Castro again defaults on payments to Paris Club, but purchases more US products for cash than under Obama thaw

What the Chamber of Commerce won't tell you about trade with the Castro regime.

Under the Trump Administration trade has increased with Cuba.

Taken from CubaBrief

The United States since 2000 has not provided credits to the Castro regime and maintained a cash in advance trade arrangement for the purchase of agricultural and pharmaceutical products. This protects U.S. taxpayers from having to subsidize the Cuban dictatorship when it defaults on its financial obligations. Their European, Latin American and Asian counterparts cannot say the same to their respective taxpayers.

Under this cash in advance agreement American companies sold over $6.3 billion to the Castro regime and have gotten paid. Despite billions in debt forgiveness  on its restructured debt less than five years ago by the Paris Club, the Cuban dictatorship in 2019 again defaulted on its payments, reported Reuters on February 11, 2020.

How did the Castro regime raise the money to purchase U.S. goods?

James Prevor, President and Editor in Chief of the publication Produce Business in the October 2002 article, Cuba Caution, reported that Cuba "had exhausted all its credit lines and, at best, was simply rotating the accounts. When the opportunity came to buy from the United States, Cuba simply abandoned all those suppliers who supported the country for 40 years and began buying from us."

The suppliers were not the ones impacted by Cuba's failure to pay its debts, the taxpayers of the suppliers' home countries were the one's left holding the bag. The dirty little secret is that profit is private but risk has been socialized in what amounts to a perversion of capitalism.

On November 1, 2013 the government of Mexico announced that it was ready to waive 70 percent of a debt worth nearly $500 million that Cuba owes it. The former president of Mexico Vicente Fox protested the move stating: “Let the Cubans get to work and generate their own money…They’re normally like chupacabras.  The only thing they’re looking for is someone to give them money for free.”

“Let the Cubans get to work and generate their own money…They’re normally like chupacabras." - President Vicente Fox

In December 2015 it was announced that Spain would forgive $1.7 billion that the Castro regime owes it. In December of 2013, Russia and Cuba quietly signed an agreement to write off $29 billion of Cuba's debt to the former superpower. Western governments pursued Cuban maritime debts seizing Cuban vessels and negotiating payment through Canadian courts.

The 2015 debt restructuring accord between Cuba and the Paris Club, according to Reuters, "forgave $8.5 billion of $11.1 billion, representing debt Cuba defaulted on in 1986, plus charges."

The 19-member Paris Club owed money by Cuba is comprised of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Britain, Italy, Japan, the Netherlands, Spain, Sweden and Switzerland. Companies, with the exception of American companies, doing business with Cuba when they are not paid pass the costs off to their respective governments, who in turn pass the costs off to taxpayers.

This is something to consider when the Chamber of Commerce argues that U.S. laws should be changed and the United States should join the long line of governments seeking to collect from the Castro regime, a deadbeat dictatorship.

Lastly, it is important to note that the U.S. Census Bureau documented the collapse of trade in goods with Cuba under the Obama thaw and have actually improved during the Trump Administration, despite tightened sanctions.

Obama Administration's folly: copying French on Cuba policy

"They’re normally like chupacabras.  The only thing they’re looking for is someone to give them money for free." - Vicente Fox, Former Mexican President, in 2015 on the Castro regime

Shameful spectacle: Honor guard in France for a Cuban tyrant

Under the U.S. embargo American companies made $5.2 billion dollars in cash and carry trade with Cuba while at the same time with normal relations and financial institutions providing credits, France lost $4 billion to Cuba.

France is forgiving $4 billion dollars the Castro regime owes it on payments that are 30 years late. Meanwhile companies in the United States between 2000 and 2016 earned $5.2 billion dollars on a cash and carry basis. The Obama Treasury Department effective January 27, 2016 joined France and the rest of the world in legalizing financing of transactions between U.S. companies and the Castro regime.

This not only goes against U.S. law and the will of Congress as U.S. Senator Bob Menendez explained, but means that U.S. taxpayers will now be joining French taxpayers in subsidizing the Castro dictatorship.

This at a time when human rights continue to deteriorate on the island and the calls of international human rights NGOs, such as Reporters Without Borders, for Western countries to hold the Castro regime accountable are ignored.

Shameful.

U.S. Treasury Cuba Announcement in brief: "U.S. taxpayers get ready to pick up the tab for the Castro regime."

"They’re normally like chupacabras.  The only thing they’re looking for is someone to give them money for free." - Vicente Fox, Former Mexican President, in 2015 on the Castro regime

 
Today's press release from the Treasury Department appears innocuous titled: "Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations"  as does the "subheading Amendments Further Implement President Obama’s Policy Related to Easing of Sanctions on Cuba."  However the devil is in the details reproduced below from paragraph six:

Financing–

Removing financing restrictions for most types of authorized exports.

• Restrictions on payment and financing terms for authorized exports and reexports, except for agricultural commodities and agricultural items, will be removed, and U.S. depository institutions will be authorized to provide financing, including, for example, issuing a letter of credit for such exports and reexports.  Currently, payment and financing terms for all authorized exports are restricted to cash-in-advance or third-country financing.  Effective January 27, 2016, examples of permissible payment and financing terms for authorized non-agricultural exports and reexports will include: payment of cash in advance; sales on an open account; and financing by third-country financial institutions or U.S. financial institutions.  OFAC is required by statute to maintain the existing limitations on payment and financing terms for the export and reexport of agricultural commodities and agricultural items. 

The United States is the only country in the world that since 2000 has had a cash and carry arrangement with the purchase of agricultural and pharmaceutical products.Under this arrangement American companies sold over $5.2 billion to the Castro regime. This arrangement protected U.S. taxpayers from having to subsidize the dictatorship when it defaulted on its financial obligations.

How did the Castro regime raise the money to purchase U.S. goods?

James Prevor, President and Editor in Chief of the publication Produce Business in October of 2002 in the article, Cuba Caution, reported on how Cuba "had exhausted all its credit lines and, at best, was simply rotating the accounts. When the opportunity came to buy from the United States, Cuba simply abandoned all those suppliers who supported the country for 40 years and began buying from us."  The suppliers were not the ones impacted by Cuba's failure to pay its debts, the taxpayers of the suppliers' home countries were the one's left holding the tab.  

For example in December 2015 it was announced that Spain would forgive $1.88 billion that the Castro regime owes it. In December of 2013, Russia and Cuba quietly signed an agreement to write off 90 percent of Cuba's $32 billion debt to the defunct Soviet Union, a deal that ends a 20-year squabble. Canadians have had to pursue Cuban maritime debts seizing Cuban vessels and negotiating payment through Canadian courts. On November 1, 2013 the government of Mexico announced that it was ready to waive 70 percent of a debt worth nearly $500 million that Cuba owes it. The former president of Mexico Vicente Fox protested the move stating: “Let the Cubans get to work and generate their own money…They’re normally like chupacabras.  The only thing they’re looking for is someone to give them money for free.”

Trade with the Castro regime peaked under the Bush administration and has crashed under the Obama administration. The Treasury Department's announcement today means that the United States will join the rest of the world in financing the Castro regime.

While the U.S. Chamber of Commerce touts the virtues of free trade, free markets and free enterprise in its advocacy for lifting economic sanctions on Cuba what it is actually pursuing is trade with the Cuban government that passes the risk of not getting paid on to taxpayers.  Darío Fernández-Morera an associate professor at North Western University in the May 1, 2014 issue of Chronicles in the article The Cost of Normalization reports that the Small Business Exporters Association announced 

"since March 2009, a select group of commercial banks now will be able to offer terms of 180 days to five years on federally-guaranteed loans to the foreign buyers of U.S. exports without having to obtain prior federal approval.  ... Because of the foreign risks involved  in export lending, most commercial banks through-out the world do not make these loans without government guarantees. In the U.S., the guarantees are provided by the Export-Import Bank of the United States (Ex-Im Bank), a federal agency.

This will mean that the Chamber of Commerce and Agriculture lobby will sell to the Cuban dictatorship and have the taxpayers pick up the tab if anything goes wrong.  The record with other countries over the past half century indicates that the Castro regime will default on what it owes. On April 23, 2014 Moody's Investor Service downgraded Cuba's already poor credit rating to Caa2 from Caa1which Nasdaq defines as follows: "Obligations rated Caa2 are judged to be of poor standing and are subject to very high credit risk."