From the West to Castro: Best wishes for a Happy New Year

IT LOOKS LIKE the Soviet Union already has at least one New Year's resolution: Get tiny Cuba off the dole.

Despite billions of dollars in Soviet trade subsidies, Fidel Castro's Cuba has become one of the poorest countries in Latin America. Moscow, tired of propping up another welfare client state, will cut off all subsidized trade with Cuba on Jan. 1.


Moscow's recent demand for hard cash in exchange for Soviet oil -- ending three decades of oil giveaways -- has prompted rumors of the rapid demise of the Cuban dictator. And, ever since the democratic revolutions began rumbling through Europe, observers have been charting Castro's fall in months rather than years.

But as Western nations continue to rescue Cuba's drowning economy, rumors of Castro's political death may be greatly exaggerated.


Canada, one of Cuba's loudest economic cheerleaders, launched an attack against a U.S. bill sponsored by Sen. Connie Mack, R-Fla., prohibiting foreign-based U.S. subsidiaries from trading with Cuba. U.S. law already forbids American companies from trading with Cuba. But the Mack amendment would help reduce Western foreign investment, trade and aid that has been crucial in keeping Castro in power.

Several nations have their hands in the investment cookie jar. Brazilian officials recently concluded a trip to Cuba aimed at increasing economic ties and called the Mack amendment a "policy of provocative isolation." Mexico, Argentina, Venezuela and Canada have all joined ranks with China to increase ties to Castro.

Thus, as the Soviet Union and the new democracies of Europe distance themselves from Castro, Western "business moguls" are planning more trade and aid to Cuba's perennial strongman.

There is no doubt that Castro's international isolation during the last two years has weakened his revolution at home. But the real threat to Castro lies in economics, not politics.

A reduction in Soviet subsidies will cost Castro $2.5 billion per year. When the Soviet Union held up two food shipments earlier this year, the two-month delay sent the Cuban economy into a tailspin. Castro put the country on a war footing that he dubbed "a special period in a time of peace."

Special indeed: Castro heavily rationed food, halted construction projects, and forced large numbers of city workers into the countryside to cultivate more land. And when Hungary refused to send buses and spare parts to Cuba without payment in cash, 50 percent of Havana's bus service was shut down.

With the Soviets and Eastern Europeans gone, Castro has desperately been reaching out to Latin American and European countries for help, says a high-ranking Cuban official who recently defected. And the West seems willing to throw him a life raft just when the sharks are closing in. But if economic hardship -- which played a key role in forcing change in the Soviet Union and Eastern Europe -- is eased by more Western trade, Castro will retain power indefinitely.

Western trade with Havana now amounts to only 15 to 20 percent of its total trade. A Cuban government report estimates that U.S. firms alone could capture 35 percent of the market, or roughly $750 million per year, if the U.S. embargo were lifted.


Trade advocates argue that increased Western investment will indirectly weaken Castro by introducing Western ideas into Cuba. They are only partly correct. Totalitarians like Castro and mainland China's Deng Xiao Peng have shown a deftness in handling Western aid without relinquishing control. Workers on Castro's collectivist farms will hardly mount an insurrection just because Canadians are now using Cuban sugar in their coffee. In fact, Cuban sugar sales to Canada bring in hard currency, which can buy grains and other foodstuffs -- strengthening Castro's hand in the short term and staving off a popular uprising.

In 1975 Congress created a "foreign subsidiary" loophole as an investment incentive to wean Castro away from communism. Castro's way of saying thank you: He sent 65,000 troops to Angola beginning in 1976, gave arms and aid to the communist insurgency in El Salvador and to the Sandinistas in Nicaragua in 1978 and has been heavily involved in drug trafficking operations. Trade not only failed to discourage Castro's communism; it gave him financial breathing space, to the tune of $1.3 billion from U.S. subsidiary companies doing business in Cuba since 1981.

Even small amounts of contraband moving through Turkey, Syria and Jordan have undercut United Nations sanctions against Iraq and weakened the embargo. Like Saddam Hussein, Castro has his own smugglers shipping him precious goods and currency. They just happen to be wearing business suits made in the West.

Wesley Smith is a Latin American policy analyst at the Heritage Foundation, a conservative think tank in Washington.