Business Interests versus National Interests

by WILLIAM R. HAWKINS April 1, 2016

While President Barack Obama was fulfilling the fantasies of every New Left radical to party with the Castro regime and be photographed with a poster of revolutionary icon Che Guevara, I was in Arkansas. There I heard Republican Governor Asa Hutchinson call for an end to the trade embargo on the Communist-ruled island, especially the restriction on financing that requires cash payments for exports.  Hutchinson wants Cuba to be allowed to make purchases on credit. The embargo has not been as tight as perceived. Food and medicine have been long been available, but the Cuban economy is so poor and inefficient due to its tyrannical system that it has not been able to buy much.

Hutchinson's support for Obama's embrace of the Castro regime was not a surprise. Hutchinson led a trade delegation to Cuba last September hoping to promote agribusiness interests which are powerful in Arkansas. Hutchinson, who was a Congressman and Washington lobbyist before he was elected Governor in 2014, is all too typical of his party's "establishment" that thinks first of Corporate America and the rest of the United States only some time later, if at all. This clash between capitalism and nationalism is most evident in defense and foreign policy where the low politics of commerce often usurp the high politics of security. It should be noted that nearly a dozen American business "leaders" went to Cuba with President Obama to attend a so-called "Entrepreneurship and Opportunity Event." Meanwhile, back in DC, lobbyists from such well-financed business groups as the Chamber of Commerce, National Foreign Trade Council, Fund for Growth, and the Business Roundtable work to eliminate sanctions on all of America's geopolitical adversaries. Free enterprise is alleged to have a "right" to trade with the nation's enemies for private gain even if it increases their capabilities to work against U.S. strategic interests.

Cuba's economy is quite small, worth only $77.2 billion in 2013. Its population of 11.3 million earns only about $25 a month on average; thus its market potential is limited. Only the government has any real money, which means any lifting of the embargo with directly benefit the Communist elite, who will control any increased flow of resources to further cement its rule even after the Castro brothers pass on. Merchants know this and don't care.

In August, 2006, I debated Kirby Jones, president of the U.S.-Cuba Trade Association on CNBC. His response to my argument that any opening to Cuba should wait until there is a post-Castro government was to claim that nothing would change after the Castros, so there is no reason to wait before plunging into Cuba! And certainly, there has been no change in Havana with Raul Castro still in power. Obama has surrendered to what is still a virulent anti-American regime; something that both left-wingers and anarcho-capitalists have long advocated.

It should be remembered that the U.S. did not impose sanctions on Cuba just because Fidel Castro espoused Marxist ideology, but because he acted on it. On June 6, 1960, Castro requested two U.S. oil refiners, Texaco and Esso, process a shipment of Soviet crude oil. The companies refused and on June 28 Castro ordered the refineries "nationalized." Then on July 5, Castro "nationalized" all U.S. businesses and commercial properties in Cuba. And on August 6, the Castro regime seized all U.S. owned industrial and agrarian enterprises. This was followed in September by the Communist takeover of all U.S. banks operating in Cuba, thus completing the task of wrecking the economy.

In retaliation, President Dwight Eisenhower imposed a partial embargo on Cuba in October, which became a total embargo 16 months later under President John Kennedy. That was back in the good old days when there was a bipartisan agreement as to who the nation's enemies were.

President Obama has argued, along with the transnational business community, that sanctions have not worked in Cuba because the Communists are still in power. But that is the discredited tactic of setting up a straw man. No one seriously thought sanctions alone would lead to a counter-revolution that would produce a regime change in Havana. Testifying before the Senate Foreign Relations Committee in 1964, Secretary of State Dean Rusk laid out the aims of the embargo.

First, to reduce Castro's will and ability to export subversion and violence to the other American states; Second, to make plain to the people of Cuba that Castro's regime cannot serve their interests; Third, to demonstrate to the peoples of the American Republics that communism has no future in the Western Hemisphere; and Fourth, to increase the cost to the Soviet Union of maintaining a Communist outpost in the Western Hemisphere.

Evaluated by its aims, U.S. sanctions policy has been successful in weakening Cuba, and should be maintained because it continues to serve the first three of the four ends set out by Secretary Rusk. With the collapse of the Soviet Union, Cuba lost its subsidies and its ability to support violence in Latin America (and Africa) diminished. Leadership of left-wing subversion shifted to the Hugo Chavez regime in Venezuela where oil revenue provided the means to cause trouble. Chavez also took on the burden of subsidizing the Castro brothers. With change in the wind in Venezuela, Cuba needs an influx of funds from America to keep afloat, which is what the Left really wants as the survival of the premier "anti-imperialist" regime is vital to its narrative.

The claim that sanctions don't accomplish anything is belied by the protests that come not just from Havana, but from Tehran, Moscow, Beijing, Pyongyang, and other bad actors, who are always demanding they be lifted. The NFTC created a group called USA Engage to lobby against sanctions. Its statement of purpose argued, "America has a vital interest in being a reliable supplier of cutting-edge technology, infrastructure, manufactured products, services, agricultural commodities, and food products throughout the world." This is patently false. America, as a nation, has a vital interest if being able to punish or reward foreign entities in accordance with its own interests. It is business firms who need to be "reliable" in trade regardless of the behavior of commercial partners. And the self-declaration that this trade includes "cutting edge technology and infrastructure" is very revealing since these are central components in determining the balance of power between rival powers. That is why there are still export controls on strategic items; business cannot be trusted to show any prudence or security concerns about what it will sell to an adversary or even help them develop (consider the aid American firms have given the Chinese aerospace industry).

Business firms are salivating over the Iran nuclear deal and the opportunity to profit from providing the Tehran mullahs with the new resources needed to dominate the Fertile Crescent and the Persian Gulf. Yet, the real damage of "free trade" to the U.S. has been done in China. As the crisis builds along the Pacific Rim, Beijing's military buildup has been financed and empowered by the massive transfer of wealth and technology to China courtesy of capitalist adventurers who believe they are above the concerns of geopolitics. But then, what business leaders heeded Winston Churchill's warning in 1933 about the folly of "building up German industry with British and American money?"

In 1935, the British Foreign Office created the Economic Section, which advocated the commercial appeasement of Germany. England would become valuable to Hitler as a market for his exports -- and would even endure a trade deficit to improve relations. This is identical to U.S. policy towards China for over two decades.

A 1936 memo from a London banking house quoted in The Appeasers by Martin Gilbert and Richard Gott speaks of "Nazi moderates" with whom the bankers could  "come to an understanding and co-operate" so as to avoid another war. The same language is now used in regard to Iranian "moderates." Typical of the appeasers was Frank Ashton-Gwatkin, head of the Economic Section, who wrote in 1936: "I myself believe, however, that this nearly mortal complaint will yield to the radioactive treatment of increased world trade instead of cutting out Hitlerism with a knife." Unfortunately, it took the "knife" of a world war to end the Axis threat. The task was much more bloody after the balance of power shifted in favor of a resurgent Germany in the late 1930s, the result of a series of concessions granted to the Hitler regime.

Today, the balance of power in Asia is shifting towards Communist China as American firms continue to support the Beijing regime. Only Donald Trump has talked about "controlling China through trade" among presidential hopefuls. However, news that Michael Pillsbury, Director for Chinese Strategy at the Hudson Institute, is an advisor to Sen. Ted Cruz holds open the chance that the Texas Republican will wake up to the danger and stop complaining that prices will go up at Walmart if China is confronted. Pillsbury's new, must-read book, The Hundred Year Marathon: China's Secret Strategy to Replace America as the Global Superpower, places heavy emphasis on the economic component of the U.S.-China rivalry and draws on the lessons to be learned from President Ronald Reagan's defeat of the Soviet Union.

Policy towards Cuba, Iran, China and other adversaries cannot be evaluated without taking into account the dangerous lobbying efforts of special interest groups and their impact on a certain breed of politician who cannot put the strategic interests of the country ahead of the petty interests of the country club. Voters need to insist that officials fulfill their premier duties as national leaders.     

William R. Hawkins is a consultant specializing in international economic and national security issues. He is a former economics professor and Republican Congressional staff member.

blog comments powered by Disqus

FSM Archives

10 year FSM Anniversary