Monday, March 12, 2007

Cuba's Debt (Part 2)

On the other hand, the US continues to create obstacles to Cuba's trade relations within the US and with other nations.

It was apparent very long ago that Cuba would have problems in acquiring hard currency. By the late eighties it was seen that sugar and Soviet oil sales were declining, and Cuba would not be able to pay its external debts. Many foreign nations assumed that they would have to hold off on new Cuban projects, at least until the US would lift the embargo. But, to the disappointment of many nations, US and Cuba relations worsened into the 90's, even after the fall of the Soviet Union (at the time the principle reason the embargo was justified).

Unfortunately, the same bad blood continues, and it is about to target Cuba's newest source for paying its external debt: oil drilling off its coasts.

After the latest announcement by Canada's Sherritt International to "export a portion of its Cuban [oil] production as a consequence of anticipated production growth" for 2007, our own US Representative Ileana Ros-Lehtinen from district 18 says that she finds this as "beyond the pale and totally unacceptable." She plans to introduce legislation this week, in an attempt to prevent Cuba from drilling in the Florida Straits, or rather to prevent foreign companies from doing so.

News reports have shown that there is great interest in the Cuban "oil rush" by American energy companies. Last year, the U.S. Office of Foreign Assets Control interrupted a business conference with Cuban officials in Mexico City because it took place in a US-owned Sheraton hotel. The conference, called the US-Cuba Energy Summit, included meetings with US energy executives, including ExxonMobil.

UM's own Jorge Piñon, a former president of Amoco Oil Latin America, speculates that Cuba could become "a major regional player in oil." An energy analyst from IHS Inc. (an information services company which includes Daniel Yergin) says that "U.S. oil companies would love to do business there [in Cuba] as soon as this thing opens up... They'd be short-sighted not to."

Cuba's huge external debt, which may soon become a marginal issue, is not necessarily an argument to justify sanctions, unless you want to see Cuba's economy and its citizens suffer.

[Part 1]

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