US - Cuba Trade

For those of you who still wonder how effective the embargo is, here's an interesting article in today El Nuevo Herald which talks about the decline in US-Cuba trade. I have taken the freedom to translate parts of the article from its original Spanish. Focus on the dollar amounts that are mentioned. Bold text is editor's emphasis.

After four years of growth, the agricultural product sales from the United States to Cuba are experiencing a remarkable decline in 2005. According to data from the US-Cuba Trade and Economic Council (USTEC), between January and April of this year trade between American companies and the government of the island has fallen 25 percent as opposed to the same period in 2004. The commercial activity in the first fourth month period of last year reached $173,6 million, whereas this year it is $131,4 million for the same four-month period.

The most noticeable reductions took place last March and April ($79 million), right after the Office of Control of Foreign Assets Control (OFAC) of the US Department of the Treasury implemented new measures on the payments of Cuban state company Alimport to North American banks. In both months of 2004, agricultural shipments to Cuba reached $115,7 million. The past February, OFAC issued an order indicating that all shipments to Cuba had to be paid in advance, and in cash, before the merchandise left the port where it was loaded. Until that moment, Alimport paid the suitable amount with the American company after the shipment arrived at the Cuban ports.

Makes sense so far, it's obvious Cuba would rather pay later (or never), rather than now. Still, we're talking about well over $100 million dollars in four months. It's obvious Cuba has money. However, those friendly with doing business, such as USTEC, with Cuba have other thoughts.

But the main advisor of USTEC, John S. Kavulich, considered that this decreasing curve is influenced mainly by a political decision of Cuba. ' ' the decrease in the purchases is not a result of the changes in the mode of payment decreed by OFAC and the Department of Commerce, but instead corresponds with the efforts of the government of Cuba to pressure the companies and North American organizations, the members of the Congress and mass media, to lobby in its favor and to obtain changes in the laws and the policy of Washington towards Havana, Kavulich said in conversation with El Nuevo Herald.

OK, sure. But what about other countries? How about Venezuela?

This decrease in bilateral trade takes place as Cuba announced that it will buy $412 million in foods and goods to Venezuela as part of the subscribed agreements of cooperation with Caracas. According to a published report by the "Official Gazette of Cuba", the Venezuelan products will be exempt of taxes and customs tarrifs and ' ' will have a preferential treatment in the ecomonic development policy' of the island.

Bingo. There you have it. Don't complain about having to pay up front to the US when you can get freebies from Huguito. But there's more.

In a summit on Cuba celebrated during the weekend in Mobile, Alabama, the president of Alimport, Pedro Alvarez, informed via teleconference that his government counts with about $1.4 billion to acquire foods in the international market with competitive prices. ' The price of the egg, for example, is very low, but Alimport is not buying, said Kavulich. `The Cuban government does not have sufficient money to buy in Venezuela, but it does not need it either, because there it receives "regalias" (Ed. loosely translated to gifts or favors in return).

I'm assuming the regalias pertains to the oil. The article goes on to mention that delegates from Alimport are currently in Vermont to negotiate the acquisition of 100 calves, to a price of $2,000 a head. It ends with a mention of the $1 billion in trade between the US and Cuba since 2001.

Are you still convinced that there's a real embargo, or blockade as Cuba calls it?
I'm sure Juan Paxety up in Jacksonville is shaking his head violently left and right as we speak.