From: rich@pencil.cs.missouri.edu (Rich Winkel)
Subject: Cuba: U.S. Embargo Weakening
Followup-To: alt.activism.d
Originator: rich@pencil.cs.missouri.edu
Organization: PACH
Date: Mon, 17 Aug 1992 23:02:10 GMT

/** 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 **

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