Change in Cuba unlikely to boost U.S. food sales

Change in Cuba unlikely to boost U.S. food sales
Thu Aug 3, 2006 9:13 AM ET

By Charles Abbott and Chris Baltimore

WASHINGTON, Aug 3 (Reuters) - Fidel Castro's decision to turn over the
Cuban presidency temporarily to his brother will not end a U.S.
stalemate over food sales to the communist island, lawmakers and
analysts said.

Sales were authorized six years ago -- an exception to the
four-decade-old U.S. economic embargo -- as long as Cuba paid cash. Farm
groups and food makers had rosy dreams of more steps to expand a market
only 90 miles (145 km) from Florida.

Instead, they are squabbling with the Bush administration over its
insistence that Cuba pay before cargo ships leave U.S. ports, rather
than before unloading in Havana.

Still, sales are on track for $350 million this year.

John Kavulich, head of a group that tracks U.S.-Cuba trade, said on
Wednesday he did not expect "a short-term or even medium-term change in
U.S. policy toward Cuba or Cuba policy toward the United States."
Washington's policy calls for fundamental change in Cuba, a perennial
U.S. antagonist.

An American farm lobbyist said it seemed unlikely Cuba would alter its
socialist course at this point. Castro provisionally transferred power
to his brother, Raul, because of illness.

"As far as any kind of trade is concerned, we would like to see a true
transition (to democracy) taking place in Cuba" before rules are
relaxed, said Camila Gallardo, of the Cuban American National Foundation
in Miami, a Castro critic.

U.S. farm groups regard Cuba and its 11 million citizens as a natural
market. "It's one the United States ought to be supplying," said Bob
Stallman, president of the 6.1-million-member American Farm Bureau
Federation.

ENCOURAGE REFORMS

With the end of the Cold War, farm and business groups persuaded
Congress in 2000, over opposition by politically powerful Cuban-American
organizations, that food sales would benefit the United States and
encourage democratic reforms in Cuba.

Some $1.4 billion worth of food -- mostly chicken, corn, wheat, rice and
soybeans -- has been sold since trade began in late 2001. Transactions
must be handled by foreign banks.

The Bush administration has required Cuba to make payment before ships
leave U.S. harbors since February 2005. U.S. sales were not hurt by the
requirement although they dipped 11 percent in 2005 from $392 million of
2004, Kavulich said.

The White House used a veto threat last year to quash a proposal to let
Cuba pay for food before goods change hands, a widely used definition of
cash sales. The House of Representatives and Senate raised the issue
again in separate votes in June and July.

"The problem is President George W. Bush," said Sen. Byron Dorgan, a
North Dakota Democrat. "Whether President Castro rebounds from his
current health crisis or not, the United States needs a modern and
effective relationship with Cuba that advances our own economic
interests as well as the cause of freedom in Cuba through direct
engagement."

Lawmakers disagree on how to address oil deposits off Cuba's coast. The
U.S. Geological Survey says the North Cuba basin could contain 4.6
billion barrels of oil and possibly as much as 9.3 billion barrels.

Spanish oil company Repsol YPF, Norway's Norsk Hydro and India's ONGC
Videsh have teamed up to look for oil in Cuban waters of the Gulf of
Mexico. The U.S. embargo bars American companies from such investments.

A bill sponsored by Idaho Republican Sen. Larry Craig would allow U.S.
oil companies to circumvent the sanctions.

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