Mark Falcoff is resident scholar emeritus at AEI. He is the author of several books including Cuba the Morning After: Confronting Castro’s Legacy. He writes further to posts for us on Cuba, most recently, here and here:
The story has kind of disappeared from the headlines, or even the second page, but the efforts of the Obama administration to reestablish relations with Castro’s Cuba continues apace. All kinds of people are getting into the act–not just unreconstructed Marxists or pie-in-the-sky peaceniks, but hard driving business people hoping to make a buck once the trade embargo is lifted.
At first glance this seems rather odd. What could Cuba buy from the US? What would it use for money? The government is flat broke. The average Cuban has virtually nothing to spend. Presumably the government and its enterprises (hotels, resorts) would get some hard currency from tourism, but at present — because of the lack of a small business community and an unproductive agriculture — it would have to turn around and buy almost all the inputs elsewhere This has been the case for some years now since the country opened itself to Canadian, European and Latin American travelers.
Tourists, of course, must eat (even if Cubans have to depend on sometimes empty ration stores.) This is where American agriculture comes in. Cuba has destroyed what agriculture it had through Soviet-type policies. It is already buying American foodstuffs, but under the current restrictive legislation, it must pay cash. It would naturally like to buy more–on credit.
This is, to repeat, not possible at present.
However, there is something called the Commodity Credit Corporation, created by Congress under pressure from senators from farm states sometime in the 1970s. It basically insures commodity suppliers against the default of purchasing governments. There have been many such–most notably Saddam Hussein’s Iraq.
This explains the current convergence of views on the part of both the US agribusiness community and Cubans friends in the administration and the media. If only Congress could change the legislation and give Havana a chance to stock up on US products at the expense of the US taxpayer–before, that is, it finally defaults, as it did thirty years ago on its hard currency debt to Europe and Japan. Now that oil prices have collapsed and Maduro’s Venezuela is no longer able to bail the Castro brothers out, guess who is coming to pick up the slack?