Don’t Drink the Water

Cuban embargo hits new low

Patrick Michael Rucker

Offshore banking has helped Citibank clients hide millions.
—According to the U.S. embargo, what can’t Americans do in Cuba? Pick one: (a) sell booze; (b) compete in a dance contest; (c) provide clean water.

Options (a) and (b) were tested at a landmark trade fair in late September, when about 300 American vendors sold nearly $92 million in food products, including wine and spirits, to Cuban state purchasers, and a little two-step won Minnesota Gov. Jesse Ventura accolades at a Havana nightclub.

James Sabzali could have joined the fun but for a federal conviction involving choice (c). He and his employer, Philadelphia-based Bro-Tech, were convicted last April of selling water purification resins to Cuba. That, according to the embargo, is a no-no.

Since the embargo was enacted 42 years ago, American business has gotten to the island in the same manner that Cuban refugees get off—with some nerve and a lot of luck. But American policy toward Cuba has grown more permissive in recent years, and the businesses that once circled the island have begun to swoop.

For advocates of a tough Cuba policy, the Sabzali case is an uncomfortable parable of how arbitrary and aimless the embargo has become. Sabzali’s misadventure began about 10 years ago, when Bro-Tech hired him as its Cuba agent. As a Canadian living in Ontario, Sabzali kept the firm one step removed from its outlaw client.

This was not an original scheme. The embargo is little hindrance for large U.S. corporations, which can shift their goods through overseas, third-party suppliers and distributors. Some of America’s most respected companies, such as General Electric, Microsoft, IBM and Coca-Cola, already have a presence in Cuba.

Things ran smoothly for Sabzali until around 1994, when, according to sources close to the case, one of Bro-Tech’s Mexican rivals dropped a dime to the Treasury Department. The firm had gotten a little greedy by then—the Cuban accounts were mingled in with ordinary sales, and in 1996 Sabzali was transferred to Philadelphia—and a dogged prosecution led to last May’s conviction.

Ironically, the successful prosecution damaged the embargo’s image. When you next hear a politician talk about the effectiveness of the embargo, think of this: American businesses can already sell medicine, medical equipment and food and agricultural products—including Little Debbie Snack Cakes, horses, plywood and cotton—to Cuba. An American citizen wishing to travel to Cuba can do so legally with the slightest pretext of research or cultural interest or, just as easily, flaunt the travel ban with a stop in a third country. Rather than argue that the embargo is a success, Castro-haters would be better served offering proof that it even exists.

The recent Havana trade fair was a triumph for the American interests that won a “food and agriculture” exemption from the embargo two years ago. Standing in a mock-’50s diner kiosk of American agriculture giant and expo sponsor Archer Daniels Midland, Pedro Alvarez, president of the Cuban importing firm Alimport, sealed the purchase of $9.7 million of rice with ADM chairman G. Allen Andreas. When the contract was signed, Fidel Castro added his own scrawl and pledged, “Now you have my personal guarantee.”

These cordial scenes must have enraged Otto Reich, an assistant secretary of state and President Bush’s Cuba policy enforcer. But worse is around the bend. Last fall, the House and Senate separately passed two measures to further roll back the Cuban embargo. The first would have effectively repealed the tourist travel ban. The second would have allowed private loans on agricultural sales to Cuba—financing that is so far prohibited.

Next spring should see those anti-embargo measures, and more, making their way to the president’s desk. Most disconcerting for the White House, the measures are likely to bear the names of many otherwise-loyal Republicans who have begun to question the wisdom of the embargo.

In the calculus of American foreign policy, the Cuba exponent has a value of exactly zero. Despite the State Department’s disingenuous hysterics about a Cuban chemical weapons program or support for terrorists, in the shadow of American military might the Caribbean island is docile as a lamb. The embargo is this administration’s guilty indulgence and an extravagant gift to South Florida Cuban exiles.

For their part, “Cubans have grown quite shrewd at how things work in Washington,” says Brian Alexander, lobbyist for the anti-embargo Cuba Policy Foundation.

At the advice of American advisers, Cuba has purchased agricultural products from 34 states—an attempt to spread goodwill and win political allies across the country. “Relaxing trade restrictions is a matter for Congress,” Alexander explains. “The Cubans understand that, and now members of Congress are going to Washington asking, ‘If my constituents can sell soy beans to Cuba, why can’t they sell tractors?’ ”

And in Washington, common sense is beginning to take hold. Arguing for the embargo is a solitary and thankless task made more difficult as the Sabzali case—once an example of the embargo’s punch—continues to collapse. One of Sabzali’s original co-defendants was plea-bargained, another had his conviction overturned, and Sabzali himself may be acquitted. Either that, or he’ll be punished for a crime that will soon cease to exist.

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Patrick Michael Rucker, author of This Troubled Land, is the Financial Times correspondent in Havana.
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