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Castro's Free Market Lobbyists By: William R. Hawkins
FrontPageMagazine.com | Thursday, August 10, 2006

On August 3, President George W. Bush issued a statement of support for “the Cuban people's aspirations for democracy and freedom.” Cuban dictator Fidel Castro had briefly given control of his police state to his brother Raul while undergoing surgery. This temporary handover sparked hopes that the Communist despot might not last much past his 80th birthday on August 13. Bush pledged, “We will support you in your effort to build a transitional government in Cuba committed to democracy, and we will take note of those, in the current Cuban regime, who obstruct your desire for a free Cuba.” Not all those who are working to obstruct change and continue Communist rule on the island are in Cuba. Some of them are in Washington.

The front page of Roll Call, a Washington, D.C., newspaper that covers Capitol Hill politics, featured an August 2 story, “K St. Subdued After Handover in Cuba.” K Street is the term for the lobbyists who always see national and world events from the narrow perspective of self-interest.


The first lobbyist quoted was Kirby Jones, president of the U.S.-Cuba Trade Association, who said, “I think there’s a heavy dose of overreaction.” Of course, he thinks – or hopes – concern over Castro’s health is an over reaction, since he has built his career on forming close ties to the aging tyrant. Those who have gotten into bed with Cuba’s Communist regime will not be looked upon kindly by the Cuban people once they emerge from the dark ages into a brighter post-Castro future.


The U.S.-Cuba Trade Association (USCTA) is part of a small cabal of activists who are always trying to find ways to entice unwary firms into financing every rogue state that has made itself an enemy of the United States. They lobby constantly to undermine American foreign policy. Jones’ outfit is a “strategic partner” with USA Engage, a group created by the National Foreign Trade Council specifically to agitate for the lifting of economic sanctions against rogue states. “USA Engage was formed because a lot of companies are not anxious to be spotlighted as supporters of countries like Iran or Burma,” said Frank Kittredge, then president of NFTC and vice chair of USA Engage. “The way to avoid that is to band together in a coalition,” he told the left-wing journal Mother Jones in 1998.


Today, the NFTC is headed by William Reinsch, who is also chairman of the USCTA board of directors. Reinsch is best known as a advocate of business involvement in China. However, on August 8, I was back on CNBC debating Reinsch about economic sanctions on Iran, and on Russian companies that had sent weapons and military technology to Iran. The obsession of NFTC with doing business with every rogue regime, terrorist state and rival power hostile to the United States is very disturbing. Reinsch’s claim that sanctions don’t accomplish anything is belied by the protests that come from Tehran, Moscow, Beijing, Havana, Pyongyang, et. al., who are always demanding that sanctions be lifted. Russia and China have worked hard to keep sanctions out of resolutions at the UN pertaining to the ongoing struggle to contain Iran and North Korea’s nuclear programs. Those subject to sanctions know full well their impact.


The commitment to do business regardless of national security concerns was made explicit in the USA Engage statement of purpose. “America has a vital interest in being a reliable supplier of cutting-edge technology, infrastructure, manufactured products, services, agricultural commodities, and food products throughout the world.” More accurately, this should read that some firms have an interest in being considered reliable suppliers. American security is endangered by the supply of certain kinds of “cutting edge technology, infrastructure and manufactured products” to hostile regimes.


In contrast to the behavior of USCTA members, responsible American companies should be positioning themselves to help create a Cuba which will not only be a better place to live, but also a much better place to do business. Under Castro, three-quarters of economic output and employment is in state-owned firms tightly controlled by central planning, which is why the economy is no longer viable in comparison with the outside world. The 2006 Index of Economic Freedom, complied by The Wall Street Journal and The Heritage Foundation, lists Cuba as an “unfree” economy, with only seven countries in the world rated as worse places to do business (Belarus, Venezuela, Libya, Zimbabwe, Burma, Iran and North Korea). Why would any firm risk its scarce capital in Cuba when the world is full of so many better prospects?


One new reason for considering Cuba is the possibility of significant oil reserves in the North Cuba Basin in the Florida Straits. Several foreign oil companies are interested in developing this region, most notably China. Cubapetroleo, the state oil company of Cuba, recently signed an oil production agreement with the China Petroleum and Chemical Corporation. But the specter of another oil-rich rogue regime, like Iran or Venezuela, should strengthen Washington’s resolve to block any Cuban ventures in these disputed waters.


Unfortunately, Rep. Jeff Flake, R-AZ, thinks American firms should apply their superior technology to boosting Castro’s oil revenue. He has introduced bill H.R. 5353 to allow American firms to explore and extract oil from Cuban waters, where they would operate under Havana’s control. He calls this the “Western Hemisphere Energy Security Act” and poses it as an alternative to importing oil from the “politically unstable Middle East.” But Flake’s real intent is easier to see when it is realized that he has offered other measures to lift restrictions on Cuba. Last year, he introduced bill H. R.1814 to “prohibit the president from regulating or prohibiting, directly or indirectly, travel to or from Cuba.” He also offered an amendment (defeated) that would have allowed “gift parcels” to be sent to Cuba. But these would have been minor next to the “gift” to Castro in the form of a U.S.- financed oil boom.


Both houses of Congress have recently passed legislation to open American oil drilling in the Gulf of Mexico and could, depending on how the bills are reconciled in the House-Senate conference, open up other offshore opportunities. Developing U.S. resources is where American capital should go, as the country does not need to increase its dependency on imported energy – especially when it would mean putting money into the pockets of adversaries. Sen. Bill Nelson, D-FL, has introduced bill S. 2682 to prevent the renewal of a maritime treaty that enables Cuba to conduct commercial activities in its half of the Florida Straits. The United States should also apply sanctions against any foreign company that drills for oil in Cuban waters.


At the moment, Cuba is still a net importer of oil, with supplies coming from ideological comrade Hugo Chavez in Venezuela. Castro’s economy is broke, and should stay that way.


I debated Jones on CNBC on August 1. His response to my argument was that the island would not change after Castro’s death, so there is no reason for business to wait to plunge into Cuba (other than to avoid being seen as helping an enemy regime, a stigma Jones does not seem to mind). Again, that is the bad outcome most in line with USCTA’s collaborationist policy. There will undoubtedly be a struggle for power, and those who have it now will want to keep it. But it would be a tragedy for both the Cuban people and the United States if they win that battle and keep Havana a center of oppression at home and aggression overseas.


Besides Raul Castro, another Communist stalwart is Ricardo Alarcon, President of Cuba's National Assembly. USCTA proudly recounts how it met with Alarcon last year when he headed Cuba’s delegation to the United Nations. As a student, Alarcon headed a terrorist cell and has never deviated from his hardline beliefs. Earlier this year, he gave a major talk in Havana on “The Work of Karl Marx and the Challenges of the 21st Century.” This was followed on May 3 by a talk that claimed, “In spite of the blockade, the harassment and threats, the Bolivarian Alternative for the Americas looms large as an example of solidarity among peoples.” This was a reference to the wave of anti-American, left-wing movements that have come to power in Venezuela, Bolivia, Ecuador, and Brazil, headed by Castro’s disciples.


In July, the State Department’s Commission for Assistance to a Free Cuba issued its report on what to do to support a post-Castro transition towards democracy. To bring that day closer, and to defeat the succession strategy of those who wish to maintain the communist dictatorship, the report strongly urges “measures to deny revenue to the Castro regime that is used to strengthen its repressive security apparatus and to bolster the regime against pressure for change.” This means a continued embargo on investment and expanded trade with Havana, as the money would go into the coffers of the current regime. Such revenue would also be used to support Castro’s anti-American foreign policy agenda in league with other rogue states. 

Business leaders who want to do right the thing, and be on the right side of history, will wait until conditions in Cuba truly improve in a fundamental way before risking their capital or lobbying for a premature end to sanctions.

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William Hawkins is a consultant on international economics and national security issues.

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