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President Joe Biden has begun his mission to save Cuban communism. This political course, announced during the 2020 presidential campaign, has ceased to be stealth. The ethical and methodological inconsistencies that permeate the current administration’s decisions, reveal a foreign policy program that has no moral compass. Regarding Ukraine, despite a slow and wobbling beginning, the U.S. has managed to help the European country enough to remain free and sovereign from Russian aggression. This is applaudable. Why are sanctions acceptable for a foe like the Putin regime, yet not for the Castro dictatorship? Why a double standard with Cuba?
Between May 10 and 16, Biden announced a reset of U.S. policy towards communist Cuba. It will grant the Castro regime much of what it has been lobbying for since Donald Trump left the White House. The proposed changes would place the Obama-Castro pact on a grander scale. These actions, if implemented, will open the flood gates of cash to Castro-Communism’s coffers.
Brazenly, Biden claims that these measures will “focus first and foremost on support for the Cuban people, including their human rights and their political and economic well-being.” This is nonsense. The current U.S. administration confuses the people of Cuba with the Marxist-Leninist regime in power. Biden has turned his back on the cause of Cuban freedom and betrayed fundamental American values of democratic solidarity.
The policy changes which have been promulgated constitute a de facto, financial aid package for Castroism. The American assistance to the Marxist regime will come in the fields of direct investment capital, tourism, wealth transfer, and immigration privileging. The most disturbing part of the Biden assistance bundle for Cuban tyranny is the use of U.S. capitalist dollars to prop-up, corrupt, crony, Castro state capitalism. This appears to squarely violate U.S. law.
On May 10, the Office of Foreign Assets Control, an agency within the U.S. Department of Treasury, issued a license which authorizes an American equity firm to initiate foreign direct investment (FDI) in a Cuban company. This has not been done since 1960. There are serious problems with this specific Biden overture. One is legal, and the other is the underlying false assumptions on which the authority for FDI in communist Cuba is premised.
The U.S. embargo against Havana’s socialist dictatorship forbids direct American investment in a Cuban business enterprise. Biden’s FDI scheme clearly achieves this. Additionally, the Cuban Liberty and Democratic Solidarity Act (1996) amended the embargo in many ways. While allowing for the sale of American agricultural commodities and other products to the island, the purchases by the Castro regime must be done on a cash, pay up front basis. No financing, public or private, is allowed. FDI’s allow for capital transfers to foreign businesses without stock acquisitions. The “equity” interest the U.S. firm will build can easily be construed as lending or an indirect joint-venture arrangement. This is something Castro-Communism has been doing with Western companies since the early 1990s.
An American FDI program for Cuban communism should be challenged in the courts. Perhaps, this is what Biden, and the Cuba trade apologists, want. It would not be the first-time court cases are deliberately set up for legal strategic maneuvering to advance, in ideologically friendly jurisdictional domains, the overall embargo issue. The Left loves to use the courts to overturn laws. The illegality of the FDI license is not the only grave deficiency.
Cuba has no civil society or private sector. The Castro regime itself refers to what some pundits erroneously call “private”, as the non-state sector. This is precisely what is. It is an insignificantly miniscule portion of Cuba’s GDP. The non-state sector in Cuba exists to bemuse the Free World with optical illusions. 75% of Cuba’s economy is driven by the communist regime’s state-owned enterprises (SOE), which are run by the armed forces. In the tourist industry, there is a 90% SOE dominance. Who are American equity firms going to invest in, if not Cuban communist state capitalist entities?
The fall of Soviet communism witnessed different roads towards democratization (supposedly). Russia carried out the largest “privatization” scheme in history. What ended up happening was that the managers of Russian SOE’s “bought” those state enterprises, in whole or pieces of it. It was done with subsidized state financing. The commodities were purchased at low domestic consumption subsidized prices. Consequently, the new oligarch class were given licenses to export them at market prices. Overnight, the former Soviet nomenklatura became millionaires and billionaires. Since there was no rule of law, property rights protection, or independent institutions to safeguard the political system, Russia became a kleptocracy. The West approved this. It was done with the facade of empowering the “private” sector. Is this what Biden, the Left, and the Castro publicists have in mind for Cuba?
Julio M Shiling, political scientist, writer, director of Patria de Martí and The Cuban American Voice, lecturer and media commentator. A native of Cuba, he currently lives in the United States. Twitter: @JulioMShiling // Julio es politólogo, escritor, director de Patria de Martí y The Cuban American Voice. Conferenciante y comentarista en los medios. Natural de Cuba, vive actualmente en EE UU.