Legendary anti-Castro militant Luis Posada Carriles died Wednesday morning in Miami at the age of 90.
According to his attorney, Arturo Hernández, Posada had been suffering from throat cancer for the last 5 years.
“I’m very sorry,” the lawyer said. “At least he tried to do something for Cuba.”
Posada Carriles was a controversial figure.
Posada was considered a hero by many Cuban exiles for his participation in the Bay of Pigs invasion and for his many attempts to overthrow Castro.
Cuban state media reported that a Boeing 737 on a domestic flight crashed in a rural area Friday afternoon shortly after takeoff from Havana’s José Martí International Airport.
There were reportedly 104 passengers plus crew aboard the plane that was leased by Cubana de Aviación, the Cuban national airline, from a Mexican company. At least three survivors were transported to a nearby hospital. Granma, the Communist Party newspaper, reported the three were in critical condition.
There were no immediate reports on casualties but The Associated Press reported that residents of the rural area where the plane crashed soon after take-off said they had seen some survivors being transported in ambulances.
Aviation sources said the plane was traveling from Havana to Holguin, in eastern Cuban, when it went down about 1 1/2 miles from the Havana airport in the Rancho Boyeros suburb.
Miguel Díaz-Canel, Cuba’s recently appoint president, headed to the scene after receiving word of the crash.
“The news is not very hopeful,” he said.
Firefighters were on the scene battling the blaze as billows of black smoke shot skyward, images showed. The airport was closed shortly after the crash, leaving several flights from Havana to Miami on hold, but reopened Friday afternoon.
The flight, DMJ 0972, took off shortly after noon before crashing at 12:08 p.m, according to 14ymedio, an independent digital outlet in Cuba. Ambulances, fire trucks, and cars from Cuba’s Instituto de Medicina Legal could be seen speeding down Havana’s central Avenue of Independence, tweeted journalist Yoani Sánchez.
Roberto Peña Samper, president of Corporación de la Aviación Cubana, said the aircraft was the property of a Mexican company and had been leased by Cubana de Aviación.
Although the plane was leased, Cubana de Aviacion’s aging fleet has faced safety issues in the past.
Just Thursday, the Cuban National Aviation Authority grounded Cubana de Aviación’s Antonov AN-158 fleet due to technical issues. According to Airline Geeks, the airline operated up to six of the Ukrainian aircraft, which had repeated maintenance issues. As of April, only one of the planes was still in operation.
The Associated Press reported that Cuban First Vice President Salvador Valdés Mesa met Thursday with officials from the airline to discuss improvement in Cubana’s service in the face of strong criticism.
In April 2017, a Cuban military plane crashed in Artemisa province and eight people died. The plane was an AN-26.
The mystery over a series of unexplained “health attacks” against foreign diplomats in Cuba deepened on Monday when Canada announced it will join the U.S. and downgrade its presence on the island.
For the past year, several Canadian diplomats stationed in Havana have complained of symptoms similar to those experienced by American diplomats. On Monday, Canada’s Ministry of Global Affairs said ongoing medical testing has raised the possibility of a “new type” of “brain injury” that doctors still can’t define.
That prompted Canada to change the classification of its embassy in Cuba to an “unaccompanied post,” meaning relatives of diplomats, who often fill support roles in foreign embassies, will not be allowed to travel to Cuba.
“The cause remains unknown but could be human-made,” read a statement from Canada’s foreign office Monday. “We will be reviewing all of our diplomatic positions in Cuba, with a view to balancing our duty of care to our staff members and their families, with the ongoing need to deliver services to Canadians in Cuba, and to promote and protect Canadian interests there.”
Canada’s decision mirrors the response from the Trump administration, which pulled 60% of its staff out of Cuba after U.S. diplomats started complaining of similar, mysterious ailments in late 2016. In those cases, U.S. officials said they suffered unexplained losses of hearing, sharp pain in their ears, vertigo, disorientation and extreme fatigue.
That combination led investigators to consider the possibility of “sonic attacks,” but U.S. officials have cast doubts on that technology and started talking about unexplained “health attacks” instead.
In October, the Associated Press obtained an audio recording of the sound heard by some of the U.S. diplomats. Described as a high-pitched whine or a mass of crickets, the recording added to the mystery over the attacks but did not help investigators determine what caused the sound.
The FBI sent a team to Cuba to meet with government officials there to try to understand what’s been happening. At a Senate hearing in January, State Department officials said that investigation has not yet been concluded and the cause of the ailments remains a mystery.
Whatever the direct cause, several senators, including Cuban-American Sen. Robert Menendez, D-N.J., said it’s naïve to think that the Cuban government didn’t play a part or didn’t even know that something was happening.
“As someone who has personally witnessed the modus operandi of the Cu
ban government, it is unfathomable that the Castro regime, and the intelligence services specifically, were not aware of these attacks,” Menendez said.
Cuba has denied any involvement in or knowledge of the attacks against foreign diplomats on its soil.
In February, a team of Cubans that has been investigating the illnesses said they had found no evidence of government involvement and provided a list of 14 theories of what could have happened.
During an interview with The Miami Herald, the team listed off several possibilities, including “mass hysteria” brought on by the stress over the deterioration of U.S.-Cuba relations under President Trump. But the Cubans were insistent that there are no sonic devices in Cuba capable of inflicting the kind of damage described by diplomats.
“This type of weapon doesn’t exist in Cuba,” Col. Ramiro Ramírez Alvarez, chief of diplomatic security at Cuba’s Interior Ministry, told the Herald. “The United States is the first one that would have this type of thing. They’re made there; they’re sold there.”
Last month, doctors released the first detailed medical reports on the case but a clear diagnosis of what happened to trigger their health problems is still a mystery.
The symptoms are similar to the brain dysfunction seen with concussions, specialists from the University of Pennsylvania found after testing 21 of the 24 embassy personnel believed to be impacted.
In an editorial, the Journal of the American Medical Association said a conclusion “remains elusive” and “many potential causes for the symptoms…. remain possibilities.”
The secretary general of the Organization of American States urged participating governments at the VIII Summit of the Americas to put more pressure on Cuba and “not allow a convenient indifference in the face of a dictatorial situation.”
“We cannot allow the Cuban people to continue to be oppressed by an infamous dictatorship, a dictatorship that carries the weight of decades of human rights violations … tortures and executions. We cannot allow that,” Luis Almagro said Thursday during a gathering organized by two organizations, Victims of Communism and CubaDecide.
“We have to be faithful to fundamental ethical values. Indifference in the face of dictatorship is to break the fundamental ethical values of policy,” the OAS chief added.
The remarks came on the same day that news outlets reported that Cuban leader Raúl Castro would not be attending the summit.
Almagro said Latin American countries have the tools to pressure the Havana regime because OAS regulations can be applied to Cuba even though the hemispheric organization suspended the island’s membership in 1962.
“Cuba is only suspended from the OAS. The resolutions of the OAS still apply to Cuba because it is still part of the Inter-American system,” he said. “A suspension does not spare it from having to meet its responsibilities. That’s why we demand democracy for Cuba and the application of the Inter American Democratic Charter.”
The OAS secretary general also endorsed the call earlier in the week by about 30 former heads of state and government from Spain and Latin America who urged the governments at the Lima summit to refuse to recognize the new Cuba government that is scheduled to be appointed April 19. Castro has said he will retire as president of the government but will remain at the head of the Communist Party.
“Let’s continue to put pressure on the regime,” he said. “Let’s not recognize the rules for succession that the dictatorship wants to impose on its people.”
The event where Almagro spoke also featured a video about Cuban activist Rosa María Payá and the death of her father, dissident Oswaldo Payá, in a car crash that was never fully clarified.
Payá said her father “gave his life for the cause of freedom for all Cubans, and we have been slowly learning that the freedom of Cubans also means freedom for Latin Americans.”
“I hope that the message sent by the former presidents … can be heard again at the Summit of the Americas, from the mouths of those who today have the power in the region and who continue in some way to try to stand aside, to avoid taking the bull by the horns and speaking the truth,” she added. “The reality is that it’s time to put the brakes on the Castro influence over the region.”
The Cuban government’s participation in the Summits of the Americas, launched by former President Bill Clinton, has long been surrounded by controversy. In 2012, ALBA member countries threatened to boycott the gathering unless Cuba was invited. In the last summit, held in Panama in 2015, Castro met with then-President Barack Obama but members of his delegation clashed with Cuban dissidents who attended a parallel summit of civil society groups.
Almagro also condemned the Cuban delegation in Lima for an outburst of screams and slogans on Thursday that forced him and civil society activists to move a meeting to a closed-off hall. The Cuban delegates shouted “liar” at Almagro and “down with the worms” at the Cuban opposition activists in the room.
“Today we had a very clear example of the levels of intolerance and how they want to silence the voice of dissidents in Cuba,” said the OAS secretary general.
“They brought intolerance to our system, brought the voice of hatred, the voice that certainly tries to drown other voices. They have tried to dismantle our own democracy, the functioning of the Summit of the Americas. And that we cannot allow,” Almagro said. “And we cannot allow that in Cuba. It would not be ethical.”
Havana’s large delegation has complained to organizers of the civil society gathering, which until Thursday had kept Cuban government supporters and opponents apart to avoid confrontations.
The Cuban ambassador to Peru, Juan Antonio Fernández, told the island’s state-controlled news media that the disruptive shouts and slogans Thursday were justified and complained that critics were hypocritical because “they are the same ones who decided not to have Venezuela here.”
“They talk about dialogue, about democracy,” he said, “but how can they do that when someone is not here?”
The Hill, by Cristina López-Gottardi
Cuba’s National Assembly will gather on April 19 to choose Cuba’s next leader, and for the first time in more than 60 years he or she is unlikely to bear the Castro name.
In 2013, Raul Castro announced that he would step down as president this year. At the age of 86, biology necessitates such a move — but this will not be a sign of transition, rather part of a well-orchestrated script authored by Raul Castro and those who surround him. It will be a continuation of the same one-party communist state that has ruled the island since his brother, Fidel Castro, first took the helm in 1959.To be sure, the Cuban government will be pressed to unveil the succession as a “historic transition,” all part of the natural functioning of a healthy democracy — it will be anything but.
Raul Castro is expected to remain as first secretary of the Communist Party, which in practical terms dictates all key policy decisions. And as the only four-star general in the Cuban military, Raul Castro is also likely to continue to yield unparalleled influence over Cuba’s Revolutionary Armed Forces. Since the mid-1990s, the Cuban military has been charged with running Cuba’s economy and GAESA, a conglomerate of government-owned companies in Cuba’s primary economic sectors. By some accounts, GAESA is said to manage an estimated 40 to 60 percent of the island’s economy.
So what does this election represent and what can we expect? Few understand Cuba’s intricate electoral system, which only recognizes Cuba’s Communist Party, the PCC, as legal and does not allow for direct presidential elections. Rather, Cubans vote in municipal elections whose winners are then eligible for consideration to fill the more than 600 seats on the National Assembly.
According to Freedom House, each seat on the National Assembly is then filled via a simple vote for or against a single unopposed Communist Party-approved candidate. Under Raul Castro’s direction, the National Assembly then convenes to designate Cuba’s next leader. That’s what will happen on April 19, and most analysts point to the likely ascendancy of Miguel Diaz-Canal.
Diaz-Canal is the 57-year-old current first vice president and former minister of Higher Education, trained as an engineer. He is believed to be loyal to the party and to the Castros and would be expected to execute policy on their behalf.
Others cite the possibility of Alejandro Castro-Espin, Raul Castro’s only son and now a colonel in Cuba’s Interior Ministry charged with overseeing intelligence services. He is also thought to be a hard-liner but, unlike Diaz-Canal, has had little public visibility and therefore seems a less likely choice at the moment. In the short-term, it’s even reasonable to believe there may be a desire to move away from the Castro name.
This leadership change will take place amidst worsening U.S.-Cuba relations. Just last month, the United States made permanent embassy personnel reductions in Havana, initiated in response to the so-called sonic attacks of 2016 and 2017 that affected at least 24 American citizens working in Cuba.
As a result, the U.S. embassy was officially downgraded to an unaccompanied post, thus restricting its function to basic duties. While the Cuban government denies any wrong-doing and has not been found culpable, it is undoubtedly an unusual set of circumstances reminiscent of Russia’s Cold War–era microwave beam attacks on the U.S. embassy in Moscow.
Unfortunately, until the State Department can assure the safety and well-being of embassy staff and their families, the president has little choice but to maintain the current course.
This change is also happening at a time of significant economic uncertainty for the island. Support from Venezuela continues to dwindle, with trade down 70 percent since 2014. U.S. tourism is also in decline, due to tougher U.S. restrictions and State Department warnings. Cuba’s dual currency system, in place since the mid-1990s, is another complicating factor that will need to be addressed by Cuba’s new president.
On the domestic policy front, the Cuban government has initiated a “rectification process” on private enterprises that includes a revoking of licenses in some sectors. This policy change may be intended to remind Cubans that the government remains in charge. In any case, it is adding to an increasingly complex and challenging economic reality for Cubans eager for progress and is fueling rising discontent that could prove troublesome for Cuba’s next leader.
Cuba will surely hype the forthcoming shift in power, but the United States and the world should not be fooled. A new president in name will not translate into meaningful change for the island.
In the short term, in fact, we may even witness a tightening up as the government weathers the change. While the Politburo has been working hard to control all relevant variables, they are certain to remain vigilant until the coast seems clear.
Cristina Lopez-Gottardi, PhD, is assistant professor and research director for Public and Policy Programs at the University of Virginia’s Miller Center.
Domestic burglary and compulsive shopping resulted from a panic boosted by meat shortage in Cuba’s west region.
Those familiar with the island’s history will remember that Cuba lost its financial backing, after decades of dependence, when the USSR came apart.
Cuba then entered a severe crisis that began in 1989 that was known as the ‘Special Period’.
On the streets of Camagüey, a western province of Cuba, people are again talking about the arrival of a new ‘Special Period’.
The price of the chicken is more than the average Cuban salary and three times more than what a construction worker from Camagüey earns in a month
The horror of the ‘Special Period”
During the Special Period, daily essentials went missing. Items such as soap, cooking oil and rice that today Cubans can buy with the exchangeable currency for tourists, the CUC, were not available. During the Special Period, US dollars were needed but their use was prohibited. Having dollars was cause enough for imprisonment.
According to socialist logic wealth is distributed and managed collectively, and during that period nobody had the right to buy antiseptic wipes, nor baby clothing -never mind diapers- until a baby was five months old, because if he/she died it would be a waste of resources that could be used by others.
Today – except for those who receive remittances– purchasing boxes with chicken for 30 CUC, equivalent to the same amount in dollars, is impossible. The price of the chicken is more than the average Cuban salary and three times more than what a construction worker from Camagüey earns in a month. “It feels like Armageddon,” merchants said, because of the fear that something terrible is looming.
Now the shortages are bringing in a crime wave against vulnerable sectors. For, as many know, food is rationed monthly in Cuba.
Raúl Castro is likely to continue to control all power in Cuba, despite the party line that he is “stepping down.”
Less than a month before Raúl Castro officially leaves power in Cuba his successor is still unknown. Which raises the question:
will the power change merely serve as an instrument to perpetuate the tenure of Raúl, heir of the Castro dynasty?
“Raúl’s plan is to have a puppet in office and remain in power until his death, as well as leave his family safe from possible legal reprisals,” Andrés Albuquerque, an Afro-Cuban Forum activist, told the PanAm Post.
But Castro’s plan will not necessarily succeed, especially considering the leader’s fragile health.Albuquerque says his impression is that the Junta is in the process of negotiating with Washington, in order to avoid the possibility of a collapse.
“When there is so much silence between the two capitals, something is usually going on, and the assassins have always been much more willing to negotiate with the hawks than with the doves,” he adds.
Many are unaware that it was the Castro brothers who overthrew the government of the first Hispanic president of African descent, Fulgencio Batista. The Castro family has since monopolized power and established themselves as a veritable political dynasty.
“The proverbial demagoguery of the left and its acolytes paints a world in which the right is racist and they are intolerant, not only in terms of race and ethnic groups but in terms of inclinations of all kinds,” Albuquerque said.
“It is easy to see how Mrs. Clinton, trying to justify her shameful defeat, blames everyone else, and calls those of us who voted for Trump racist and ignorant. It is ironic that this corrupt lady accuses me, who is black, of hating African-Americans. According to her, those of us who vote for the current president are like that,” he said, adding, “many in Latin America do not know that the party of slavery and the Ku Klux Klan was historically the Democratic Party, not the Republican party.”
“Wherever the left has managed to impose its will, we have seen the breakdown of the family, intolerance for opposing points of view, and racism,” he said.
Albuquerque also said that Communist regimes from the USSR to Cuba have herded homosexuals and people of religious faith into concentration camps. The Cuban author Pablo Milanés, and the former head of the Catholic Church, Jaime Cardenal Ortega y Alamino, are survivors of such abuse.
A group of scientists says they might have found the cause of strange illnesses among U.S. diplomats in Havana: eavesdropping devices placed too close together emitting an ultrasound frequency.
A team of computer scientists from the University of Michigan may have solved the mystery behind strange sounds heard by American diplomats in Havana, who later suffered a variety of medical disorders.
Professor Kevin Fu and members of the Security and Privacy Research Group at the University of Michigan say they have an explanation for what could have happened in Havana: two sources of ultrasound — such as listening devices — placed too close together could generate interference and provoke the intense sounds described by the victims.
And this may not have been done intentionally to harm diplomats, the scientists concluded in their study, first reported by the Daily Beast.
Those who have followed the case closely say the new theory makes sense.
“This is a variation of what I have always thought,” James Cason, a former top U.S. diplomat in Havana, told el Nuevo Herald. “It explains the sonic part, that no one was spotted planting new devices inside the homes and doing it from the outside would require something huge.”
The health incidents — which took place between November 2016 and August 2017 at homes and two Havana hotels — were initially blamed on “sonic attacks.” The cause has perplexed the Department of State, the FBI and other U.S. agencies that have been trying to figure out just what made 24 intelligence officers, diplomats and relatives based in Havana ill. Many reported a variety of symptoms such as hearing loss, headaches, cognitive problems and other ailments that doctors said correlate with concussions.
University of Miami Dr. Michael Hoffer, who led the initial team of physicians who examined the victims, did not immediately respond to a request for comment on the Michigan report. The State Department said: “We still do not have a cause or source of the attacks. The investigation is ongoing.”
Most of the victims said they heard a shrill sound coming from a specific direction before experiencing the ailments.
Fu and his team used recordings of the sound obtained by The Associated Press and applied reverse-engineering to replicate what was heard by diplomats. By combining various ultrasound signals, they discovered that the resulting distortion produced an audible sound similar to what was heard in the original recording.
“When a second inaudible ultrasonic source interfered with the primary inaudible ultrasonic source, intermodulation distortion created audible byproducts that share spectral characteristics with audio from the AP news,” the university report said.
The Cuban government, which has independently investigated the incidents, has said that it found nothing suspicious in the recordings provided by U.S. agencies and that the sounds are similar to those produced by crickets and cicadas.
At first, Fu and his team did not find anything notable in the recording.
“We wondered for a moment if someone might be playing a joke on us,” they wrote in their report. But then they performed a procedure known as “AM demodulation,” and the resulting signal “sounds like an F1 engine.”
Fu’s theory, focused on ultrasound waves, would help explain why the victims described that the sound came from a specific direction. That is what 21 victims told a University of Pennsylvania medical team, according to an article published in the Journal of American Medical Association (JAMA).
“Ultrasound is more directional than audible sound and infrasound. Ultrasound can be focused on a certain area,” says the University of Michigan report.
So far, the United States has not found what caused the incidents that it has labeled “attacks on the health” of its diplomats. Cuba, for its part, has vehemently denied that it has attacked American personnel and has called the alleged attacks “science fiction.” If Fu’s theory is correct, Cuba’s response may be based on the premise that malfunctioning spy technology is not a form of aggression.
Several Canadian diplomats and their families also experienced similar symptoms, which generated more questions about why Cuba would venture to attack officials from Canada, the No. 1 source of tourism on the island.
Cason, who was in charge of the former U.S. Interests Section in Havana between 2002 and 2005, said that U.S. diplomats have lived for years in the same houses provided by the Cuban government and are aware that there are listening devices in them.
The theory that the incidents were due to malfunctioning devices and not staged attacks could explain why they only occurred in the homes of some diplomats and at two hotels in Havana, while not at the embassy.
“That cannot happen at the embassy in Havana because Cuban personnel are forbidden to enter higher floors,” where many diplomats have their offices, Cason said.
However, many questions remain unanswered: The most important is whether the ultrasound, the resulting sound distortion or both can cause the symptoms presented by the victims.
The doctors from the University of Pennsylvania could not explain the origin of the concussion symptoms, which several of the victims presented, although they ruled out other causes such as poisoning, a virus or collective hysteria.
More explanations on the cause are sure to surface.
“The JAMA report represents a collection of data from a partial sample of individuals seen at random times after an exposure, but not acutely. Our University of Miami team has provided a detailed description of how these individuals presented acutely,” Lisa Worley, a spokesperson at UM’s Miami Miller School of Medicine, said in a statement.
“This data is currently under peer review by a high-impact journal,” Worley said. “As the primary acute care providers in this case, we believe our work represents a high level of comprehensive detail that has not yet been reported. We look forward in the very near future to sharing our findings.”
In the JAMA article, doctors speculated that a new unknown source of “directional” character could cause brain damage. The authors also said there is no evidence that audible sounds could cause the symptoms. Although they did not speculate on what kind of technology may have caused the symptoms, they mentioned that microwaves can cause brain damage.
Many experts and American politicians have pointed to microwaves and to Russia as possible culprits for the attacks. This would imply that the Cuban government must have known whether foreign actors were involved. Other theories have suggested that a faction within the Cuban government could have acted on its own, which many observers believe is unlikely.
The Michigan report notes the lack of consensus and research on damage caused by ultrasound.
“The devices put in by the Cubans could have caused problems that no one knew could happen,” Cason said. “If this finally solves the mystery of sonic attacks, it is likely that Cubans will never admit it. They would have to recognize that they have eavesdropping
devices everywhere, and that they will never say.”
A draft of new Cuban economic regulations proposes increasing state control over the private sector and curtail1ing private enterprise, a copy of the document seen by Reuters showed.
The tightening may signal that the ruling Cuban Communist Party fears that free market reforms introduced eight years ago by President Raul Castro may have gone too far, amid a broader debate about rising inequality.
The draft document, circulating among Cuba experts and private entrepreneurs, goes beyond proposed restrictions announced in December.
For example, it would allow homes only one license to operate a restaurant, cafeteria or bar. That would limit the number of seats per establishment to 50. Many of Havana’s most successful private restaurants currently hold several licenses enabling them to have a seating capacity of 100 or more.
There is uncertainty over the direction of economic policy generally as Cuba prepares in April to mark the end of six decades of rule by Castro and his older brother Fidel, who stood down formally as a leader in 2008.
That has been heightened by U.S. President Donald Trump partially rolling back the Obama-era detente with the United States.
The head of the Communist Party’s reform commission, Marino Murillo, announced restrictions on the private sector in December, some of them included in the new document. But the draft regulations go into greater detail and show how far the push back could go.
“The decree strengthens control at a municipal, provincial and national level” over the private sector, according to the 166-page document, dated Aug. 3, 2017 and signed by Marcia Fernández Andreu, deputy chief of the secretariat of Cuba’s Council of Ministers.
The document said resolutions were drafted by the reform commission and were being sent to provincial and national organs of administration for consultation. Reuters could not independently verify its authenticity. Cuban authorities did not immediately respond to a request for comment.
Some analysts said they suspected the draft was leaked to gauge public opinion and could be revised.
The regulations state that measures that will apply to infractions will be more “rigorous.”
The government has increased criticism of wealth accumulation over the past year and gone on the offensive against tax evasion and other malpractices in the private sector.
The number of self-employed Cubans soared to 567,982 as of the middle of last year, versus 157,731 in 2010 at the start of the reform process designed to boost Cuba’s centrally planned economy.
Private sector workers now make up roughly 12 percent of the workforce, but the prosperity of some Cuban entrepreneurs, particularly those working in the tourist sector and receiving hard currency, has become a source of tension.
The average state monthly wage is $30, the same sum a B&B owner can charge for a night’s stay.
The restrictions unveiled by Murillo in December included limiting business licenses to a single activity per entrepreneur.
Some entrepreneurs had hoped they could get around that by transferring business licenses, for activities as diverse as manicures or bookkeeping, to family members.
It was unclear from the draft document whether the measures would be applied retroactively.
Murillo said in December the number of categories in which self employment would be permitted would be reduced and in some cases consolidated. For example, manicurist, masseuse and hairdresser would fall under an expanded beauty salon license.
The draft lists 122 categories, down from approximately 200 previously.
The document calls for a new division under the Ministry of Labor to administer and control self-employed work.
Creditors hope to begin negotiations with Cuba on more than $1 billion in unpaid commercial debt from the 1980s.Settling the debt is a key hurdle for the country if it ever hopes to attract large-scale foreign investment.
Signaling the seriousness of its intent, the Cuban London Club creditors committee has retained high-powered American attorney Lee Buchheit.
A creditors group wants Cuba to begin talks on more than $1 billion in unpaid commercial debt from the 1980s — a key hurdle if the country ever hopes to attract large-scale foreign investment.
Signaling the seriousness of its intent, the Cuban London Club creditors committee has retained high-powered American attorney Lee Buchheit of the Cleary Gottlieb law firm.
Buchheit, who is well known for international debt restructurings such as the one for Greece, said Cuba “will need to clean those Augean stables” before major investors will consider putting money into the island.
Julian Adams of Adelante Asset Management, head of the ad hoc London Club Committee of investors who own defaulted Cuban debt, said creditors prefer a negotiated settlement. However, if that does not happen, they could resort to the courts. Measures they could pursue include seizing assets and interrupting Cuba’s international payments and trade.
Adams said the committee put “a good faith offer” on the table in January in an effort to resolve the long-standing issue, which prevents Cuba’s re-emergence into international capital markets. The island has been given 50 days from Feb. 5 to respond.
A representative of Raul Castro’s government did not respond to a CNBC request for comment.
Cuba accumulated billions in unpaid loans and debts under the late Fidel Castro. Mexico, Canada, Australia, France, Italy, Japan and in particular the former Soviet Union, all lent millions, if not billions to the Castro regime in the ’70s and ’80s. Much of it went unpaid for four decades.
About five years ago, the Cuban government began steadily restructuring those loans with creditor countries and received large debt forgiveness. Mexico wrote down 70 percent of nearly half a billion dollars in debt in November 2013. The same year, Russia forgave 90 percent of the $32 billion it said Cuba owed for financial support provided by the then-Soviet Union during the Cold War.
A major achievement was Cuba’s agreement in 2015 with the Paris Club, an organization headquartered in the French Ministry of Finance and made up of officials from creditor countries who negotiate with nations that can’t pay their bilateral loans.
The Paris Club announced an additional 14 countries, mostly European, had agreed to massive debt forgiveness for the island. Cuba owed those countries roughly $11.1 billion in debt, including past due interest. The amount was written down to only $2.5 billion.
According to Reuters, under the terms of that deal, Cuba’s repayment schedule was backloaded through 2033, with no money due during the first year. In addition, many of the countries agreed to discount the debt even further in exchange for the potential profits stemming from future joint business ventures.
The commercial creditors say their offer to the Cuban government is even more generous than that agreed to by the Paris Club. Adams says the offer made to the Cubans gives them even more time before they make the first payment, and that creditors may be willing to change their debt holdings for future equity investments.
Many of the London Club members have held this debt for decades. Spending money on expensive attorneys signals they believe now is the time that a deal might actually be achieved.
Due to the ongoing U.S. embargo against Cuba, Buchheit had to obtain a special license from the U.S. Treasury because he is an American.
Cuba’s commercial debt, issued by European banks in the ’80s, has traded at 6 to 8 cents on the dollar for much of the last 10 years. Deals like this are now without precedent.
Liberian debt traded for 3 cents on the dollar in the 1990s, and creditors eventually received 21 cents on the dollar in a 2008 deal. Creditors told CNBC in 2015 they believed the debt would be settled at 27 to 49 cents on the dollar. They declined to say now what their offer is.
Whether the Cuban government actually wants large-scale foreign investment is unclear. During the thawing of relations between the U.S. and Cuba under the Obama administration, hundreds of international companies, many of them American, went to Cuba looking for opportunities. The number of deals achieved was few; mostly tourism deals that would bring much-needed foreign exchange to the cash-crunched communist regime.