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Allowing People to Travel to Visit Family Members in Cuba:

Some people have questioned whether the Obama Administration's proposal to "Lift all restrictions on transactions related to the travel of family members to Cuba" or "Remove restrictions on remittances to family members in Cuba" would be unconstitutional discrimination based on ethnicity in favor of Cuban-Americans. I don't think so (though of course it would depend on the precise text of the rule, which to my knowledge hasn't yet been set forth).

The rule wouldn't distinguish people of Cuban ethnicity (whatever precisely that might be) from people of other ethnicities. Rather, it distinguishes people on whether they have family members in Cuba. If two German Jewish brothers left Europe before World War II, and one came to the U.S. and another to Cuba, the children of one would be able to visiting the children of the other.

To be sure, the overwhelming majority of the beneficiaries of the law will be Cuban-Americans, in the sense of people who came from Cuba or whose own ancestors came from Cuba. That's what is called in the law a "disparate impact" on Cuban-Americans, here in their favor.

But such a disparate impact doesn't make for unconstitutional discrimination. That, after all, is why the current policy of sharply restricting visits to Cuba isn't unconstitutional discrimination -- it doesn't distinguish Cuban-Americans on the grounds of their ethnicity, though it has a much greater impact on Cuban-Americans than on others. Under the current policy, most people are free to visit their relatives (since their relatives aren't in Cuba), but most Cuban-Americans are much constrained in their ability to visit their relatives (since their relatives are indeed in Cuba). That's not presumptively unconstitutional discrimination because it doesn't facially discriminate based on ethnicity, and isn't intended to so discriminate. The same is true of the proposed relaxation of the travel restrictions.

This also helps explain why there's little reason to think that this facially ethnicity-neutral distinction (do you have a relative in Cuba?) is intended to discriminate in favor of Cuban-Americans because of their ethnicity. (As I suggested above, intentional ethnic discrimination is generally treated by U.S. constitutional law as tantamount to facial ethnic discrimination, and not just to disparate impact.) The proposed change seems intended to do precisely what it facially does -- to let people visit their families, something that the rest of us can generally do without U.S.-imposed restrictions.

So while I can't speak to the wisdom of the proposal, I don't see any constitutional problem with it, or any ethical problem that is related to any supposed ethnic discrimination.

Steve:
Another analysis reaching the same conclusion here. But where is the other side of the argument? Both of you note that "some have argued..." but frankly, the argument seems intuitively absurd to me, and no one seems to be able to link to a credible argument that the proposal is unconstitutional. So the contest seems a bit one-sided at this point.
4.14.2009 2:24pm
einhverfr (mail) (www):
Interesting topic. Of course, in reality, if Americans want to travel to Cuba, they frequently can do so undetected though this is illegal.

If Americans want to invest in foreign businesses that do business in Cuba they can do so legally. If software developers want to collaborate with those in Cuba by publishing all code changes on the internet, and as long as no money changes hands, that seems to be legal too.

Also in general informational materials are not subject to export controls with the limited exception of materials related to weapons of mass destruction. Control hence of published and publicly source code for high encryption algorithms, and presumably UAV designs would be exempt. IANAL though and before getting into possible grey areas, please both consult a lawyer and do some research on your own.
4.14.2009 2:43pm
byomtov (mail):
So while I can't speak to the wisdom of the proposal,

Surely you can.
4.14.2009 2:46pm
Annie Way (mail):
In addition to the ethnic disputes, I'd like to know more about trade embargo, which seems to be a bigger problem:
Newsy.com Video

I think this would be a more significant change on U.S. foreign policy than arguing over which wording is PC.
4.14.2009 2:52pm
Eugene Volokh (www):
Byomtov: How about "I can't speak in any informed way to the wisdom of the proposal"? I have knee-jerk reactions to it, but I usually prefer to limit myself to more informed commentary.
4.14.2009 2:57pm
Floridan:
Of course this doesn't go far enough.

My entire adult life I have not been allowed to legally travel to Cuba without the U.S. government reviewing my reasons for doing so and deciding if my purpose fits a very narrow range of government-approved categories.

I can visit Afghanistan, Iran, North Korea and even Somalia, but not Cuba.

I would think everyone who considers him or herself a libertarian would oppose our outdated travel policy regarding Cuba.
4.14.2009 3:07pm
byomtov (mail):
Eugene,

OK.
4.14.2009 3:15pm
CDU (mail) (www):

I have knee-jerk reactions to it, but I usually prefer to limit myself to more informed commentary.


A very succinct description of why I like reading this blog.
4.14.2009 3:20pm
nutbump (mail):
Floridan:
I would think everyone who considers him or herself a libertarian would oppose our outdated travel policy regarding Cuba.

Very true. It is absolute hypocrisy for U.S. Government to be in bed with China (currently worst and most powerful communist regime) and prohibit americans from visiting Cuba at the same time.

Viva Cuba Libre!!!
4.14.2009 3:37pm
A. Zarkov (mail):
This change in policy will provide Cuba with hard currency it desperately needs. As such it will strengthen the dictatorship, not weaken it. Of course one can argue that the policy has failed because Castro is still in power, but I submit that's too simple an analysis. No matter how poor Cuba gets, the completely ruthless totalitarian regime can remain in power. It's a question of how much power they are going to have.

For decades I've heard that the Cubans drive old 1950s American cars because of the US embargo. What a bunch of crap! Cuba can buy Hondas, Toyotas, Yugos etc. They can buy anything they want. If Japan can ship cars to the US, why can't they ship them to Cuba? Obviously Cuba's problem is lack of hard currency, not the American embargo. Even lifting the American embargo will not help Cuba unless someone extends them credit, or they they get sources of hard money. If they can't buy Honda because they lack the money, they can't buy Fords either. So look for American banks and other institutions to provide loans to Cuba just they way they provided credit to the Soviet Union to buy American wheat in the 1970s.

Allowing tourist to go to Cuba and relatives to send money into Cuba will provide regime with hard currency. Make no mistake about, our far left president wants to help out the Castro brothers and help them out at our expense.
4.14.2009 3:40pm
nutbump (mail):
A. Zarkov
No matter how poor Cuba gets, the completely ruthless totalitarian regime can remain in power. It's a question of how much power they are going to have.


I am sorry but it is ridiculous, if U.S. continue stupid travel restrictions, pretty soon China and Russia (both nations that have been recently enriched by U.S.) will extend Cuba a huge credit. And then, there will be numerous chinse and russian military bases established along the coast of Cuba.
4.14.2009 3:51pm
einhverfr (mail) (www):
nutbump:

Like with Kim Jong Il, threatening Castro with isolation is like threatening a drowning man with a life preserver.....
4.14.2009 3:52pm
Floridan:
"Make no mistake about, our far left president wants to help out the Castro brothers and help them out at our expense."

I'm sorry but that is exactly what has been happening (helping the Castro brothers out at the expense of American citizens)with our failed policy of embargo and travel restrictions.

On a related note:
A federal judge in Miami on Tuesday overturned a law passed last year by the Florida Legislature that requires travel agencies that specialize in trips to Cuba to post bonds and pay higher registration fees.

In his 12-page summary judgment, Judge Alan Gold said there was a substantial likelihood that, if the case were to go to trial, the plaintiffs would be able to demonstrate that the law was unconstitutional
.
4.14.2009 4:02pm
Sarcastro (www):
If we give Cuba money, then the people living under the totalitarian regime might be less miserable! Obama is totally helping them Castro boys, letting them rule over less unhappy people! Don't you see? Giving the Castro regime hard money could allow it to become some kind of brutal regime!

It's more proof Obama's a Communist Marxist Socialist LIBERAL.
4.14.2009 4:02pm
A. Zarkov (mail):
nutbump: (?)

"I am sorry but it is ridiculous, if U.S. continue stupid travel restrictions, pretty soon China and Russia (both nations that have been recently enriched by U.S.) will extend Cuba a huge credit."

Why would China and Russia extend Cuba credit? How can Cuba pay back a loan to anyone? Their economy is moribund, and their currency is worthless. Besides Russia is in no position to extend credit to anyone right now.

I don't get the connection between US travel restrictions, and Cuba getting credit from China. If China wants to extend Cuba credit, they will do so on geopolitical considerations, which have nothing to do with Americans sunning themselves on Cuban beaches and visiting whores at night (the good old days!).

If a China presence in Cuba threatens American security then we have to deal with that the way we did in 1962.
4.14.2009 4:04pm
A. Zarkov (mail):
"If we give Cuba money, then the people living under the totalitarian regime might be less miserable!"

The people won't get the money. It will go to the government which will use it to strengthen the security services. The people could end up more miserable. Then again what makes the US responsible to make Cubans happy? After all they can watch American TV and surf the Internet-- that should make them happy enough. ( I can do it too.)
4.14.2009 4:09pm
A. Zarkov (mail):
nutbump (love your name):

If you think lending Cuba money is such a good investment, why don't you lend them some of yours? You might have identified a market inefficiency-- loans to Cuba carry too high a interest rate for their risk of default.

Then you can frame the note and hang it on your wall.


I own nutbump $10,000

Signed,

Raul

4.14.2009 4:16pm
Sarcastro (www):
A. Zarkov has a point. 20% is a lot like 100%. And eventually, when people spend the money it'll go to the government anyhow!

The important thing is not to leave it up to the families.
4.14.2009 4:22pm
Hovsep Joseph (mail):
"This change in policy will provide Cuba with hard currency it desperately needs. As such it will strengthen the dictatorship, not weaken it."

They have access to hard currency already. Its a poor country with a bad government that has normalized relations with almost every other country on earth. And family members that wanted to get money to Cuba surely were already finding ways to get it there, as its not that hard to get to Cuba. This change merely lets family visit without circumventing the law.
4.14.2009 4:24pm
einhverfr (mail) (www):
Sarcastro is right. It is critically important to prevent ALL American money from going to Cuba, Iran, etc. Therefore, I suggest we ban ALL investment in foreign companies since we otherwise can't prevent those same foreign companies from doing business in Cuba!

We can also prohibit all foreign travel since money spent in Mexico might end up in Cuba!
4.14.2009 4:26pm
nutbump (mail):
A. Zarkov
If you think lending Cuba money is such a good investment, why don't you lend them some of yours?

Like you said, for the geopolitical reasons.
Anyway, I think it is unfair and unconstitutional to restrict people to travel to Cuba.
How it is different from USSR then.
4.14.2009 4:31pm
Oren:

This change in policy will provide Cuba with hard currency it desperately needs. As such it will strengthen the dictatorship, not weaken it.

Providing the populace with an alternative unregulated way to run their economy usually weakens the government. The government would prefer that no foreign currency ever touch Cuba and everything be done in scrip so as to squash to black/grey markets.
4.14.2009 4:39pm
A. Zarkov (mail):
nutbump:

"Anyway, I think it is unfair and unconstitutional to restrict people to travel to Cuba."

Was it unfair and unconstitutional to embargo South Africa? Funny thing-- the people who constantly tell me that the Cuban embargo is useless, and unfair etc, were all for the embargo against South Africa, a country not even hostile to the US. Not even a totalitarianism dictatorship. A country that had in-migration from the surrounding areas. Compare and contrast to Cuba-- a virtual prison camp.

At one time the University of California at Berkeley Computer Store would not carry IBM computers because IBM had investment in South Africa. For a while if one tried to shop there you might get into a fistfight with one of the protesters.
4.14.2009 4:42pm
einhverfr (mail) (www):
A. Zarkov:

The embargos of South Africa and Cuba are worlds apart. We seek a total (though 100% ineffective) embargo of Cuba. The embargo of South Africa was partial and targetted. To my knowledge it was never illegal for US citizens to travel to South Africa and spend money there.

Why do YOU think that the PDRK bans the imports of cell phones? Maybe because totalitarian regimes like North Korea are threatened by contact with outside cultures?

If we are worried, we should have targetted embargos. Full embargos are a waste of time and effort and do NOTHING but help those we wish to harm by removing our cultural influence.
4.14.2009 4:47pm
A. Zarkov (mail):
Oren:

"Providing the populace with an alternative unregulated way to run their economy usually weakens the government."


I don't understand the connection with the embargo. If Americans visit Cuba, they will spend their money in state run hotels and state run stores. The government will get the money, and use it to buy things like surveillance cameras (no longer embargoed), better weapons, and strengthen their armed forces. Remember Castro sent Cubans to fight in Angola.

The money might go directly to the whores unless of course the Cuban government pimps for them, it which case they have to hand it over and live on their salary.
4.14.2009 4:50pm
A. Zarkov (mail):
einhverfr:

"The embargo of South Africa was partial and targetted. To my knowledge it was never illegal for US citizens to travel to South Africa and spend money there."

No there was no travel ban. But not for want of trying by activists against South Africa. But let's remember South Africa had a good economy before the blacks took over. They had plenty of hard currency to buy things. They were not dependent on credit. As I wrote, this whole thing is about credit for Cuba. The tourism etc is a distraction, a misdirection so we will not focus on the credit the Castros will get to strengthen their regime.
4.14.2009 4:56pm
CJColucci:
Several campaign cycles ago, Pat Schroeder was, briefly, running for President and suggested that we put a Triple-A baseball franchise in Havana. Made as much sense as anything else I've heard. Before you know it, we'd be buying their sugar and cigars, they'd be buying our blue jeans (all right, so they're manufactured in China, but the profits go to the owners) and porn DVDs. The casinos and brothels would be back in business, and Cuba would eventually be forced to dance to our tune. Anyone seen Hyman Roth lately?
4.14.2009 5:01pm
A. Zarkov (mail):
einhverfr:

"Why do YOU think that the PDRK bans the imports of cell phones? Maybe because totalitarian regimes like North Korea are threatened by contact with outside cultures?"


Exactly. But Cuba can buy or not buy all the cell phones it wants. The world will sell them cell phones. If Raul thinks the Cuban can have cell phone they will, otherwise they won't. Let's remember Cuba is not isolated in the way NK is. Cuba can trade with the whole world (sans US) if it wants. Our lifting the embargo is all about credit-- keep your eye on the credit ball and don't get distracted.
4.14.2009 5:02pm
A. Zarkov (mail):
"Several campaign cycles ago, Pat Schroeder was, briefly, running for President and suggested that we put a Triple-A baseball franchise in Havana."

Why would Americans travel all the way to Cuba to watch a baseball game when they can get the same thing here? Before Castro, Americans went to Cuba for the beaches, (world's best I'm told), to gamble, see sex shows in Havana, and of course to visit the whores. Those were and still are Cuba's chief assets. Of course according to Michael Moore, Americans should visit Cuba for its world class medical system. Hmmm, why did Castro use a Spanish doctor?

Pat Schroeder had little business experience when she made that proposal. Now she's CEO of the Association of American Publishers. I don't know if her new job gives her a better perspective.
4.14.2009 5:13pm
einhverfr (mail) (www):
A. Zarkov:

In fact nothing prevents a US citizen from starting up a business in, say, Canada and owning 49.5% of the business.

Such a business may trade with Cuba.

Such a business may invest in Cuba.

The American part owner is NOT even obligated to object.
4.14.2009 5:22pm
einhverfr (mail) (www):
In fact such a business could take retained earnings and invest in Cuba instead of paying shareholder dividends, so money would go to Cuba instead of the shareholders (including the American).
4.14.2009 5:23pm
A. Zarkov (mail):
einhverfr:

"Such a business may trade with Cuba.

Such a business may invest in Cuba."


Yes indeed. But Cuba can't pay for the trade with its domestic currency. Someone has to advance them credit. "Trade" is just that-- an exchange. Cuba does not have much to exchange except for cigars and sugar cane. The sugar beet industry has made the sugar cane industry pretty unprofitable. If Americans can visit Cuba and spend money there, and send money to Cuba, then they will have more money to buy things, and we can't control what they buy. That's why it's in the interests of the US to deny them as much hard currency as we can and not advance them credit.

Tell me why its to our advantage to change the status quo.
4.14.2009 5:47pm
Floridan:
"Tell me why its to our advantage to change the status quo."

Because our government shouldn't be telling American citizens where they can or can't go, and who they can or can't do business with, unless such travel and trade poses an immediate and real national security issue.
4.14.2009 6:30pm
A. Zarkov (mail):
"Because our government shouldn't be telling American citizens where they can or can't go, and who they can or can't do business with, unless such travel and trade poses an immediate and real national security issue."

But it is a national security issue. The embargo functions to deny Cuba hard currency which it has virtually no way to earn without expanding its tourist trade. Even if the Chinese should be willing to lend them money, someone has to build the hotels, casinos, night clubs, race tracks, beaches etc. In theory China or even Canada could do the construction, but that would be very expensive without access to American, labor, materials and skills. China is not going to ship workers and materials to Cuba. It's too far. But if the US firms can do the construction then Cuba gets the means to earn hard currency and that has national security implications. With lots of hard currency, Cuba can buy high tech surveillance equipment to strengthen its oppression of the Cuban people. It can also buy military equipment. All that is not in our interest.

If you really want to go to Cuba, you can. Fly to Canada or Mexico and get a flight to Cuba. It you like seeing people in poverty then you should have a good time.
4.14.2009 7:52pm
RPT (mail):
Because the current policy has worked so well.....to paraphrase, the current anti-Castro policy is perfectly designed to generate the results which it has achieved for almost fifty years, that is, the perpetuation of the Castros' power. What would Congress be without the Diaz-Balarts?

(yes, I am a former Hialeah resident)
4.14.2009 8:32pm
Ricardo (mail):
Zarkov,

You seem to labor under the assumption that Cuba is currently starved for foreign currency and the proposed policy to allow Cuban-Americans to visit and send money to relatives in Cuba will have some big impact on the regime's ability to maintain power.

In 2008, Cuba received 2.35 million visitors from abroad. What currency do you suppose these 2.35 million foreign visitors have with them when they land at Havana airport? Your comment about how the policy change will not lead to more money going into the pockets of ordinary Cubans is also odd. That's the very idea of a remittance. Cuba could always require its citizens to convert dollar remittances at terrible official exchange rates but then again, Cuba already has a pretty extensive dollar gray economy. All the more reason to encourage remittances by stuffing greenbacks inside a carry-on during family visits.

Re: South Africa v. Cuba, one major argument for limited sanctions against South Africa was that they would respond to international pressure, release Nelson Mandela from prison and hold free elections, an argument that turned out to be true although not without some grumbling from the likes of you. In Cuba, the argument against extensive economic sanctions is that Cuba will not respond to international pressure, an argument that is turning out to be correct. It's about preferring policies that actually make a difference in the real world.
4.14.2009 10:03pm
Dilan Esper (mail) (www):
But it is a national security issue. The embargo functions to deny Cuba hard currency which it has virtually no way to earn without expanding its tourist trade. Even if the Chinese should be willing to lend them money, someone has to build the hotels, casinos, night clubs, race tracks, beaches etc. In theory China or even Canada could do the construction, but that would be very expensive without access to American, labor, materials and skills. China is not going to ship workers and materials to Cuba. It's too far. But if the US firms can do the construction then Cuba gets the means to earn hard currency and that has national security implications. With lots of hard currency, Cuba can buy high tech surveillance equipment to strengthen its oppression of the Cuban people. It can also buy military equipment. All that is not in our interest.

You have a very strange conception of US national interests.
4.14.2009 10:14pm
einhverfr (mail) (www):
A Zarkov:


But it is a national security issue. The embargo functions to deny Cuba hard currency which it has virtually no way to earn without expanding its tourist trade.


But this is still entirely ineffectual. I am not even sure that the law prevents indirect ownership of Cuban businesses to the extent they exist.

Ok, I am in the process of investigating setting up a business in Ecuador. Obviously I couldn't be personally involved in any dealings or transactions involving the Cuban government, but once I am no longer managing it actively and only a minority owner, if they get contracts with the Cuban government, great! More profits for me!! As a side note, if this involves installing American-authored but open source cryptography software like MIT Kerberos, that is still OK.

Cuba is a popular tourist destination in Latin America and the EU too. Consequently there is a lot more money flowing into the country that might otherwise be at issue. I think the bigger issue tends to be a lack of Cuban exports (though of course they go to Latin America, Canada, etc and Americans to my knowledge are not legally forbidden from smoking Cuban cigars or drink Cuban rum in Canada as long as they don't bring them into the US).

Cuba's resource shortages are the result of central planning and bad economics, not the result of our embargos.

What we should do:

Lift all non-arms embargos from Cuba. The same approaches that worked with China should be used to help open Cuba up.
4.14.2009 11:58pm
A. Zarkov (mail):
Ricardo:

"In 2008, Cuba received 2.35 million visitors from abroad."

Where does that number come from? The Cuban government? As we have learned from experience, Communist governments are untrustworthy when it come to official statistics. During the Cold War the CIA used to derate Soviet statistics by a factor of 2. Only after the regime disintegrated did they learn that a factor of 10 would have been more appropriate. Without some vetting I can't take that number seriously. It might be absolutely accurate-- but I just don't know.

"What currency do you suppose these 2.35 million foreign visitors have with them when they land at Havana airport?"

Is it your contention that Cuba is flush with hard currency? If so then why do we see these kinds of cars. Why does so much of Havana look like this. Let's remember that Havana is not typical of Cuba-- the horrible rural poverty is a different story.

"You seem to labor under the assumption that Cuba is currently starved for foreign currency and the proposed policy to allow Cuban-Americans to visit and send money to relatives in Cuba will have some big impact on the regime's ability to maintain power."

Mere remittances from Americans are not going to revolutionize the Cuban economy, but I assume the new policy is a start down the road to large credit-financed purchases from the US, and a reconstruction of Cuba's tourist industry which will earn them significant amounts of hard currency. What is the benefit to the US of a dollar outflow to Cuba in any amount?

With respect to Cuba and South Africa, you are looking backward. One major reason the US embargo failed to bring down the Cuban Communist government was the enormous subsidy provided by the Soviet Union. It was enough to strain the Soviet economy. Do you think it will weaken the Cuban government if we lift the embargo in a big way and allow credit to flow to Cuba? In the early days of the Soviet Union we did just that. American banks lent Lenin a lot of money and it helped the Communists hold onto power.
4.15.2009 12:18am
A. Zarkov (mail):
einhverfr:

If the Cuban embargo is so ineffective then why is Fidel and Raul so anxious to get it lifted? Why are so many pro-Cuban Americans agitating so hard for it? If Cuba is so ripe for development then where is it? Why don't we see construction cranes all over Havana? Why don't we see ships unloading automobiles and other goods? In my opinion the answer is plain. Cuba needs Americans to come to a revitalized tour industry in large numbers. Sure people can come from China, and Finland and even Canada. But that market is nothing compared to the American market 90 miles away. Without the American market, Cuba is not a good investment for anyone. Do a net present value analysis with and without the embargo. There is a good reason we don't see development there.

"Lift all non-arms embargos from Cuba. The same approaches that worked with China should be used to help open Cuba up."

If we lift the embargo and make them richer, they will buy arms from Russia or China-- money is fungible. I think it was a big mistake to open up China-- we will come to regret that one day. A monster has been unleashed.
4.15.2009 12:30am
Ricardo (mail):
Zarkov,

You seem to be interested in arguing about a completely different topic from what everyone else is discussing. The issue is loosening a few restrictions on travel and flows of funds to Cuba that don't exist for any other country in the world. In terms of Cuba's poverty, Cuba is poor for three broad reasons:

1. The U.S. embargo
2. It is a relatively small island in the tropics: there are very few examples of economically successful tropical island countries either in the Caribbean or elsewhere for a variety of reasons.
3. It is a Communist dictatorship with dysfunctional, stupid and cruel domestic policies.

Ironically, you are adopting the line of the "far left" in overemphasizing #1 and downplaying #2 and especially #3. Why don't more Cubans drive Honda Civics? Take a wild guess. Poor people can't afford to buy cars. In terms of credit, Cuba can already borrow money on the Eurodollar market from any non-U.S. bank willing to extend them credit. Or they can borrow from Hugo Chavez who has plenty of dollars from petroleum exports.

I don't think Obama's proposed policy is going to "revolutionize" Cuba and never said any such thing. As to why I think we should adopt Obama's policy, it is a virtually costless way to greatly improve the lives of some ordinary Cubans. You may not care about the welfare of ordinary Cubans but then why do you put so much emphasis on Castro's oppression of his people? You can't have it both ways.
4.15.2009 1:15am
A. Zarkov (mail):
Ricardo:

Basically I don't disagree. However, I see the policy change as the road to something more expansive, and I don't think the Cuban people will be helped. The way to help them is to get rid of the Castro brothers and the Communist party in Cuba.

Before the 1959 revolution Cuba was one of the richest countries in Latin America, so your reason (2) does not apply to Cuba.

Let's not forget that Castro was telling Khrushchev to launch an IRBM at the US in 1962 even though that would mean the total destruction of Cuba and the Soviet Union. Khrushchev thought Castro was nuts, and Khrushchev himself got removed from power as the result of his Cuban adventure. Do you really think the Castro brothers have changed?

If the left agrees with me about the embargo, then good for them. It's about time they wised up. No embargo means a much stronger Cuba. But you can be sure the left wants cheap credit extended to Cuba along with lifting the embargo. That's where we differ. As for borrowing from non-US banks, why don't they do it and buy new cars? Because they are a bad credit risk and can't afford the high interest rates that would come with those loans. Banks know they would never get the principal back. They can't even get the principal back from Argentina, let alone Cuba.

I'm trying to look ahead to the consequence of Obama's policy change. I simply don't trust him.
4.15.2009 1:59am
Dilan Esper (mail) (www):
The way to help them is to get rid of the Castro brothers and the Communist party in Cuba.

1. Raul Castro is no threat to the US; thus, there's no reason whatsoever we should be trying to overthrow that government. It would be much better to simply recognize them as the legitimate government of Cuba.

2. Getting rid of Castro would only be helpful if it were replaced with something better. Unfortunately, Fidel's regime is far from the only repressive regime in Cuban history. The regime before it was even worse.

To put a fine point on it, if our idea of a regime change is to try and settle all the property claims of very wealthy white Cubans who left the island in 1959 and their American corporate and organized crime backers, the resulting situation would be even worse than the Castro regime.

We should simply lift the embargo. If the Cuban people really hate Raul Castro, they will eventually lead a revolution and throw him out (and I would cheer mightily if they do). But it should be a non-issue for America; it isn't our job to decide the leadership of Latin American countries which have little impact on our interests.
4.15.2009 3:36am
Dilan Esper (mail) (www):
Before the 1959 revolution Cuba was one of the richest countries in Latin America, so your reason (2) does not apply to Cuba.

This is the sort of thing the right wing constantly gets wrong. For the vast majority of Cubans, life was living hell under the Batista regime. A few white Cubans, and plenty of mafioso, were wealthy. But most people lived practically as slaves. And they didn't even get the free education and health care that Castro delivered. Plus, there was widespread gambling and prostitution. (The prostitutes have come back under Fidel and Raul, but they were gone for a number of years.)

The Cuban revolution was extremely popular. Now, of course, it turned out that Fidel Castro was an awful tyrant. That often happens. But Cuba is basically a paradigmatic example of what happens when you measure everything in terms of total GDP and don't give a crap about economic and social inequality. And for the vast, vast majority of Cubans living under Batista, the country's "richness" was a cruel joke. That's why they joined the revolution.
4.15.2009 3:41am
Floridan:
Z: "Before the 1959 revolution Cuba was one of the richest countries in Latin America . . . "

For a well-documented and very entertaining look at Cuba before Castro, read Havana Nocturne: How the Mob Owned Cuba and Then Lost It to the Revolution, by T. J. English.
4.15.2009 8:59am
Ricardo (mail):
Before the 1959 revolution Cuba was one of the richest countries in Latin America, so your reason (2) does not apply to Cuba.

Others are also attacking this claim but I would point out that there is no real GDP per capita data for 1950s Cuba in the Penn World Table, which is generally considered to be the most careful and rigorous dataset for international GDP comparisons. Additionally, being a relatively wealthy country by the standards of 1950s Latin America is nothing to boast about (Mexico's GDP per capita -- a figure that does exist in PWT -- was about $500 in year 2000 PPP terms). For someone who chides others about data quality, I would like to see you substantiate this claim with a reputable data source.
4.15.2009 10:41am
einhverfr (mail) (www):
Ricardo:

It is fundamentally unclear to me how much being cut off from the American economy hurts Cuba. They export a LOT of products elsewhere in the world and both cigars and rum are relatively fungible. Every time we buy a bottle of rum from somewhere else, we may be enabling someone else in the world to buy a bottle of Cuban rum.

The second issue is tourism though. Here being cut off from direct contact with our economy hurts Cuba to some extent but Cuba has had ways of compensating. They are a major destination of "medical tourists" from the EU for example (wealthy folk willing to pay to get treatment they can't get in their countries or avoid waiting lists).

I still say get rid of the total embargo and replace it with more intelligent and selective sanctions. After Tienanmen Square, we responded to the Chinese in two ways both carrot and stick. We responded with an arms embargo and in fact used diplomacy to prevent Israel from selling weapons to the Chinese government too (in reality, there was no reason the Israelis couldn't have negotiated a deal that removed the offending piece of US technology). However, we also encouraged other forms of trade.

The major difference between China and Cuba is that the interests of a few American corporations seeking to claim vast tracts of land in Cuba are what holds this process up.

Now current law would not necessarily prevent me from travelling to Cuba provided that someone else paid for everything and I didn't receive gifts from those in Cuba. If, for example, a Venezuelan customer wanted to pay me a certain amount to go on an all-expenses paid business negotiation trip (between him and me, not involving Cubans) to Cuba, my reading of the law is that this would be just fine.
4.15.2009 10:45am
CJColucci:
"Several campaign cycles ago, Pat Schroeder was, briefly, running for President and suggested that we put a Triple-A baseball franchise in Havana."

Why would Americans travel all the way to Cuba to watch a baseball game when they can get the same thing here?


The idea wasn't for Americans to go and watch, it was to wring concessions out of Fidel, who was famously a huge baseball fan.
4.15.2009 11:28am
Boonton (mail) (www):
This change in policy will provide Cuba with hard currency it desperately needs. As such it will strengthen the dictatorship, not weaken it. Of course one can argue that the policy has failed because Castro is still in power, but I submit that's too simple an analysis. No matter how poor Cuba gets, the completely ruthless totalitarian regime can remain in power. It's a question of how much power they are going to have.

This model too is simplistic. Power is relative. If I have a gun and you have a club I have more power than you. If you have a twig and I have a club, we might both be poorer than we were before but I still have power. Sanctions often enhance the dictators power because he has the ability to control the black markets that dodge the sanctions making the population all the more dependant on him for what little resources do get in through the sanctions blockaid.

While the visits and money mostly anti-Castro-American-Cuban's send to their own relatives in Cuba will provide the country with 'hard currency' it will also provide at lease a few people in Cuba access to some resources that are independent of the government.

If Japan can ship cars to the US, why can't they ship them to Cuba? Obviously Cuba's problem is lack of hard currency, not the American embargo. Even lifting the American embargo will not help Cuba unless someone extends them credit, or they they get sources of hard money.

So think this out carefully. Anti-Castro-Cuban sends money to his cousin who buys a Honda. What has happened? A Cuban's standard of living has gone up NOT because he is a member of the Party or informed on his neighbors but because he has support from someone other than the government. Being a loyal Party member isn't the only road to get ahead anymore.

Now maybe Castro will order all the money be taken and the Honda will get purchased by some Party favorite....but it's not like Cuba has no hard currency now and the Laffer curve still is in effect. If Castro takes all the money then why would relatives keep sending it if it can't be enjoyed by their family members? We kind of know this right now since relatives are allowed to send money and visit, just much more limited.

Of course, the money going over is probably not enough to buy a new Honda. But it is probably enough to make life a bit nicer for the person receiving it and that's why it works. Sure he may spend the 'hard currency' at a state store but the fact remains alternatives will be opened for the people.

Yes indeed. But Cuba can't pay for the trade with its domestic currency. Someone has to advance them credit. "Trade" is just that-- an exchange. Cuba does not have much to exchange except for cigars and sugar cane.

Credit here is irrelevant. If someone loans Cuba money they will expect to be paid back. At some point Cuba has to do something with that money to earn the money to pay back that loan plus interest. A 15 yr old boy getting a prepaid phone because his Miami aunt sends him some US dollars won't produce anything for Cuba...even that 15 yr old's father getting a Honda for the same reason. But a loan that goes to improve a hotel or make a cigar factory more efficient may do the trick. But that type of transfer wouldn't be covered by this policy and really has nothing to do with the discussion unless you think the cigar factory is going to sell to the 15 yr old to get the 'hard currency' to pay back the loan....in that case you still got the same positive impact I described above.

More importantly, the lack of 'hard currency' isn't making life tougher for Castro. The regime knows enough to push all suffering down as far as it can. Since the regime can control what is produced, what income is earned, it can ensure that those who are loyal are taken care of and those who aren't get the brunt of the punishment. An extra dollar going to Cuba, then, doesn't go to Castro but to the marginal person in this spectrum of loyality.
4.15.2009 11:56am
A. Zarkov (mail):
Dilan Esper:

For the vast majority of Cubans, life was living hell under the Batista regime. A few white Cubans, and plenty of mafioso, were wealthy. But most people lived practically as slaves.

This is the kind of statement one might see in Granma; one that even some hardcore leftists would be embarrassed to make. I pass along the following story to show how Castro hurt even the ordinary person. Sometimes one has to experience things on a personal level to understand.

Circa 1966 (not long after the revolution) I knew a young Cuban woman who along with her parents were forced out of Cuba. They were hardly plutocrats as her father owned a small shoe store. But that was enough to make him an enemy. One day she took me to a Cuban-Chinese restaurant deep in Harlem. "Cuban and "Chinese" were two concepts I had never put together. But sure enough, the restaurant was both. The menu was in Spanish, and the waiters and cooks were Chinese who spoke only Spanish. There on my plate was fried rice and plátanos. I asked her, "what the hell were Chinese doing in Cuba, and how did they end up here?" She told me that Cuba had a small Chinese community, but Castro considered them an enemy so they too had to leave Cuba. I don't know if all the Cuban Chinese had to leave, but the guys in this poor, tiny, Harlem restaurant certainly did. They too were hardly plutocrats or Mafioso.

I also found that the stories from her and other expat Cubans matched the stories I heard from my Russian, Ukrainian, Lithuanian, Polish, Hungarian and Yugoslav friends. They had also lived under Communism in the indicated countries at various times. Despite the variation in time and place, a common thread ran through their lives. These people lived through Batista and Castro-- and I trust them more than college professors.
4.15.2009 12:09pm
Dilan Esper (mail) (www):
Circa 1966 (not long after the revolution) I knew a young Cuban woman who along with her parents were forced out of Cuba. They were hardly plutocrats as her father owned a small shoe store. But that was enough to make him an enemy. One day she took me to a Cuban-Chinese restaurant deep in Harlem. "Cuban and "Chinese" were two concepts I had never put together. But sure enough, the restaurant was both. The menu was in Spanish, and the waiters and cooks were Chinese who spoke only Spanish. There on my plate was fried rice and plátanos. I asked her, "what the hell were Chinese doing in Cuba, and how did they end up here?" She told me that Cuba had a small Chinese community, but Castro considered them an enemy so they too had to leave Cuba. I don't know if all the Cuban Chinese had to leave, but the guys in this poor, tiny, Harlem restaurant certainly did. They too were hardly plutocrats or Mafioso.

Zarkov:

I don't deny that Castro was a ruthless tyrant, which is all that your anecdote evidences. (Indeed, I made that perfectly clear in my comment.) But if your theory about Cuba's relative prosperity during the Batista dictatorship were correct, there would have never been a revolution.

The fundamental nature of Cuba's economy pre-Castro-- and this is not exactly the only time this has happened in a right wing dictatorship in Latin America-- was that there was a privileged elite which made tons of money and shipped it out of the country, along with huge payments being made to the mafia and to multinational corporations. Meanwhile, the vast, vast majority of the public never saw any of that money.

Despite his tyrannical ways, Castro is extremely popular among certain segments of the population. Remember how the Miami Cubans SWORE that once Elian Gonzalez's father came to America and saw it, there was no way he was going back to Cuba? Turns out he was a true believer. Why? Because a lot of Cubans did so poorly under the Batista regime that despite Castro's failures, they still see themselves as better off because of his social programs.

Telling stories of the many, many dissidents of Castro's tyrannny does not change that reality.
4.15.2009 12:23pm
The River Temoc (mail):
I'm joining this thread late, but a couple of things.

First off, on the question of the effectiveness of economic sanctions generally, I am surprised that no one has brought up the study by Gary Hufbauer at the Petersen Institute for International Economics.

In essence, the authors compile a dataset of sanctions for the last hundred years or so and conclude that sanctions are effective only about one-third of the time — and that they are most effective when applied against allies, democratic countries, and for limited purposes. This makes sense — allies don't have the option of "playing the Russia card" and turning elsewhere. South Africa is basically a textbook case of this.

Sanctions are almost always ineffective when the cost of complying with the sanctions is regime change, which is also not surprising: if you're going to get booted from power, what possible incentive could you have to comply with whatever demands the sanctioner is making of you? And Cuba is basically a textbook case of this — and it explains exactly why the "one last push" theory of sanctions against Cuba never works.

There is a reason why Cuba and North Korea are the only two really Stalinist states left in the world: we tried to isolate them, not enmesh them.
4.15.2009 12:26pm
A. Zarkov (mail):
Boonton:

How will ordinary Cubans spend their dollars? If they can't use the special state stores, then they will have to get pesos on the black market-- from tourists or submit to the official rate. I don't know if such activity is a crime in Cuba, but it was in the USSR and other East Block countries. Then they might have to account for their sudden new wealth. Cuba is not Mexico. The security services monitor everything down to the block level. You can be sure that if the remittances from relatives in the US were to change the power balance between the people and the Castro brothers, they would put a stop to it.

Credit here is irrelevant. If someone loans Cuba money they will expect to be paid back.

Credit is everything. If you think that American banks expect a return of their principal then you don't understand banking. The principal on loans to Latin American countries is constantly rolled over. When the borrower can't make the interest payments, the loan, is rescheduled (different from a rollover). When even the rescheduled loan becomes too burdensome default is threatened. Then come the bailout. The whole idea is to get Cuba enrolled in the system. Lifting the embargo is a start in that direction.
4.15.2009 12:38pm
The River Temoc (mail):
If you think that American banks expect a return of their principal then you don't understand banking. The principal on loans to Latin American countries is constantly rolled over.

Er, didn't most Latin American countries retire their outstanding Brady Bonds a few years ago?
4.15.2009 12:50pm
The River Temoc (mail):
How it is different from USSR then.

Easy. In the USA, we let you travel to any country other than Cuba. In the USSR, they let you travel to Cuba, but not any other country.

I don't think the travel ban is particularly effective policy, but it's hardly indicative of some kind of looming totalitarianism.
4.15.2009 12:52pm
A. Zarkov (mail):
Dilan Esper:

I heard the same excuses for Communism all my life. We heard that as bad as Lenin was, the Czar was worse. Then came Solzhenitsyn, who told us exactly how the Communists were worse than the Czar. Then came the fall and now we have the whole story. One by one, almost every lie about Soviet Communism has come unglued. For example, the Katyn massacre. I can't tell you how many arguments I had with leftists about this stuff. They kept insisting the Germans did it. I remember one guy I used to eat lunch with insisting that Korean Air Lines Flight 007 really was a CIA spy plane.

One day we will go through the same process with Cuba. BTW my friend's mother was a doctor. Castro made medicine worse too. But we will not be able to settle this under the regime falls and we can get reliable data. But try reading Ronald Radosh's book. The author had a conversion from communism after he toured Cuban hospitals and asylums. The use psycho-surgery really got to him.
4.15.2009 1:09pm
Boonton (mail) (www):
How will ordinary Cubans spend their dollars? If they can't use the special state stores, then they will have to get pesos on the black market-- from tourists or submit to the official rate.

Why would they buy pesos from the black market? Why not buy goods and services directly and pay with greenbacks? Certainly you are familiar with the fact that in many less developed areas of the world it is often possible to conduct business with a major currency like US dollars or Euros rather than the local one. Thank you, though, you've just demonstrated another advantage of Obama's policy change. If the non-Castro controlled economy is stimulated then that is a break in his power. Maybe it's just a tiny crack in a giant rock but a crack nonetheless.

You can be sure that if the remittances from relatives in the US were to change the power balance between the people and the Castro brothers, they would put a stop to it.

You assume perfect efficiency on the part of the gov't as well as perfect loyality. Where did you ever aquire such faith in communism? 'Block captains' never take bribes? Locals haven't learned to appear perfectly compliant with the rules while circumventing them?

Credit is everything. If you think that American banks expect a return of their principal then you don't understand banking. The principal on loans to Latin American countries is constantly rolled over.

Bhahhahh!!! Seriously, you don't understand banking. Yes loans may get 'rolled over' but the 'roll over' is essentially a new loan that pays off the old one. This requires someone willing to make a new loan (whether it be the same bank or a different one). At some point if it becomes clear that no stream of currency is ever going to be produced the roll overs are going to stop and the bank holding the loan at this game of musical chairs is the loser. See the last 6 months of current events in the credit markets for ample illustrations.
4.15.2009 1:25pm
Boonton (mail) (www):
Additionally, I don't get your credit line at all. Credit is a source of hard currency. If you already have hard currency you don't need credit. You're telling me that Castro can secure millions in hard currency loans from international banks and financial firms but the only thing that is stopping him is that little Suzy can't get $50 for her birthday from her grandmother in Miami?
4.15.2009 1:30pm
Boonton (mail) (www):
AND AND AND!!!! If this policy is so helpful to Castro then why are Cuban Americans playing along? They are the only ones allowed to send money to relatives or visit them in Cuba. If they hate Castro and his regime as much as you claim why would they take advantage of this policy? Why not refuse to send money or visit? The only possibilities are:

1. Cuban Americans (or at least a large number of them) really like Castro and want to help him (unlikely)

2. They know that the help they want to provide to their relatives exceeds any indirect benefit the regime might receive.
4.15.2009 1:32pm
A. Zarkov (mail):
The River Temoc:

"Er, didn't most Latin American countries retire their outstanding Brady Bonds a few years ago?"

Brady bonds are exactly the kind of gimmick I'm writing about. They were created to get bad loans to Latin American countries off their books. From Wikipedia,
The key innovation behind the introduction of Brady Bonds was to allow the commercial banks to exchange their claims on developing countries into tradable instruments, allowing them to get the debt off their balance sheets.
Now comes the final round as the risk is transferred to the American taxpayer.

The principal amount was usually, but not always, collateralized by specially issued U.S. Treasury 30-year zero-coupon bonds purchased by the debtor country using a combination of International Monetary Fund, World Bank, and the country's own foreign currency reserves. Interest payments on Brady bonds, in some cases, are guaranteed by securities of at least double-A-rated credit quality held with the Federal Reserve Bank of New York.
The point being banks don't expect their principal back. Eventually the US taxpayer ends up holding the bag as should be obvious to everyone by now.

Once Cuba gets "regularized" then it can get in on the gravy train. It can get the same kinds of deals the the Eastern Block countries.
4.15.2009 1:35pm
A. Zarkov (mail):
Boonton:

Why not buy goods and services directly and pay with greenbacks?

Because the government store won't accept dollars. I don't know if this is actually true, but it's one mechanism.

"Bhahhahh!!! Seriously, you don't understand banking. Yes loans may get 'rolled over' but the 'roll over' is essentially a new loan that pays off the old one."


Read more carefully. Rollover is only the beginning stage. The last stage is having the US government assume the risk.
4.15.2009 1:41pm
A. Zarkov (mail):
"If this policy is so helpful to Castro then why are Cuban Americans playing along?"

Ask them. Perhaps they don't see the consequences of this first step towards the regularization of Cuba. Besides how do you know they are playing alone? How speaks for them? Have they been polled?
4.15.2009 1:44pm
Boonton (mail) (www):
A Zarkov

Once Cuba gets "regularized" then it can get in on the gravy train. It can get the same kinds of deals the the Eastern Block countries.

Brady Bonds were a one time deal. This claim is implausibly speculative. Maybe in the future banks will make big loans to Cuba, get in trouble and get bailed out by taxpayers. That assumes a lot of if's, one really big IF being how willing the US gov't will be to bailout bad loans to Castro considering the huge amounts of bailouts it has had to do now. A more likely model would be what happened in the 1990's when Russia defaulted on its debt. The banks and people holding it got screwed.

When do you think this is going to happen? Ten, twenty years from now? Are the Castro's going to live to 150?


Because the government store won't accept dollars. I don't know if this is actually true, but it's one mechanism.

Come on man, have you ever even been abroad? Hard currencies are always welcome in black markets. Why would they give a fig about government stores? More often than not gov't stores carry 2nd rate goods, the better goods 'fall off the truck' to get sold in the black market for hard currency.

Read more carefully. Rollover is only the beginning stage. The last stage is having the US government assume the risk.

If any bank adopts this as their business plan I'd like to see your 401K invested entirely in it.
4.15.2009 2:02pm
Dilan Esper (mail) (www):
I heard the same excuses for Communism all my life. We heard that as bad as Lenin was, the Czar was worse. Then came Solzhenitsyn, who told us exactly how the Communists were worse than the Czar.

What you are ignoring is that whether someone is "worse" often depends on where you stand. For certain classes of people, the Czars certainly were worse than Lenin. For other classes, Lenin was worse than the Czars. And for other classes, both were equally awful.

Cuba had a revolution because the Batista regime made a killing but kept the country poor. The new regime raised the standard of living somewhat of a lot of poor people while soaking the formerly rich and imprisoning a lot of dissidents and gays, althewhile making the country as a whole somewhat poorer.

This isn't a binary "only one type of government can be bad" situation. Different governments are bad in different ways.

BTW my friend's mother was a doctor. Castro made medicine worse too.

Since the purpose of medicine is to deliver care to as many people as possible, you simply cannot say this. The fact that a wealthy person in Havana in the 1950's could get first rate care from a private doctor does not mean Batista had a better medical system-- most of the population in those days got no care at all. Castro built clinics and gave the poor free health care for the first time. That's a perfectly reasonable trade-off for some drop-off in care for the elites.

I should add one more thing. We fought Communism because the Soviet Union was expansionist. If it hadn't have been, our Soviet policy then might have looked like our China and Vietnam policies now. Cuban communism is not expansionist.

Thus, you can't really make Cold War analogies when arguing for sanctions on Cuba. The Cold War is over, and Cuban Communism is no threat to the United States at all, which is why we should simply recognize the Castro government and leave Cubans to decide whether they want to try to overthrow it.
4.15.2009 2:05pm
Boonton (mail) (www):
Ask them. Perhaps they don't see the consequences of this first step towards the regularization of Cuba. Besides how do you know they are playing alone? How speaks for them? Have they been polled?

You're missing the point. They don't have to be polled. They hate Castro, if they felt doing something like visiting Cuba more than once every 3 years would help him they wouldn't do it. It doesn't matter that Obama changed the policy. If you don't think American Cubans know anything about what is good or bad for Cuba then why do you cite them in explaining how bad Castro is?
4.15.2009 2:08pm
Boonton (mail) (www):
I apologize if I'm being too dismissive. Yes sometimes bad loans are 'bailed out' at the end of the day. Quite often, though, and this is hardly unprecedented in Latin America, bad loans simply are defaulted on and the lender ends up screwed.

Loans that are made are made because the lender thinks he is going to get paid back. If he thinks the loan is so risky that he can only get interest he will set that interest high enough to basically make the loan an annuity that never returns principle but generates interest income.

What lenders do not do on purpose and do not want is to make loans that are simply ponzi schemes that depend on some other sucker 'rolling over' the loan. Even if the loan is just to receive a long line of interest payments, the intent is for the subject of the loan to be able to do something with the money to earn good currency to make the payments. (examples, improving sugar cane production, making a cigar factory more efficient). If anything credit would increase pressure for market based reforms as they have in China. That is unless you think a communist system does a better job at producing quality goods more efficiently than a market system.
4.15.2009 2:33pm
David Chesler (mail) (www):
The rule wouldn't distinguish people of Cuban ethnicity (whatever precisely that might be) from people of other ethnicities. Rather, it distinguishes people on whether they have family members in Cuba.

Living and dead is easy enough to determine - you must have living relatives in Cuba to visit. How closely related to you do they have to be? Wide enough out you're getting hard to distinguish from ethnicity or national origin. (And even widerer out you've got all of humankind.)

I don't know if my mother's cousins, who were musicians in Havana in the 1950s, have known living relatives in Cuba -- would I be allowed to visit them?
4.15.2009 3:11pm
einhverfr (mail) (www):
The River Temoc:

Can you show me a ban on travel per se to Cuba? AFAICS, an all expenses paid trip to Cuba paid for by a Canadian, Mexican, Venezuelan, etc. is all fine and legal.

In short we say "You can travel to Cuba, but you can't spend any of your money there."

This might be more interesting if the money was spent out of some sort of joint holdings beyond your personal control (retained earnings of a corporation you are a part owner in but dont have a controlling share) and hence you actually end up paying part of the cost via less income. However, even there I dont see a strong case for prosecuting that.
4.15.2009 8:24pm
einhverfr (mail) (www):
Boonton:

Come on man, have you ever even been abroad?

I'll say.

Actually one thing I like about Ecuador though is how readily US dollars are accepted. (They had a flap with the IMF and resolved it by discontinuing their currency.)

One other point is that unauthorized currency trading is a crime in most Latin American countries. It seems that it is a common way to fund FARC, Aquilas Negras, etc. as well as launder money from drug profits.
4.15.2009 8:31pm
einhverfr (mail) (www):
note that such illegal moneychanging is still extremely common in most Latin American countries I have been to....
4.15.2009 9:09pm
A. Zarkov (mail):
According to Humberto Fontova (never heard of him) writing here, the ExIm banks in both France and Mexico have cut off Cuba's credit. Cuba does already have significant trade with the US in food, but as the old joke goes "In God we trust, all others pay cash." Having stiffed too many countries, Castro now needs the US to end the "embargo," which as we see really amounts to little more than no credit for Castro. Now we see what the communists in the Black Caucus (*) were up to in their recent adulatory visit to Cuba. Raul and Fidel need help. Their credit card won't work anymore, and they're out of cash. They need access the US ExIm bank (which is not a commercial bank, but the official credit agency of the US government) to continue the American imports. In other words, the US taxpayer should get set to subsidize Cuba-- we will be doing it for the children.

(*) The Black Caucus is a parody of itself. Their favorite word is "inclusive," but they themselves are anything but. Not only that one of the members said she wasn't alive when Castro was murdering all those people, so he gets a pass from her.
4.16.2009 9:24am
Boonton (mail) (www):
I thought you said stiffing the creditors was part of the plan? The governments would bail out the banks that Castro stiffed, everyone goes home happy. Now you're saying that it actually matters that Cuba can't pay off some of their loans! Sounds like getting credit isn't all that wonderful after all.

More to the point, international credit is not all that different than your personal credit cards. If you charge them up you're either going to have to default on them or get a job and pay them off. If Castro wants continued access to international credit he will be pressured to make market reforms....unless you think he has found the magic forumula for making communism work enough to beat out capitalism.

As for your argument that now Castro is at the brink. Give it a rest, we've been hearing that for 40+ years now. Just tighten a little bit more and Cuba will fall! No, plenty of Latin American countries have defaulted on debt and it wasn't the end of the world for them. Yes maybe some people lost an election but Castro doesn't have to worry about that. Even if the embargo was the magic ticket to avoiding a default, Castro ain't going to step down and retire to some quiet island if he doesn't get it.
4.16.2009 10:11am
einhverfr (mail) (www):
A Zarkov:

It seems to me that what we need to do is quite simple:

End the embargo in a graduated way, in steps, tied to human rights changes.

Now, as for the comparisons with the USSR, I have a slightly different perspective. My great-grandfather, a general in the Czar's army, took a six month vacation a few years before WWI and he used that time to emigrate to the US, hid his identity, etc. I have to wonder if he saw the end of the regime coming and if he realized how bad it would be if he stayed.

Furthermore democracy is no guarantee of human rights. If we compare, for example, Malaysia and Indonesia, Malaysia is more dictatorial, has a better human rights record, better economy etc. Democracies tend to be really bad at doing certain things, especially when they are sustained by business and with few ethical controls. We shouldn't insist on either democracy or returning land to foreign companies in Cuba. We should, however, insist on improvements in human rights.

My suggestion is that we divide goods into a number of categories:
1) Food and humanitarian supplies
2) Entertainment and cultural goods (movies, rum, tobacco, and tourism!)
3) Commodity computer hardware and software
4) Security-related systems
5) Military armaments

IIRC, we already engage in trade with Cuba on #1. The next stage is to drop restrictions, license requirements, etc. on that category and begin trading (both import and export, but with licenses) on number 2. We agree to drop the licensing requirements when certain specific steps are taken regarding dropping restrictions here. Then we start providing gradual carrots in the sense of removing these restrictions one phase at a time as we go forward as the situation progresses.

Destroying the Cuban communist party through hard and unyielding sanctions has never worked and given that Cuba trades with the other 75% of the world economy, I suspect that the economic problems in Cuba have very little to do with the embargo and much more to do with economic mismanagement. Sanctions can change behavior and this is what we should be aiming at. They don't cause regime changes though.
4.16.2009 10:15am
einhverfr (mail) (www):
Boonton:

Usually rhetoric about Latin American countries being on the brink is overblown anyway. Although I find Ecuador's recent default interesting and possibly quite significant. It looks like Ecuador's argument isn't "We can't pay" but rather "We found legal irregularities in how these bonds were issued and therefore we don't have to pay." In fact Correa says he is pledging to sue the crediting countries in international court over the fact that the debt was apparently bought with bribes. I.e. the allegations are that foreign officials bribed previous leaders into taking the debt and therefore it wasn't legally binding.

If this plays out, it could be quite significant in that it might allow other countries to sue creditors in order to declare debts null and void as well. This will be worth watching.
4.16.2009 10:25am
A. Zarkov (mail):
Boonton:

First you nitpick. Then you set up straw men. I was careful to point out the US ExIm bank is is not a commercial bank. It was set up by FDR to act as a lender of last resort for foreign purchases of American goods, but since then it's mandate has expanded. Note from its web page here that support for Cuba is prohibited by law. This bank is entirely different from long-term commercial banks that provide longer term development loans the US taxpayer might have to bail out. You might say ExIm skips all the intermediate steps and put the US government guarantee up front.

Second I never said that Castro is "on the brink." He needs credit, although I'm sure he can keep his government without it. This brings up another straw man. We hear over and over that the sole purpose of the original embargo was to bring down the Castro government. "No" writes Humberto Fontova.
... Secretary of State Dean Rusk gave to the Organization of American States at Punta del Este Uruguay on January, 21, 1962 recommending the members' vote for an embargo on Cuba. There is not a single word-or even an inference-that this was the embargo's stated goal. Indeed, Secretary Rusk, went out of his way to stress that this was NOT the embargo's goal. "The United States objects to Cuba's activities an policies in the international arena not its internal system or arrangements."
The Cuban embargo question has flipped back and forth over the decades. It comes off, and it goes on, or becomes weaker or stronger as administrations change. So far Obama has not gone beyond Carter, but we have never had as radical a leftist as Obama in the White house. Cuba has never had access to the ExIm bank. Perhaps this won't change. My posts serve to point out potential future scenarios-- projections, not forecasts. But we need to always ask what's in it for us? The US government must promote the interests of the US not Cuba.
4.16.2009 1:02pm
A. Zarkov (mail):
einhverfr:

Why do we need to do anything? We are not obligated to sell Cuba anything-- even food and medicine. Surely we should wait until the Castro brothers pass from the scene. After all Fidel was out to destroy the US in 1962 and directed Khrushchev to fire nuclear missiles from Cuba into the US. I'm not inclined to forgive and forget so easily. Perhaps we can't get rid of Castro without an invasion, but I see no reason to prop him up, even a little bit.
4.16.2009 1:08pm
Boonton (mail) (www):
Second I never said that Castro is "on the brink." He needs credit, although I'm sure he can keep his government without it. This brings up another straw man.

Indeed it is, the whole credit thing is a straw man. The embargo hasn't brought Castro down, probably has made him relatively more powerful if anything. Even if lifting it at this moment might provide some temporary respite from his financial problems it will in the long run undermine his party's control of the country.

But we need to always ask what's in it for us? The US government must promote the interests of the US not Cuba.

What's in it for us is that we should ditch a policy that both empirically and theoritically has not helped us advance our goals or values.

Then you set up straw men. I was careful to point out the US ExIm bank is is not a commercial bank.

I'm still trying to figure out what you're trying to say is the problem. You say lifting the embargo will allow Castro to gain credit &he wouldn't have to pay it back because the gov't will bailout anyone who got stiffed lending money to Cuba. There is no such provision in law and no one has proposed it. Yes it *could* happen someday but the case for such a bailout would be very difficult to make.

The Cuban embargo question has flipped back and forth over the decades. It comes off, and it goes on, or becomes weaker or stronger as administrations change. So far Obama has not gone beyond Carter, but we have never had as radical a leftist as Obama in the White house.

Nonesense, the embargo has remained tight and ineffective for decades. Decades. It is, quite frankly, very uncapitalist to continue to reward such failure. Speaking of Obama, after hundreds of comments have you even noticed that you haven't really addressed the actual policy Obama has implemented which has nothing to do with lifting the embargo?
4.16.2009 1:57pm
einhverfr (mail) (www):
A Zarkov:

The Cuban communist party will outlast the Castro brothers if we don't.

Remind me how the USSR fell apart after the death of Lenin and how China's human rights were suddenly perfect after Mao left the scene......
4.16.2009 2:33pm
einhverfr (mail) (www):
Also:

I am not obligated to abstain from Cuban goods/services either as long as I don't do business directly with Cuba or bring said goods into the US......
4.16.2009 2:34pm
A. Zarkov (mail):
Boonton:

Nonesense, the embargo has remained tight and ineffective for decades.


According to this timeline of the embargo, which is obviously pro-Castro.

March 19. U.S. President Carter drops the ban on travel to Cuba and on U.S. citizens spending dollars in Cuba.

January 1 [1979]. Cuban-Americans are permitted to visit their families in Cuba. More than 100,000 visit in the coming year.

October 5 [1995]. The Clinton Administration announces a new people-to-people-contact plan.

February 12 [1997]. The Clinton Administration approves licenses for U.S. news organizations to open bureaus in Cuba. (The Cuban government allows only CNN into the island.)

January [1999]. The Clinton administration announces changes to the embargo, which include:
- Sales of some food and agricultural products to private individuals and non-governmental organizations,
- An increase in the number of charter flights to Cuba,
- Allows anyone (not just Cuban-Americans) to send up to $1,200 per year,
- Allows major league team, the Baltimore Orioles, to arrange two exhibition games, on in Cuba, the other in the U.S., and
- Increases the amount of money a U.S. visitor can spend on the island from $100 per day to $185 per day.
Is this all made up?
4.16.2009 2:45pm
Boonton (mail) (www):
So the Cuban economy was saved by a CNN bureau, pen pals who send their pen friends $1200 a year and Cuban Americans visiting relatives? Ohhh and the Baltimore Orioles! They are a stimulus package unto themselves aren't they?

You are mired in petty details while missing the picture. The Embargo is and was a failure and it didn't fail because Clinton let CNN put station 5 reporters in Havana or because Carter let Miami grandma's visit their grandchildren.

As was pointed out earlier, Embargos almost always fail. The few times they tend to work are when they are inflicted on countries that are normally allies, when their governments are generally responsive to the needs of their people and when compliance is generally tolerable for the leaders. None of those conditions apply to Cuba.

The continuation of a failed policy is not in our interest and does nothing but needlessly harm Cubans. It also provides a ready made excuse for Castro to justify his failures &allows him to maintain a relative monopoly on power by limiting any possibility for Cubans to derive alternative incomes.
4.16.2009 3:53pm
einhverfr (mail) (www):
Boonton:
I am somewhat unconvinced that our embargo even causes needless harm to Cubans. It might be even that ineffective. How many bottles of rum were not produced just because of the embargo? Or did they just get sold elsewhere?

The fact is that, if the State Department's site is accurate, Castro enforces isolation regarding Cuba more than we do......

In fact, I can't imagine a more Castro-friendly policy than the one we have had over the last few decades.....
4.16.2009 7:34pm
A. Zarkov (mail):
"So the Cuban economy was saved by a CNN bureau, pen pals who send their pen friends $1200 a year and Cuban Americans visiting relatives? Ohhh and the Baltimore Orioles! They are a stimulus package unto themselves aren't they?"

Humberto Fontova writes
Currently the U.S. is Cuba's biggest food supplier and 4th biggest import partner. The U.S. has been Cuba's biggest donor of humanitarian aid including medicine and medical supplies for decades
If that's true, then your dogmatic statements to the effect that the embargo is both tight and trivial stand firmly contradicted.

No one has answered my question on the benefit to the US of lifting the embargo fully so as to allow ExIm financing for Cuba. Obviously there isn't any. You seem more concerned about Cubans then Americans. Of course you might be Cuban or an agent for them, in which case everything makes sense.
4.17.2009 12:31am
Boonton (mail) (www):
You know, I noticed that your 'timeline' contradicted your own assertion that Obama is the most radical leftist yet. Obama's relaxation simply allows Cubans in America (who are American citizens) to visit their relatives and give them money. That seems pretty fundamental to me and a lot less 'loose' than letting the Baltimore Orioles play in Cuba.

For ExIm banks, the issue is irrelevant.

The details on the ExIm bank are good to review on http://en.wikipedia.org/wiki/Export_Import_Bank. Basically the ExIM bank does two things. One is it provides working capital to US businesses trying to export goods. What that means, essentially, is that it prevents a business from going bankrupt because foreign customers may take 180 days to pay while domestic customers pay in 30 or 60 days. It also writes insurance policies against businesses who sell to customers who don't pay.

How does this help the US? Well it helps our businesses, especially small business, sell goods abroad thereby boosting exports. Could you rip it off? Sure but it's a bit like ripping off your credit card. After about 60 days your plastic is going to get declined. Now the other alternative is that Cuba will use the ExIm bank the way it is supposed to be used. If that's the case then they will pay their bills. If they pay their bills they need income and the need for income increases the incentive for market reforms.

The ExIm bank sounds to me like it's kind of unnecessary and just sits on top of the private sector banking system. I'm not seeing your argument, though, that this should be some type of major focal point in evaluating Cuba policy.

http://www.exim.gov/news/reporter.cfm has a 2003 figure that they had 2700 transactions totalling $14.3B. Even if they have grown in the last 6 years this would make them bit players in global trade and in global credit and finance even less than that.

You seem more concerned about Cubans then Americans. Of course you might be Cuban or an agent for them, in which case everything makes sense.

Yes you got me. I'm an agent for Fidel Castro. The money is just so good that there's no way to say no. Grow up man.
4.17.2009 10:29am
einhverfr (mail) (www):
I am actually in talks with a Venezuelan company regarding strategic partnerships regarding joint marketing. One of the issues they have is that Chavez has more or less driven away the mid-sized businesses and that leaves smaller businesses entirely dependant on the government. They are trying to keep their private business afloat and this is becoming harder every day.

Once again, I am NOT at all convinced the embargo is a major cause of problems. I think that mismanagement of the economy causes more problems than anything else.
4.17.2009 12:57pm
einhverfr (mail) (www):
Major causes of Venezuelan economic problems (all of which are probably applicable to Cuba):

1) Bloated government
2) Suppressed private enterprise
3) Lack of security regarding tourists.
4) Attempts at suppressing political diversity
5) tight control over foreign currency conversions.

These have driven (in Venezuela) nearly all the midsize businesses elsewhere, along with a signifiant portion of educated people. Once you do that much damage, cutting a country off from a quarter of the world's economy is pretty small potatoes.

However, what cutting the country off from our economy accomplishes is that it ASSISTS with the suppression of political diversity.
4.17.2009 6:19pm

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