Foreign Investors Won't Liberate Cuba

Foreign Investors Won't Liberate Cuba

The billions already poured into the island have done nothing to advance

civil society.

By MARY ANASTASIA O'GRADY

June 1, 2014 6:24 p.m. ET



Attitudes toward the 52-year-old—though much-modified—U.S. embargo of

Cuba's military dictatorship have changed a lot in recent years. But not

always in the ways you might expect.



There was a time when it was not hard to find a Cuban dissident willing

to criticize the embargo. Today, a great many of the island's political

activists and human-rights advocates no longer believe that foreign

investment helps them in their struggle for liberation. They are asking

for more economic pressure on the regime from abroad, not less.



As Cuban political activist Antonio Rodiles told journalist Pablo Diaz

Espi for the Spanish website Diario de Cuba last month, "We need, first

and foremost, the re-establishment of basic rights and freedoms. The

international pressure, which includes the American embargo, is very

necessary to at least contain the impunity enjoyed by the totalitarian

regime."



Enlarge Image



U.S. Chamber of Commerce President and Chief Executive Officer Thomas

Donohue addresses the audience during a conference at the University of

Havana May 29, 2014. Reuters

This is worth noting, not the least because of new pressures on

President Obama to allow Americans to do more business in Cuba. Last

month one group—made up largely of lobbyists and former U.S. bureaucrats

and politicians who now make their living as consultants—sent a letter

to Mr. Obama asking him to unilaterally lift some restrictions on U.S.

investment and travel to Cuba.



The letter's signers say a change in U.S. policy "can help the Cuban

people determine their own destiny," strengthen civil society and

improve bilateral relations between the U.S. and the dictatorship. But

as Cubans are not allowed to freely engage in any business transaction

with a foreign entity, any new investment from the U.S. must go through

the Castro brothers and their friends.



The dissident community on the island and in exile responded to the

letter with indignation. "The embargo that must be eliminated is the one

which totalitarianism has imposed on the Cuban people," Cuban poet and

former political prisoner Raúl Rivero wrote in the Spanish daily El

Mundo. As to bilateral relations, once there is a democracy, "the issues

between both governments can be resolved diplomatically in 24 hours."



Cuba's Christian Liberation Movement, founded by the late Oswaldo Payá,

had this to say: "To support and applaud this logic of no-rights is an

act of complicity that infringes, precisely, against the potential birth

of a real 'civil society.' "



Advocates for economic liberty argue that the embargo unjustly restricts

American freedom: Investing abroad is central to free trade whether in

South Africa during apartheid or in Castro's Cuba. That's a defensible

libertarian argument. But it's a bad joke coming from signatories to the

letter like Andres Fanjul, whose family made a fortune from U.S. sugar

quotas or Venezuelan tycoon Gustavo Cisneros.



On a visit to Cuba last week Tom Donohue, the head of the U.S. Chamber

of Commerce, reportedly commended the regime for its recent efforts to

attract investment. That's a howler too.



For more than 20 years Castro has been inviting foreigners to run

hotels, mine for nickel, make cement and otherwise provide capital to

the island. Spaniards, Canadians, Brits, Swiss, Italians and Russians,

among others, have invested billions in partnership with the government.

Some of these investors have made use of confiscated American property.

Millions of Europeans and Latin Americans have made Cuba a tourist

destination. Hundreds of thousands of Americans now travel to the island

every year.



Yet Cubans are still tyrannized. Foreign employers pay the government in

hard currency, but the government pays the workforce slave wages in

nearly worthless local pesos. Foreign capital funneled to the despots

has only made life for ordinary Cubans worse because it has given Castro

an economic lifeline and more resources with which to repress the

population.



Cuban philosopher and former University of Havana Professor Alexis

Jardines argued in Diario de Cuba last week that focusing on Cuba's

economic problems plays into the hands of the thugs: "We shouldn't

forget that in state socialism, misery is artificially provoked."



It's true that Cuba is changing slowly, but that's being driven by

desperation not engagement. The Castros want to end the embargo not

because they are reforming but because they are not reforming. The

economy remains a train wreck. The regime can now buy all the food and

medicine it wants from the U.S., but under the embargo it has to pay

cash. Having defaulted on nearly $75 billion in loans from the rest of

the world, it has run out of willing state creditors.



Cubans now permitted to travel abroad bring merchandise from Miami,

reducing some of the privation on the island. But the regime knows well

that accumulating wealth means accumulating some control of one's own

destiny. That's why a foreigner caught paying an employee hard currency

can end up in jail.



It can be profitable doing business in a Caribbean country with one-man

rule. I get it. But the theory that a wave of foreign investment to Cuba

will swamp the totalitarian boat has been tested and failed. Let's not

pretend that cutting deals with plantation owners is about making Cubans

better off.



Write to O'Grady@wsj.com



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