NetNews Usenet Archive 1992 #18/NN_1992_18.iso/spool/misc/activism/progress/5860

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From: [e-mail] (Rich Winkel)
Subject: Cuba: U.S. Embargo Weakening
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/** reg.cuba: 180.0 **/
** Topic: U.S. Embargo Weakening **
** Written 10:12 am  Aug 16, 1992 by ttomasko in cdp:reg.cuba **
Sharpening interimperialist competition weakens Washington's
embargo of Cuba

by Seth Galinsky

from The Militant, May 22, 1992

When news was released last year that the French oil company
Total had signed an agreement with the Cuban government to
explore for oil off the island's coast, in exchange for 50 percent of
the earnings, many in business circles around the world paid close
attention. Would Cuba find enough black gold to significantly
make up for the drastic cutback in oil sent from the former Soviet
Union?

        The White House was not pleased. U.S. officials let the
French government know that, as far as Washington is concerned,
any oil deposits discovered still belong to U.S. companies and the
families that own them, based on claims staked out before the
1959 revolution. In a statement sent to businesses in Switzerland,
Washington warned that firms investing in Cuba could find that
they "may be legally encumbered by unresolved claims."

        No significant oil discoveries have yet been announced. The
Wall Street Journal in an April 15 article claims Total has only
found some difficult-to-refine deposits that would bring merely
$6 a barrel on the world market.

        But the paper details the company's extensive investments
in the United States. It has four refineries as well as 647 gasoline
stations in 18 states, and sells gasoline under four brand names to
an additional 2,118 stations in 22 states. The Journal's implied
message: Total could face U.S. retaliation if it proceeds with its oil
exploration in Cuba.

        In spite of the threats, other companies are trying to
ensure their share of any future discoveries. Canada Northwest
Energy Ltd., acquired last year by Toronto-based Sherritt-Gordon,
has been awarded three oil exploration and production contracts
by Cuba.

        In January, Brazil's state oil company Petrobras signed a
contract to drill for offshore oil and modernize a Cuban refinery in
Cienfuegos. The Swedish firm Taurus Petroleum also signed a
deal, and Shell and British Petroleun are discussing possible
explorations contracts.

Interimperialist trade conflicts

        The simmering tension over oil exploration is one example
of the difficulties Washington is having in maintaining its
economic embargo against Cuba under conditions of intensifying
interimperialist trade conflicts.

        More companies than ever before are willing to stand up to
U.S. pressure. There is growing concern among a section of U.S.
capitalists that their rivals are moving in to capture valuable
markets from which U.S. firms are excluded.

        For more than 30 years Washington has maintained a
draconian embargo in an attempt to undermine the Cuban
revolution. Not content with cutting off U.S. trade to the island,
the U.S. government enforced retaliatory measures against firms
around the world that did not follow suit. The embargo has cost
Cuba more than $20 billion since it began, Cuban officials
estimate.

        While maintaining the prohibition on direct trade with
Cuba by U.S. companies, Washington loosened some restrictions in
the mid-1970s. The biggest modification in the Cuban Assets
Control Regulations, the law the governs U.S. trade with Cuba,
came in 1975. For the first time since the start of the embargo,
subsidiaries of U.S. companies operating in other countries were
allowed to trade with Cuba.

        After the restrictions on subsidiary trade with Cuba were
lifted, the total value of imports and exports hovered around
$300 million a year. But from 1989 to 1990, trade by U.S.
subsidiaries with Cuba doubled from $331 million to $705 million.

        The change is even more striking when looking at exports
to Cuba. Cuba bought $97 million in products from U.S.
subsidiaries in 1988. In 1990 the figure jumped to $533 million.

        Foodstuffs account for almost three quarters of all Cuban
imports from U.S. firms abroad. Cuban exports to U.S. subsidiaries
in 1990 consisted mostly of sugar and molasses.

        Foreign subsidiaries of some of the United State's largest
corporations are routinely granted trade licenses by the U.S.
Treasury Department. Among the biggest names are Cargill Inc.,
which buys Cuban raw sugar for resale; Goodyear Tire and Rubber
Company, which sells tires to Cuba; Otis Elevator Company;
Johnson and Johnson; and Tenneco Inc.

Trade with USSR collapses

        Prior to 1989 the Soviet Union and Eastern Europe
accounted for 85 percent of Cuban trade. In 1988, the re-export
of Soviet oil was Cuba's second largest source of hard currency,
after sugar. By 1989 re-export was down to zero. The Soviets
shipped 7 million tons of oil to Cuba in 1991, but this year only 3
million tons are expected from Russia. Cuba is offering to rent out
its extensive excess refining and storage capacity, one of the
consequences of the drop in trade.

        Trade with the former Soviet Union and Eastern Europe
was at prices more favorable than on the world market and did
not usually require hard currency. With the collapse in trade,
Cuba has been forced to look elsewhere for its basic necessities.

        As a result, hard currency imports are up from $1 billion in
1988 to $4 billion today. Although Cuba's total imports have been
cut in half, its imports from hard currency markets have almost
quadrupled.

        Capitalist countries today account for the majority of Cuba's
trade. Because of the U.S. embargo, Washington's allies and
competitors have filled the gap.

        Spain, Sweden, Austria, Germany, Switzerland, Britain,
Japan, Italy, and Belgium are all engaged in significant commerce
with Cuba.

        "Canada," a new report from Business International Corp.
points out, "has served as one of Cuba's major trading partners
outside the socialist bloc since the 1959 revolution."

        Before the revolution, Canada was one of the main
imperialist competitors of the United States in Cuba. The Royal
Bank of Canada had 64 branches on the island in 1927 and
extensive interests in its sugar industry.

        In 1990 Canada exported more than $141 million to Cuba,
most of it flour and cereals. In turn it imported $107 million,
mostly sugar.

Business opportunities

        When some capitalists look at Cuba all they can see are
opportunities to make money. Business International Corp.
published an 84-page booklet in March called "Developing
Business Strategies for Cuba." "Business International's purpose is
to provide senior managers of multinational companies with the
highest quality of information, analysis and advice," the booklet
states.

        At $475 a copy, the booklet tops the best-sellers list of the
firm's publications on Latin America. "Cuba's location, large
population and other qualities make it a potentially important
market and production site," the report states.

        Among the island's strong points, it says, is the fact that its
market "is the largest in the Caribbean or Central America. Eleven
million inhabitants with a high level of education represent a
potentially attractive market for consumer goods."

        Business International also notes that Cuba has the world's
fourth largest nickel reserves.

        Much of the interest in Cuba has been fueled by a
concerted effort by Havana to win new investment and trade,
taking maximum advantage--with some success-- of the growing
interimperialist rivalries.

        Cuba's 1982 Joint Venture Law--which allows foreign
companies up to 50 percent ownership and perhaps more--only
really began to be used in 1989. According to "New Opportunities
for U.S.-Cuban Trade." published in April 1992 by the Cuban
Studies Program at John Hopkins University, there are now more
than 200 joint ventures.

        Cuba is also aggressively seeking new markets for its
products from nickel to biotechnology, as well as trying to
generate increased tourism. One of its newest customers is South
Korea, which for the first time ever is purchasing 100,000 tons of
raw sugar.

Ruling class division

        The increased trade by U.S. subsidiaries abroad has been a
source of controversy within the U.S. ruling class. While the total
amount of the trade is relatively small by big-business standards
--although not insignificant to the individual companies involved
--it is extremely important to Cuba.

        There is a real tug-of-war going on between those in
ruling-class circles who want to prevent all trade with Cuba in an
attempt to destroy the revolution and those who believe the
embargo is unsustainable. The latter argue that their rivals will
trade in spite of U.S. pressure and that, in the long run, U.S.
capitalists will be hurt by the inexorable workings of the laws of
capitalist development and competition.

        The so-called Cuban Democracy Act of 1992, a bill
sponsored by Democratic congressman Robert Torricelli and
backed by the Cuban American National Foundation, would
restrict shipping and U.S. subsidiary trade, while loosening
restrictions on mail and phone service. It is still before Congress.
A similar bill has been initiated by Republican senator Connie
Mack.

        Both President George Bush and his Democratic opponent
William Clinton try to outdo each other in condemnations of the
Cuban revolution. But behind the rhetoric, the Bush
administration, like the Reagan administration before it, opposes
the restrictions on subsidiary trade that are at the heart of the
Torricelli bill. There is no reason to think that Clinton, if elected
president, would do differently.

        In an attempt to preempt the bill Bush ordered some
changes in U.S. regulations that went into affect April 23. The new
rules prohibit vessels from entering U.S. ports while they are
carrying cargo to or from Cuba. This is less restrictive than
Torricelli's provision, which would bar the ships for six months.

Hurts Canadian trade

        The new shipping restriction will primarily hurt Canadian
and other competitors who can rarely send full ships directly to
Cuba and back. Peter McKellar, a spokesperson for the Canadian
consulate in New York, said in a phone interview that the new
regulations "could create scheduling difficulties and delays for
what we consider to be legitimate bilateral trade with Cuba."

        Bush also lifted restrictions on direct mail service for
sending packages of food, medicine, and clothing to Cuba--a
measure aimed at winning support from Cuban-Americans--at
the same time as he introduced the shipping changes. Mail
currently takes a cumbersome route through Mexico or other
countries. Cuba has not yet announced whether it will agree to the
service.

        Powerful U.S. companies that benefit or wish to benefit
from trade with Cuba have forcefully stated their opposition to
the Torricelli and Mack proposals.

        U.S.-based Continental Grain, for example, opposed the
Mack bill "simply because it will not deter Cuba's imports of food
commodities and is not in the best interest of United States trade."

        Other governments, including U.S. allies, have long chafed
at the flagrant violation of their sovereignty by the U.S. claims to
extraterritoriality. They argue forcefully that their laws govern
trade by companies incorporated on their territory, not U.S. law.

        British trade secretary Peter Lilly warned in September
1991, "We will not accept any attempt to superimpose U.S. law."

        In 1990, the Canadian attorney general issued an order
barring Canadian corporations from complying with U.S. measures
that limit subsidiary trade. Foreign Affairs Minister Joe Clark
called proposals in the Mack amendment "an intrusion into
Canadian sovereignty."

Aiming at U.S. competitors.

        According to the London-based "Cuba Business," "There is a
suspicion in European business circles that the hidden agenda of
the new legislation is to squeeze non-U.S. business out of the Cuba
market in preparation for the eventual re-entry of U.S. business."

        These suspicions are borne out by the selective U.S.
application of current embargo rules.

        Although it now readily grants licenses to U.S. subsidiaries
to trade with Cuba, Washington continues to threaten punishment
against foreign companies that do the same.

        The September 9, 1991, edition of the Wall Street Journal
reported how far Washington's use of the embargo stretches,
especially when it involved non-U.S. firms. The Brazilian VASP
airline broke off negotiations on entering an operating
partnership with Cuba's state airline after Washington threatened
to embargo VASP's purchase of U.S.-made planes.

        Since the embargo was first imposed, Washington has been
especially strict on its prohibition against the import of products
containing Cuban nickel, no matter how insignificant the amount.
The Montreal-based El Correo reports that the U.S. Treasury
Department told the Canadian mining firm Sherritt-Gordon that it
cannot sell any of its products in the United States that contain
Cuban nickel. The firm bought $45 million of nickel from Havana
in 1991 and has signed a $1.2 billion contract to help introduce
new smelter technology.

** End of text from cdp:reg.cuba **