Monday, December 14, 2015

Cuba and U.S. discussing financial claims (Dec. 14, 2015)

A year after Cuba and the U.S. stunned the world by announcing negotiations to end their 50-year, Cold War-era feud, much has changed very quickly. The two countries have reopened embassies in each other's capitals (see July 20th's post), and a flood of U.S. tourists are taking advantage of newly relaxed restrictions. It seems not a day goes by without a piece in the foreign media on how Cuba is changing (AirBnB!, the Pope!, Wifi!).

U.S. and Cuba officials met last week to begin discussing some of the most difficult conversations in the negotiations: American property confiscated by the revolutionary government and reparations for the damages wrought by the ongoing trade embargo.

The U.S. Foreign Claims Settlement Commission has found that the government of Cuba seized $1.9 billion in U.S. assets, including farms, factories, mines, homes, livestock, and utilities companies, reports Newsweek. The claims are estimated to be worth 8 billion with interest, reports the New York Times. To understand the scope of potential claims, the Miami Herald says that U.S. citizens were estimated to have owned 5 percent of the swathes of Cuban economy confiscated by the Castro government.

But the Cuban's are pushing demands of their own. Arguing that the United States had strangled Cuba’s economy and caused irreparable harm, in 1999 a Cuban court found the United States government liable for deaths and damages caused by America's "aggressive policies" against the island ordered the United States to pay $181 billion in damages, reports the New York Times. At the United Nations this year, Cuba said it was owed about $121 billion. 

The two parts made no advances at last week's meeting, reports the Miami Herald, and have made only tentative commitments to meet again in the next few months. Just having the talks is already a breakthrough, notes the Washington Post. And a settlement on the American claims would be especially significant because it's a necessary precondition for lifting the U.S. trade embargo.

Experts quoted in the NYTimes piece say Cuban negotiators are motivated to move forward by the opposition win in Venezuela, which could lead to financial repercussions for the island which receives funding from the Chavista government. Cuba needs the embargo to end and must settle these claims with the U.S. in order to have that happen, explains Richard E. Feinberg, a Latin America adviser during the Clinton administration who published a study on the claims issue this month for the Brookings Institution.

The study includes history of similar negotiations with Iron Curtain countries, China and Vietnam, for example. The State Department negotiates on behalf of American claimants and does not have to seek their approval before reaching an accord.

In other financial negotiations, Cuba will pay $2.6 billion to creditor nations over an 18-year period while $4 billion of its debt will be forgiven in a deal announced this weekend with the Paris Club, an informal group of developed creditor nations, reports the Wall Street JournalReuters reports that $8.5 billion of late payment charges will be forgiven. 

The talks stem from Cuba’s lingering $16 billion debt which it defaulted in 1986. One diplomat said that Cuba had agreed to pay the principal of around $5 billion owed since its 1986 default in exchange for forgiving $11 billion in service charges, interest and penalties, with talks focussed on how long Cuba would take to repay and how much of the money would be reinvested in Cuba. And French Finance Minister Michel Sapin said that of the $470 million in principal and original interest payments that Cuba owes to France, the largest creditor, $240 million will be repaid, while the rest will be converted into development projects for Cuba.

In the latest result of the ongoing thaw: the U.S. and Cuba announced on Friday that they would establish direct mail between the two countries for the first time in more than fifty years, reports the Washington Post. Details remain sparse, but the two countries agreed on a pilot program to provide mail flights between the United States and Cuba, rather than routing mail through a third country

But in substance nothing has changed, denounces a Miami Herald editorial from this weekend. Especially on a political level, "the unremitting harshness of the dynastic police state run by Raúl Castro remains very much in place. Progress has been made on some issues, but Cuba’s people remain victims of an unbending regime." The piece notes that Cuba's government long pointed fingers at the U.S. as the enemy forcing limitations on freedom. "So the question must be asked: If the United States is no longer the enemy, why are ordinary Cubans still denied the right to peaceful protest, to a free press, to a public airing of their many grievances?" The piece calls on Cuba to change politically before the U.S. contemplates ending the trade embargo that is now the island's key demand for full normalization.

And U.S. President Barak Obama told Yahoo News that he would be interested in visiting Cuba before leaving office, on the condition that he can meet with political dissidents. "If I go on a visit, then part of the deal is that I get to talk to everybody," Obama said."I've made very clear in my conversations directly with President [Raul] Castro that we would continue to reach out to those who want to broaden the scope for, you know, free expression inside of Cuba."

New Briefs

  • Costa Rican president Luis Guillermo Solis arrived in Cuba for an official visit yesterday. But the first official visit in 72 years will likely be marred by the news that Costa Rica cannot continue to care for the nearly 5,000 Cuban migrants stranded in that country as they attempt to make their way to the U.S., reports Reuters. Last month Costa Rican authorities broke up a ring of human smugglers taking migrants north. While the country granted the Cubans temporary visas to travel through the country, they were rebuffed at the Nicaraguan border. Diplomatic efforts in Central America to find a solution for the stranded migrants have failed so far. (See Nov. 16th's post, and last Thursday's briefs.)

  • Cuban healthcare is recognized world-wide for accomplishing a lot with few resources. Cuba spends $431 per head per year compared with $8,553 in the U.S., and has a lower infant mortality rate than the US and a similar life expectancy, reports the BBC. Now the World Health Organization is praising the preventative nature of the Cuban system and calling on other countries to follow the example. At the heart of the system are primary care family doctors based in neighborhood centers. Cuba has 90,000 doctors for a population of 11 million, more than double the rate in the U.S. and the U.K.
  • Thousands of Brazilians took to the streets demanding the ouster of President Dilma Rousseff, but in smaller numbers than protests from earlier this year, reports the New York Times. But while that might be a comfort to Rousseff as she battles impeachment proceedings in Congress, the piece notes increasing polarization in Brazil and vitriol among her opponents. Sao Paulo attracted the biggest crowd, with about 40,000 people, reports the Associated Press. But the crowd was notably smaller than in March and April of this year, when Paulistas turned out 210,000 and 100,000 strong, reports the Wall Street Journal. Analysts say the protests could play a role in swaying votes in the House of Representatives if the impeachment proceedings are first okayed by a legislative commission. The request to impeach her needs to be approved by two thirds of the 513-member legislative body to advance to the Senate. (See last Thursday's briefs and Dec. 3rd's post.)
  • Brazil's Federal Police on Friday arrested the president of builder OAS, along with executives of at least three other firms, as part of an ongoing corruption investigation. They are alleged to have overcharged the government on contracts for a project to divert water from a Brazilian river to a dry region of the country, reports the Wall Street Journal.
  • Over 3,000 migrants of Haitian decent from the Dominican Republic are living in camps along the Haitian border after fleeing threats of violence and deportation earlier this year after the government began a crackdown on illegal migrants. Haitian officials have done almost nothing to support them, reports the New York Times and horrid sanitation has led to a cholera outbreak in the camps.
  • And a New York Times editorial focuses on Haiti and it's increasingly polemic presidential election. Though the two front-runners of October's election are meant to face-off on Dec. 27, the second place runner up Jude Célestin has denounced the results as fraudulent and is threatening to withdraw from the race. (See Nov. 30th's briefs.) The editorial criticizes U.S. efforts to try to persuade Célestin to participate, saying it "should instead be pressing for an independent, Haitian-led inquiry to examine the October vote. The runoff should be postponed, so the October ballots can be openly counted and the results legitimized — if that is even possible, given the irregularities. And any effort at staging a credible election should include reform of the electoral council, which has been accused of partisanship and incompetence."
  • A piece in the New York Times explores the voto castigo in Venezuela, looking at how Chavista loyalists didn't necessarily vote for the opposition but rather against the current economic situation in Venezuela. The piece looks at anti-leftwing government sentiments around the region and makes perhaps the most relevant observation of the whole "end of the pink tide" commentating going on: the region's left-wing governments came to power during a commodities boom that brought prosperity to South America in the century's first decade. They were elected in a wave of popular indignation after a period of economic stagnation -- and now they are being rejected as international prices leave governments with fewer resources to meet heightened demands. And another interesting point made by Brian Winter, vice president of policy at the Americas Society and Council of the Americas, suggests a more lasting policy shift: even many conservative politicians who hope to replace the long-running leftist governments in the region acknowledged the need to continue such policies because of lasting concerns over inequality.
  • The rightward swing is a golden opportunity for Obama to improve relations in the region, argues Andrés Oppenheimer in his Miami Herald column. He says Obama should visit the region in the first half of next year and attempt to counter-balance Chinese influence in the region.
  • Venezuela's outgoing Congress promoted a judge who drew international criticism by giving a long prison term to the opposition leader Leopoldo López, reports the Associated Press. It's one of several moves aimed at consolidating power before the socialists hand over the legislature to the opposition, according to the piece.
  • New Argentine President Mauricio Macri announced the elimination of export taxes on most agricultural products, fulfilling a campaign promise and dismantling one of his predecessor’s key economic policies, reports the Wall Street Journal. Export taxes for corn, wheat and meat will be eliminated and those for soybean exports will be reduced. The measure aims to boost agricultural production and impulse grain sales which could provide the government with much-needed dollars to bolster its rapidly dwindling central bank reserves.
  • Argentina's new government will effectively allow a 2013 agreement with Iran to die by not appealing a court decision from last year that found the pact -- signed by the government of former President Cristina Fernández de Kirchner -- unconstitutional, reports the New York Times. The memorandum of understanding signed by the two countries -- and ratified by Argentina's Congress in the same year -- attempted to help solve the 1994 bombing of the AMIA Jewish center , which killed 85 people. Argentine prosecutors have accused Iran of being behind the attack, a charge that Iran has denied. The case has been in stalemate for years as Iran won't extradite it's accused officials, and Argentine laws do not permit the case to move forward without their being interrogated.
  • At least 41 police officers were killed earlier today when a bus in a convoy in northern Argentina went off the side of a bridge and fell 65 feet, reports the Associated Press.
  • Keiko Fujimori, the leader of right-wing populist party Fuerza Popular, is a favorite to win next year's presidential elections in Peru, reports Reuters. The daughter of disgraced ex-president Alberto Fujimori, is leading with 33 percent according to a poll from this weekend.
  • An Associated Press looks at how some of the families of Uruguay's estimated 200 disappeared during the last period of military dictatorship there are attempting to search for answers regarding what happened to their loved ones. 
  • The Pope announced a six-city Mexico visit next February, which will span the country and highlight issues of economic justice, migration, drug-related violence and the rights of indigenous peoples, reports the Wall Street Journal.
  • After the successful close of the Paris Climate talks, it's worth looking at an interesting piece on InSight Crime on five criminal industries that are causing enormous environmental degradation in Latin America: illegal logging in the Amazon rainforest, cocaine production, oil theft, informal mining, and wildlife trafficking.

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