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Security Forum No. 00-F 46 2000-09-28

The Slippery Slope toward Life-Support for Castro's Regime

(Washington, D.C.): Yesterday, congressional leaders agreed to the most significant erosion of U.S. sanctions against Communist Cuba in four decades by approving the sale of American food products to that island nation. According to the 28 September editions of the New York Times, the deal would allow Cuba to make cash purchases of U.S. food products, financed through third countries. The agreement, hammered out after intense lobbying by U.S. agribusinesses, would also eliminate restrictions on travel to Cuba for those who seek to export foodstuffs there.

The move is a giant bound onto the slippery slope toward full normalization of relations with one of the world's last unreconstructed totalitarian regimes -- something the Clinton-Gore Administration clearly intends to effect before leaving office. At this point, the only impediment to House and Senate adoption of this deal will be if the proponents decide to try to get all they want in one bite, rather than the two contemplated by the current approach.

Even in this electoral silly season, with the remnants of budgetary discipline being sacrificed left and right in the quest for votes, many legislators are clearly uneasy about not just selling Castro food but having the American taxpayer pay for it. Since the only prospects for large-scale sales of U.S. food to the impoverished Cuban people and/or government is to have them subsidized by the U.S. taxpayer (e.g., in the form of Commodity Credit Corporation credits), the greediest of the agribusinesses and their champions on Capitol Hill are intent on striking from the pending compromise restrictions on CCC and other taxpayer-subsidized lubricants to trade.

The case for opposing even the relatively modest -- to say nothing of the more costly -- of these openings to the Castro regime was made by the Center for Security Policy's President, Frank J. Gaffney, Jr., in testimony last week before the U.S. International Trade Commission. In the following prepared statement and orally delivered remarks, Mr. Gaffney made clear that, while easing the embargo may advance the interests of a relatively small number of American companies (as opposed to individual farmers, who are unlikely to benefit appreciably from the sweetheart deals Castro will secure from unscrupulous multinational agribusinesses), the net effect is likely to be to provide economic life-support for Fidel's despotic government. This would be in the interests of neither the United States nor the long-suffering Cuban people.

Submitted Testimony by Frank J. Gaffney, Jr.
President, The Center for Security Policy

Before the International Trade Commission

Washington, D.C.
19 September 2000

'Freedom is served by Maintaining Sanctions on Cuba'

I am grateful for the opportunity to appear before the International Trade Commission to address the impact of the economic embargo the United States has long maintained against Fidel Castro's Cuba. I do so from the perspective of a former senior official in the Reagan Defense Department and as the current President of the Center for Security Policy -- an organization that concerns itself with strategic developments that bear on our national defense and international interests.

As the Commission evaluates the impact of the U.S. economic embargo on Cuba, you will be urged to embrace three seductive notions. Permit me to address each in turn briefly:

Untrue: The Embargo has 'Failed'

The first of these is the proposition that the embargo has been a failure. In making this claim, critics of our present economic sanctions define success, at least implicitly, in terms of removing Fidel Castro from power.

To be sure, this certainly would have been desirable to have accomplished years ago -- for both the United States and for the Cuban people who have long-suffered under Castro's totalitarian misrule. Economic sanctions, especially ones actively undercut by other nations, have limited ability to effect regime change.

That does not mean, however, that the embargo has "failed." In fact, I believe that it would be more accurate to describe the effect of the embargo on Cuba as an incomplete success, and certainly no abject failure.

After all, there can be no doubt that U.S. economic sanctions have succeeded in crippling Castro's ability to amass the wealth that would have enabled him to assemble a far more formidable military and other threats to U.S. interests.

That said, Fidel has certainly pursued -- and continues to do so -- what are known as "asymmetric" threats to the United States, its forces and interests. These are believed to include biological weapons programs, information warfare capabilities and a nuclear reactor program that, if brought on-line, could threaten to unleash Chernobyl-like levels of deadly radiation upwind from millions of Americans.

These potentially lethal means of doing harm to the United States pale by comparison, however, with the magnitude of the threat a richer Castro regime would surely have sought to mount in an international marketplace awash with long-range ballistic missiles and nuclear and other weapons of mass destruction.

Of course, no one can say for sure how much worse things would have been in these and other ways had the constraints imposed by the American economic embargo not been present. We do know, however, that when Castro was able to offset them with the largesse of his Soviet sponsors, he managed to dispatch expeditionary forces to Africa and to provide underwriting for a variety of Marxist and other terrorist groups and odious governments in the Western hemisphere.

Fortunately, with the fall of the Berlin Wall and the end of what President Reagan accurately described as the "Evil Empire," however, its Cuban outliers had their hands full just keeping the Castro regime afloat. Given the dire straits into which Fidel has plunged Cuba's economy, even the considerable cash flow the government is garnering from illegal narco-trafficking (with which Castro is reportedly personally implicated) has been insufficient to support the sort of aggressive international agenda Cuba pursued as a Cold War proxy for the USSR.

Had this not been the case, it seems unlikely that the hemisphere would have reached the point it did during the 1990s when Cuba was the only nation in the hemisphere that did not enjoy democratic rule.

Unfortunately, that happy state of affairs has already begun to unravel. In Venezuela, Ecuador, Colombia and Panama, for example, we are witnessing developments that suggest trouble ahead for the political stability and economic opportunity of the region. Notably, Venezuela's dictator-in-the-making, President Victor Chavez, has publicly declared that he "loves" Fidel and is actively working to inflict upon his country Castro's "revolutionary" model.

In short, in weighing the success and shortcomings of the U.S. embargo, it may be difficult to say with precision how much worse would things have been without it. But the embargo has, in my judgment, helped reduce Castro's capacity for malevolence. Should it be removed or eased while he retains power, moreover, a fundamental truth will likely apply: The more cash Castro has at his disposal, the better able Fidel will be to cling to power -- and to try to make up for lost time by reinvigorating and consolidating his anti-U.S. and anti-democracy campaigns throughout much of Latin America.

Untrue: U.S. Farmers and Businessmen Are Missing a Windfall

Second, those who claim the embargo has failed often insist that its only effect has been to punish American concerns who could otherwise be making good money selling food, medicine and other commodities to the Cuban market. Here again, the facts suggest that "it ain't necessarily so."

For one thing, it turns out the rest of the world is not making huge profits selling in the Cuban market. Last year, for example, the Wall Street Journal and Los Angeles Times published reports documenting the fact that Canadian, European and Latin American governments and companies that once were convinced they could make a killing investing in Cuba (with the Americans held at bay) have been sobered by hard experience with the Cuban government.

As the Journal reported on 28 June 1999, "'[In 1993], there was an effervescent feeling that Cuba had opened up a process of change,' says Archibald Ritter, a prominent Cuba scholar at Carleton University in Ottawa."

In light of Fidel's double-dealing (e.g., giving proprietary information developed at one company's expense and contracts based upon them to competitors), his capriciously instituted impediments to doing business in Cuba (e.g., confiscation of portable copiers on the grounds that they could be "subversive tools") and his regime's determination to maintain control over foreign investments, even the companies that seemed to delight in defying U.S. policy -- like Canada's Sherritt International Corporation -- have pulled back.

The Journal reported that Sherritt "had raised nearly $500 million three years ago to invest on the island. Now the mining and energy company is looking elsewhere; it just bought a share of a nickel mine in Australia for about $35 million. 'There's a limit to the rate you can invest in Cuba,' Sherritt Chairman Ian Delaney told reporters after the company's annual meeting in May."

In words that were intended to be prescriptive to other businessmen, moreover, a Canadian entrepreneur -- who once was enthusiastic about investing in Cuba -- last year wrote in a financial newsletter quoted by the Wall Street Journal that "The best way to see Cuba is on a holiday package to the island's beautiful beaches. Don't waste time in the business district."

An underlying fact of life is that the Cuban people have no money with which to buy American products -- any more than they do those of our competitors.

In other words, the only way in which American farmers and businessmen are likely to prosper from selling their products in so impoverished a place as Castro's Cuba is if American taxpayers subsidize their sales.

Under certain circumstances, such subsidies can be rationalized. But in every case, before the taxpayer is obliged to underwrite transactions that can not only wind up costing the U.S. Treasury dearly but that can have undesirable political and strategic repercussions, to boot, these subsidies must be subjected to the closest scrutiny. National decisions to do business in that fashion should then proceed, if at all, only after open, informed and above-board deliberation.

It is deeply distressing that the present, frenzied effort to get the embargo lifted appears to be a stalking horse for securing such subsidies, instead, through a non-transparent and back-door manner. Presumably, this is because the huge agribusinesses -- which tend to benefit far more from this sort of taxpayer-subsidized trade than do the small farmers whose plight is far more often touted by those who would end U.S. trade sanctions -- are reluctant to be seen seeking a renewal of the sorts of Commodity Credit Corporation hand-outs that previously cost the American people hundreds of millions of dollars worth of write-offs on grain sales to countries like Saddam Hussein's Iraq and the Soviet Union.

Untrue: 'Engagement' Will Free Cuba

Finally, proponents of doing more business with Castro's Cuba often try to dress up their true motivations -- namely, greed -- with pious pronouncements that doing what will profit them is actually noble. They typically contend that economic "engagement" will not only improve the lot in life of the people they intend to sell to, trade with and employ in countries like Cuba; it is said that it will also produce, at least over time, desirable political reforms.

Unfortunately, time after time, in country after country where this practice has been applied, it has proven to be cynically exploited by the government in question to secure legitimacy and financial life-support from the West, while staving off political liberalization. This was true with the first Communist government in Lenin's Soviet Union -- which survived its infancy only by securing Western investments and other cash infusions. It has, moreover, had similarly dismal results in each of the Communist nations where it has subsequently been applied.

For example, reasonable people can disagree about the significance and extent of changes U.S. and Western "engagement" has effected in the economic system in China. But trade on basically Beijing's terms has, to this point, certainly has not created the liberty, the freedoms -- to say nothing of the democratic institutions -- that have often been promised as the inevitable result of "engaging" the Communist Chinese.

The point is, if we are genuinely interested in promoting freedom, then enriching those who are responsible for repressing it is a real formula for failure. And that, regrettably, would be the ineluctable consequence of lifting the embargo while Castro remains in power.

What is more, were we to lift the embargo while Fidel remains in charge, we may well make more problematic the chances for real reform after he finally goes. In this connection, I commend to the Commission's attention the views of one of our government's most astute and informed observers of developments in Cuba -- Rep. Lincoln Diaz-Balart -- who believes that Cuba would probably enjoy a transition to democratic capitalism unless the U.S. embargo were lifted now.

In that case, Rep. Diaz-Balart has warned, chances are good that Castro would be succeeded by a government determined to pursue the "Little China" model of fascist capitalism -- under which foreign infusions of capital are welcome, provided they are effectively controlled by the state (e.g., through joint ventures, state-owned entities, etc.) and political control remains firmly in the hands of the regime and its adherents.


I would like to conclude my remarks by quoting an individual whose savoir faire in the world of international business is the stuff of legends. In an op.ed. article in the 27 June 1999 editions of El Nuevo Herald, the Spanish-language version of The Miami Herald, Donald Trump made the following observations:

"I perfectly understand the arguments that are frequently used in favor of lifting the embargo. The Cold War has ended. Castro has not much time left. Investing money in the Cuban economy would benefit a people that has suffered for a long time. It would be a way of exerting pressure so that Cuba "opens up": it would help export democracy and promote free enterprise. All those arguments are totally false.

For me, there are no doubts regarding the embargo. Of course we must keep the embargo. We must keep it until Castro goes."

In short, Mr. Chairman and members of this distinguished Commission, I am convinced that -- even if some small subset of America were to benefit economically from lifting the U.S. economic embargo -- it will not translate into, on net, a positive result for the Nation as a whole. And it certainly would not help the people of Cuba.

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