FreightWaves Classics articles look at various aspects of the transportation industry’s history. If there are topics that you think would be of interest, please send them to [email protected]

The many industries that make up the world of freight have undergone tremendous change over the past several decades. Each week, FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.

In this week’s edition, from the July 1974 issue of American Shipper (virtual pages 27-29), FreightWaves Flashback looks back at the U.S.-Cuba stalemate during the Nixon administration.

On Jan. 1, 1959, the regime of Cuban dictator Fulgencio Batista crumbled under the weight of two years of protracted guerrilla warfare and Batista was forced to flee the island. What was supposed to be a democratically inspired revolution headed by the bearded Fidel Castro soon showed its true colors and became instead the first Communist dictatorship in the Western Hemisphere.

Following two years of increasing tensions between Cuba and the United States, President Eisenhower ordered diplomatic relations between the two countries severed on Jan. 3, 1961. Since then, events surrounding the relations between the two nations have ranged from outright hostilities, such as in the Bay of Pigs invasion in 1961 and the 1962 missile crisis, to cooperation, such as in the signing of an anti-hijacking agreement in February of 1973.

Today, the question of whether or not to resume or “normalize” relations with Cuba is once again in the limelight. The purpose of this article is not to make a recommendation for or against resumption of relations, but merely to relate the present state of affairs. Whether or not one has an opinion on the subject, the fact remains that the question of recognition of Cuba must be dealt with because even the lack of change signifies that a decision has been made.

Changes

Several factors point to the need for at least a reevaluation of U.S. policy toward Cuba. Time alone is one such factor. More than 15 years have elapsed since Castro assumed power. Most nations’ policies are subject to change with the passage of time and ours is no exception. Another factor is a change in the circumstances that brought about the original imposition of those policies, and perhaps a third factor is the realization that the original policies no longer have the result that was originally intended for them.

Whether or not relations are resumed, there is a “sub-issue” that is related to recognition but that can be, and indications are that it may soon be, dealt with separately. This is the issue of trade relations. As we have seen in the recent China “rapprochement,” there can be considerable trade with a former enemy with which the U.S. has not formally resumed diplomatic relations. It is to this sub-issue — trade relations — that we will address ourselves. As we observed earlier, there are a number of reasons or causes for a call for a review of our relations with Cuba.

Triangular trade

Whatever the previous conditions may have been, there is a salient fact surrounding the question of trade with Cuba today: Cuba is trading with most of the nations of the world, and through what is called “triangular trade” (through a third country), even with the United States itself.

The table provides the latest figures for Cuba’s imports and exports with selected countries. Since most of the United States’ best trading partners are listed, it is easy to see how “triangular trade” can be accomplished.

Embargo failed

The figures indicate something else: that Cuba seems to be able to buy and sell practically anything practically anywhere. If this is true, then one reason for the trade embargo is no longer valid: to bring about the downfall of the Castro regime by denying it all the foreign goods and earnings that import and export trade enable a nation to obtain.

Still, in order for a normalization, or resumption of trade to occur, a political decision must be made.

There is much more opposition on the political side of the argument than on the economic since there are many U.S. firms that stand to gain from resumption of trade with such a geographically and historically close customer of U.S. products as Cuba. Likewise, however, there are many people in this country who oppose resumption of relations because of the aura of respectability that they feel such a move would give to a totalitarian dictatorship.

To that latter argument there is more than one counterargument. First, the United States has an avowed policy of recognizing all government, referring to Latin America. President Nixon said in a speech to the Inter-American Press Association on Oct. 31, 1969, “We must deal realistically with government in the inter-American system as they are.” 

A second argument is that there are several thousand political prisoners in Cuba who have not been helped at all by Cuba’s isolation. On the contrary, an opening up of Cuba, with the advent of commercial relations and the many people who would consequently travel to the island might very well force the government to relax its grip not only on the prisoners but on the population as a whole.

Castro

This very possibility, as a matter of fact, could be what has made Castro so adamant in his refusal to open up. Contrary to what many people think in this country, Castro has not been pressuring for a normalization of relations but has consistently argued most virulent against it. It seems rather strange that the leader of a nation in such dire need of spare parts for the enormous amounts of U.S.-made machinery it has lying idle, and in such need of markets for its agricultural products, would turn its back on its closest, richest neighbor. The answer can only be political. In addition to his traditional anti-American behavior, Castro probably fears that a normalization of commercial relations might lead to liberalization of the internal political situation due to pressures from world public opinion.

Castro’s position thus in fact allies him with his most rabid opponents in the Cuban exile community in the U.S. and with the official posture of the Nixon administration.

Nixon

Even within the Nixon administration, however, there are differences of opinion as to what our policy should be toward Cuba. It has been widely reported that President Nixon reacts very negatively to any mention of rapprochement with Cuba, while Secretary of State Kissinger appears to have a more pragmatic stance. Kissinger, however, must carry out the policies of the president and officially, therefore, he states even as recently as April 22 at the Organization of American States meeting in Atlanta that the U.S. “will not be establishing diplomatic relations with Cuba” anytime soon.

Very quietly, however, several steps have been taken recently by the United States government that appear to point in the opposite direction. At the same time as the OAS foreign ministers conference in Atlanta, Kissinger agreed to a proposal that Argentina canvass other Latin American governments to determine if they are willing to invite Cuba to the next informal meeting of hemisphere foreign ministers, scheduled for March 1975 in Buenos Aires, Argentina. At approximately the same time, the U.S. State Department announced that it had approved export licenses to Ford, Chrysler and General Motors for their Argentine subsidiaries to sell vehicles to Cuba. Although this is a “de facto” break in the embargo, State Department officials stressed that the decisions should “in no way” be interpreted as a change in U.S. policy toward Cuba.

The State Department can see the figurative handwriting all over the Latin American wall. Only the most right-wing governments in Latin America, such as Brazil and Paraguay, now oppose bringing Cuba back into the Western Hemisphere community. Even without any formal process of reentry, Cuba has been the focal point of changing attitudes throughout the Americas.

Canada

The Canadian government recently approved the sale of 25 locomotives manufactured by MLW Worthington of Montreal to Cuba. In itself, this would not be a significant sale, since Canada is a major trading partner of Cuba, but MLW Worthington happens to be 52% owned by Studebaker Worthington Inc., a U.S. corporation. Canada has vowed that the sale will go through notwithstanding any opposition from the U.S. State Department. This transaction has the potential of causing a rift between two good friends, the U.S. and Canada, because of national pride. The Canadians state that they cannot allow the U.S. State Department to tell a Canadian-based corporation who not to sell to. Many advocates of resumption of trade with Cuba point to such incidents as embarrassing and unnecessary and ones that could be avoided by allowing U.S. companies to do what other companies around the world can do.

Debts

Ironically, if trade were resumed, many U.S. companies that would like to may find themselves unable to deal with Castro because of his lack of foreign exchange, hard cash, with which to pay. Cuba is up to its ears in debts to the Soviet bloc — over $3 billion to the USSR alone and continuing to borrow from the Russians at a rate of approximately $600 million a year. Another possible obstacle to trade would be the claims by U.S. citizens and corporations against the government of Cuba for over $1 billion in confiscated property that was not compensated.

Both these obstacles, however, could be overcome, since in the latter case it behooves U.S. corporations to allow Castro to establish business relationships that would make him sufficiently dependent on U.S. trade to force him to reopen negotiations for those compensations. In the former case, it is reported that the Russians would be only too glad to allow Castro to establish credit somewhere else and rid themselves of a costly “socialist” ally that has so far given them only headaches.

Once again, however, political considerations enter the picture, since Castro is aware of those very same potential consequences of trade relations. Economically, however, Castro may be able to hurdle the foreign exchange obstacle by spending some newly acquired cash obtained as a result of a rise in the world market price for sugar, still Cuba’s main export crop.

Florida

The effect of a resumption of trade with Cuba would, of course, be felt very strongly in Florida. Many of the products that would be required by Cuba are presently being either manufactured or distributed by Florida-based companies. In addition, Florida’s four international airports and 14 deepwater ports would, by their geographic proximity, carry the majority of the Cuban cargo, both import and export. Although the Port of Miami would be a major beneficiary, it would not be the only one. One becomes aware of the importance of Cuba as a trading partner when one realizes that Pensacola, the Florida port most distant from the Caribbean island, fully lost one-third of its cargo when trade with Cuba ended in early 1961. Not only the state’s air and maritime transportation and industrial sectors stand to gain, but all the other ancillary services, such as the financial, freight forwarding, land transportation and other services, which always benefit from an increase in commercial activity.

The date?

In summary, it must be said that all recent indications point to an eventual resumption of trade relations with Cuba, even if a limited one. The actual time of that occurrence cannot be determined because of all the circumstances influencing it, not the least of which is the present domestic political situation in the U.S. Since President Nixon himself is said to be the main obstacle to normalization on this side of the Florida Straits, it is conceivable that nothing will change until he leaves office. On the other hand, he may want to use Cuba as the next target of his policy toward Communist countries and as an indication that he can still take the initiative. Then it will be Castro’s turn to decide whether he feels sufficiently strong domestically or is sufficiently desperate for new markets and sources of supply to change his attitude.

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