What in the world is Matt Lauer reporting on in Cuba?



Well, the stories in the media say that one of the things he’ll be reporting on is the embargo. The question is what facts is he going to share with his viewing audience and what facts will be left out of the report? In order to prep his audience for the discussion I have prepared the following Cuban Embargo Q & A:
Why do we have an embargo against Cuba and not against other dictatorships such as China?
The embargo on Cuba was put in place in response to the expropriation of American assets by the castro regime. Cuba broke the rules of international trade and before we restore normal trade terms, there has to be an acknowledgment and settlement of that debt, even if it’s for pennies on the dollar. Otherwise we would be rewarding the regime without any admission that what it did was wrong.
China settled with the US for assets it expropriated when it went communist.

In 1966, Congress amended the International Claims Settlement Act of 1949 to authorize the Foreign Claims Settlement Commission to undertake an evaluation of claims by American nationals for losses due to Chinese nationalization of property and other assets after Oct. 1, 1949. Claims by private U.S. citizens and corporations adjudicated by the commission totaled about $197 million.

Now let’s put that in perspective. In 1966 a congressionally appointed commission placed the value of American assets that were expropriated without compensation in China at $197 million but only a few years before Cuba had similarly expropriated an estimated $1.8 Billion (with a B) in American assets. The largest such seizure in the history of the American Republic. If $1.8 billion sounds like a lot, it should. That’s 10 times the amount the Chinese seized. And $1.8 Billion in 1963 dollars is $10.5 billion today when accounting for inflation.

Treasury Secretary W. Michael Blumenthal reached an agreement with the Chinese on the settlement of American claims during his visit to Peking in March 1979. Under the agreement, which was officially signed during Secretary Krepsf visit in May 1979, the Chinese will pay 41 cents on the dollar for a total of $80.5 million.

As you can see we have a much bigger beef with castro’s Cuba than we did with China and in China’s case it prevented normal trade relations for three decades.
But isn’t China communist too?
Not really, at least not anymore. It’s become a quasi-fascist state dressed in the trappings of communism.
By the time the US moved toward normalizing trade with China, Mao Zedong had already died, opening the door for his successors to implement economic reforms. With castro, Cuba’s Mao-like figure, still alive and his shadow over his would be successors, such needed reforms are not likely to come to Cuba and neither is any kind of acknowledgment of the debt for expropriated assets.
Let’s say we wanted to buy a bunch of souvenir pens, we can go to China and make a deal with a Chinese citizen that owns a factory that makes souvenir pens. That’s because when you trade with “China” you are actually trading with an individual or company, who in turn employs other Chinese at the prevailing wage in China.
In Cuba, such private enterprise is strictly forbidden. All of the international commerce conducted by Cuba is conducted by the Cuban state through a variety of shell companies, which it owns. A Spanish hotelier, for example, that runs a joint venture in Cuba is doing business directly with the regime. The regime provides the employees (the hotelier has to take the employees provided by the Cuban employment agency). The salaries of the employees are paid to government in Euros or other hard currency and the employee is paid by the state in near worthless Cuban pesos.
In short, the system in Cuba is set up to capture all of the cash and minimize any natural liberalizing effect that trade with that country would have.
But the embargo hasn’t worked in all of these years?
It certainly hasn’t toppled fidel castro if that’s the measure of success. But again the embargo is a punitive measure in response to the expropriation of American assets. The perpetrators of that theft are still in power and still refuse to live up to the norms of trade that prohibit such actions. Only recently was the lifting of the embargo tied to certain political changes that would signal that Cuba is free. And it is true that Cuba has not made any progress toward those changes. But it would be a logical fallacy (it’s called a false dichotomy) to believe that since the embargo hasn’t worked that removing the embargo must work.
Canada, Europe, and Latin America have all been doing business with castro, inc. for the better part of the last 20 years and repression has not diminished one iota. Under the circumstances mentioned above, with the Castros dictating the terms of trade, how can American trade will do any better? What is so magical about American investment or tourism that can’t be found in Canadian, British, Mexican, Spanish trade and tourism? Logic dictates that there is no magic bullet of American trade.
Still the policy has failed to produce the result we want. Why keep the policy, isn’t this illogical?
The one constant throughout the last 48 years is Castro. American presidents have changed (10 administrations from both parties), policies toward Cuba have been liberalized then strengthened again. Other countries have “engaged, traded with and dialogued” with Cuba. castro is the only variable that hasn’t changed. And it’s the only variable that can change to create a diferent outcome. The embargo gives the US the one piece of leverage that it could use when the personalities involved at the top levels in Cuba change (i.e. when the Cuban Gorbachev comes to power) to speed reforms.
Rewarding an outlaw regime that has places spies at the highest levels of our intelligence community, murders American civilians, harbors fugitives from American justice, and imprisons scores of dissidents does not seem like a very logical approach.
But doesn’t the embargo hurt American businesses?
Perhaps, but consider this: we don’t like it when American companies are labeled as exploiters when they operate in an unsavory manner overseas, often in environments that are much more free than Cuba. Given the rules that American companies would have to work under in Cuba, they would be aiding the castro regime in exploiting the Cuban people. Maybe the Spanish don’t have a problem with Sol Melia enforcing things like tourist apartheid in Cuba or the prohibition of independent labor unions, but we should have a problem with a company like Hilton doing it.
The reality is that embargo opponents don’t just want the embargo lowered. They want Cuba to be able to buy American goods on credit. Of course Cuba is a terrible credit risk and many of the sectors, which would benefit from such trade (like agribusiness) are highly subsidized industries. So when the Castros default, as the always do (and as they must because the economic system they stubbornly continue to implement simply can’t work) you and I as American taxpayers are the ones that get left holding the bag.
Questions for Matt Lauer: Will you mention the fact that the embargo exludes medicines and agricultural products? Will you mention that the US is Cuba’s leading supplier of food? Will you put the embargo into historical context?

3 thoughts on “What in the world is Matt Lauer reporting on in Cuba?”

  1. Henry,
    The usual questions. Damn good answers. We should bookmark this. Its among the best comebacks I’ve ever seen, especially the China facts.

  2. Henry,
    What a great piece! You have effortlessly eviscerated the arguments of the let’s-lift-the-embargo crowd! KUDOS!

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