approvals have been held up or denied when spats broke out between the two countries.
  Shortly after Mr. Castro’s crackdown, the Bush administration expelled 14 Cuban diplomats for inappropriate conduct, a byword for spying.
  Most observers say the combination of Mr. Castro’s repression and the upcoming American presidential campaign season probably means that no dramatic Cuba initiatives will pass in Congress or if they do, are likely to be vetoed by President Bush.
  Mr. Bush has strong ties to Miami’s Cuban-American community. His brother, Jeb, is Florida’s governor, and many say the president owes his razor-thin victory in the 2000 election to the solid support of Cubans, as Florida proved to be the decisive state.
  While embargo opponents vow to keep up their fight to relax Cuba policies, supporters say they are just as firmly committed to maintaining the restrictions.
  Dennis Hays of the influential Cuban-American National Foundation said the crackdown proved once again the ruthless nature of the Castro regime. He is confident that no major changes in Cuba policy will be implemented this year, noting that President Bush has made it clear he would veto any attempt to end the embargo.
  As for trade, the foundation has not opposed the food and medicine sales, and has no plans to try to roll back provisions allowing them.
  “We’re holding our nose and won’t oppose it,” Mr. Hays said. “But Cuba is a deadbeat, bankrupt nation. This crackdown should discourage American companies from doing business there. But some individuals and companies will brush it aside in favor of making a quick buck.”

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