Friday, December 19, 2014

Why the Cuban Thaw Puts GOP in Danger of Losing Corporate Sponsors

by Nomad

Rejecting Obama's new policy for Cuba could be the biggest political blunder the Republican Party could make.
In 2016, American corporations will not forget  or forgive who  put the brakes on the significant business opportunities in Havana.

It's obvious that Republicans hate everything President Obama does. It's hard for them to deny it. And why should they? Being against President Obama has always been a vote catcher. Fox News misrepresents the issue, the Internet sites stir up the hate, the Republicans get the support from the un-informed voters and their corporate sponsors dish out the cash to ensure the Republican Congress will happily vote accordingly. It's a beautiful little machine.

Let the Rants Begin!

So it was no great surprise that when the president announced a restoration of diplomatic ties with Cuba, Republican politicians began to rant and foam at the mouth. 

Sen. Marco Rubio (R-FL), former Florida Gov. Jeb Bush, and Rep. Ileana Ros-Lehtinen (R-FL) rushed to be the first one to the Fox News microphones to condemn the president. Naturally, you'd think that this position would be a sure-fire winner in Florida with its large Cuban-American population.
However, according to HuffPo, that wouldn't be so sure-fire as you might believe:
In Florida, including in the Cuban-American stronghold of Miami-Dade County, support for better relations was even higher than the national average, contradicting the conventional wisdom that many Floridians support Washington's aggressive stance against the country 
Something else to consider. Florida will be a swing state in the next presidential election.

Realities like that have never thwarted the Republican party. Speaker of the House John Boehner called it "misguided " and said that relations with the Castro regime should not be revisited, let alone normalized until the Cuban people enjoy freedom – and not one second sooner."

Even a Democrat, outgoing Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.), took the opportunity to castigate the president, calling the initiative "a reward for a totalitarian regime." I believe he was referring to Cuba in this case.

After 55 years, many Americans felt that the policy (as well as the embargo) had been given enough time. What was the point in sticking to a failed policy? Polls show that Republicans- once again- are out of touch with the American voter and if nothing else are playing to a minority within their own party. Seventy-seven percent of Democrats and 56 percent of independents favor the change, but only 32 percent of Republicans agree with the shift.

A Gallup poll showed that overall more than half of all Americans are in favor of lifting the embargo. Moreover, that figure is slightly down from when Obama took office. 

Part of a Larger Strategy

Despite Republican objections, the timing of Obama's announcement politically couldn't be better. Cubans could hardly hold back their excitement at the prospect of normalization and the possibility of the embargo being dropped. It had the Pope's blessing. 

European allies hailed the decision, comparing it to the fall of the Berlin Wall. One source puts it this way:
"Today another Wall has started to fall," EU foreign policy chief Federica Mogherini said in a statement. "These moves represent a victory of dialogue over confrontation."
Perhaps, or is it just a more sophisticated kind of confrontation?
Cuba's former Soviet-era ally, Russia, is on the skids with its economy and, in spite of the Ukrainian problem, Russia's sphere of influence has been reduced to its own borders. Was it just a coincidence that the announcement of the  Cuban Thaw came in the same week as even tighter sanctions against Russia were authorized by Congress? 
Was this really a victory of dialogue over confrontation or was it a more sophisticated form of confrontation? 

Consider this under-reported point. 
Earlier this year, A senior Russian defense official announced that Moscow was looking into building military bases in countries in South East Asia and Latin America, including Cuba.

By July, the news was even more grim. The Guardian reported that Russia had quietly struck a deal with Cuba to reopen the Lourdes military base. This 28-square-mile, Soviet-era signals intelligence spy base and military facility was once the USSR's largest foreign base. During the Cold War, its primary function was to eavesdrop on radio and telephone communications in the US. The threat was largely symbolic. The cost of any serious Russian bases throughout the world rules out any serious threat.

Clearly, any further negotiations between the US and Cuba would include an end to any Russian bases in Cuba. 

GOP vs. Market Forces

All in all, Obama's policy makes sense in domestic politics as well. Whether they understand it yet or not, the Republicans have once again exposed themselves as being the party without solutions. 

The carping party which can do nothing but stand with arms akimbo and complain. They have no new policy with Cuban (or half a dozen other issues) except to continue pressing on with the unsuccessful failures of the past. Like Trickle Down theory and tax breaks for the so-called jobs providers.

Still there's one more factor that the GOP didn't seem to have considered when it issued its knee-jerk reaction against all things Obama. The New York Times pointed out that immediately after the president's announcement, companies were on the move to take advantage of this unexpected opportunity. 

Home Depot, Caterpillar, and John Deere will be, the article says, welcomed with open Cuban arms and that first wave will be followed by smaller American companies depending on the prospective markets. 

The race is on to be the first to introduce their products and services to the Cuban market which has been closed for half a century. 
Despite Cuba’s long stagnation and isolation from the global economy, the potential trade opportunities go both ways. While some Americans will be itching at the opportunity to obtain the famed Cuban cigars more easily, the country also has a surprisingly robust biotechnology industry that makes a number of vaccines not now available in the United States. Another hot spot for the economy could be mining, as Cuba has one of the largest deposits of nickel in the world.

Tourism is another potential market which will expand if normalization. In the Bahamas, nearly 40% of the country's total gross domestic product is based on tourism. In a short time, the same could apply to Cuba. 
This will require a much greater investment in infrastructure for Cuba, of course, but the potential benefits are incredible. At present, this industry that generates over 3 million arrivals per year. Not too shabby for a country with only 11.25 million people. 

One of the problems, experts say, is that Cuban policies of foreign currency were poorly thought out. Last year, the Cuban government scrapped the problematic two-currency system. This is very good news for eager Americans that could flood to the island with dollars.
The New York Times article noted that 
“We will take our cues from the U.S. government but look forward to opening hotels in Cuba, as companies from other countries have done already,” Arne M. Sorenson, president and chief executive of Marriott International.
Behind that remark lies a lot of problems for the Republicans. Marriot's enthusiasm to back an open door policy with Cuba obviously is in conflict with the Marriott family ties to Republican president candidate Mitt Romney. In fact, he sits on the board of directors.

If Romney runs again in 2016, it will be interesting to see him choosing between his compulsive to add a buck to his fortune and his ambition to please the Republican party power-holders. 
Expect more flip flops than a hooked swordfish. 

The Irresistible Smell of Petroleum

There's one more opportunity that could appeal to American corporations. Something that has successfully swept away all of the pretend Republican principles about not doing business with dictators.   
Oil.. and lots of it. 

In 2008, the US Geological Survey (USGS) estimated that as much as 9bn barrels of oil and 21 trillion cubic feet of natural gas could lie within that zone, in the North Cuba Basin. (By comparison Saudi Arabia, the world oil leader, has 267 billion barrels.)

Due to the embargo, no U.S. companies were able to participate in 2010 when Cuba leased blocks of ocean floor north and west of Cuba for exploration and development of these oil reserves. Who benefited? Brazil, India, Norway, Russia, Spain, Venezuela, Vietnam.

Presumably a lifting of the embargo, something Republicans have sworn to stop Obama from doing, will free up American oil companies to participate in further Cuban leasing programs. That is a very powerful lobby the Republican party would have to face down. 

President Obama has now put the GOP in a remarkably uncomfortable position. Republicans must now decide whether it is more politically advantageous to stand against Obama and the Cuban Thaw or risk losing their corporate sponsors who are practically elbowing themselves to plant themselves on Cuban soil. Given the party's excessively close relationship with corporate America, the Republicans will have no other choice but to sign on or see campaign funding slip out of their hands in 2016.

Already, the message was delivered to the upper levels of the Republican party. Associated Press reported
The Chamber of Commerce spent heavily in the midterm elections, investing $35 million to elect business-minded, predominantly Republican lawmakers. Its president, Thomas J. Donohue, said Wednesday that Obama's actions "will go a long way in allowing opportunities for free enterprise to flourish."

Mr. Wild Card and Rebels in the Jungle

So what's to stop the Republicans from- after the appropriate period of complaining and refusing to negotiate- finally agreeing with both normalization and dissolving the embargo? 

Besides the fact that Boehner has refused to consider it and one of the few serious candidates (not Rubio) Jeb Bush has been quick to register his own opposition to the idea. 

Let's say, the Republicans can find a face-saving way to spin the issue in such a way so that they can support it without supporting the president. Quite a trick, I admit. There's still another problem.. or shall I say the usual problem.

Texas Republican senator Ted Cruz - the leader of the Tea Party arm of the Republican party has made it clear what he thinks of any Cuban initiative. On Fox News he declared:
“This is yet another manifestation of the failures of the Obama-Clinton-Kerry foreign policy. This announcement today will be remembered as a tragic mistake.”
Perhaps, but whose tragic mistake? Not Obama's.

No, the tragic mistake will most likely belong to the Republican party. Ted Cruz and the Republican party's perennial party pooper is poised to poop on the GOP parade one more time. 
That's pretty ironic considering Cruz just happens to be the son of a Fidel Castro freedom fighter.