Cuba

Cuba slowly begins to rejoin the global financial system

Organization of American States Secretary General Jose Miguel Insulza smiles following the election of his successor, Uruguayan Foreign Minister Luis Almagro, who takes office May 26, 2015.
Organization of American States Secretary General Jose Miguel Insulza smiles following the election of his successor, Uruguayan Foreign Minister Luis Almagro, who takes office May 26, 2015. AP

CAF-Development Bank of Latin America plans a small overture toward Cuba later this month that could be a stepping stone toward the island rejoining the international financial community.

CAF — whose members include 17 Latin American and Caribbean countries, Spain and Portugal and 14 private banks in the region — is planning a conference with the University of Havana to explore economic development in Latin America and Cuba.

While the April 28-29 conference is an “intellectual” rapprochement, Enrique García, the executive president of CAF, said that while in Havana, he also plans to explore the possibility of Cuba becoming a member of the only multilateral bank owned by emerging nations.

CAF’s interest, García said, is improving the quality of life for the Cuban people.

The overture responds more to a long-standing desire by Caracas-based CAF to bring Cuba back into the hemispheric fold than to the new U.S.-Cuba policy and President Barack Obama’s decision to remove Cuba from the U.S. list of state sponsors of terrorism, García said.

But he added: “The new U.S.-Cuba relationship obviously facilitates the opportunity to do things. We are very pleased to see the way the situation is turning out. It’s very positive for Cuba, for hemispheric relations.”

Unlike other regional financial institutions such as the InterAmerican Development Bank, membership in CAF doesn’t require that a member country also belong to the Organization of American States. Although Cuba was one of the founding members of the OAS, it was suspended for nearly five decades after the organization found Cuba’s Marxist-Leninist government incompatible with OAS principles.

The OAS lifted that suspension in 2009 on the condition that Cuba take part in a “process of dialogue” on OAS principles. But that dialogue never took place and so far Cuba has said no thanks.

For decades, Cuban officials criticized the OAS as a tool of the U.S. government and said the organization would “end up in the garbage dump of history.”

But that was before the United States and Cuba began the process of renewing diplomatic relations.

“My feeling, however, is that Cuba will not return yet to the OAS,” said José Miguel Insulza, secretary general of the OAS. “It’s going to wait for some time. I think the issue of the U.S. continues to be very relevant for them. They want to have normal relations with the U.S. first.

“Second, it’s been so many years that probably they would prefer to go to other institutions of the inter-American system,” Insulza said. “The political step will be taken later. After telling your people for 54 years that the OAS is the worst thing in the world, you just don’t come and sit down without explaining.”

Things are percolating on other fronts too as Cuba tries to shore up its troubled finances and rejoin the global economy.

In early March, for example, Paris Club Chairman Bruno Bezard met with Cuban finance officials in Havana. Cuba stopped servicing its debt with the Paris Club, a grouping of 20 industrialized nations, in 1987.

The two sides began talking about a year ago after previous Paris Club negotiations in 2000 broke down.

“We have moved very quickly. There is plenty of will on the Cuban side and the side of the creditors to begin this work,” Bezard said at a news conference in Havana.

During the talks, how much debt and interest are owed to each Paris Club creditor was discussed. France is currently the largest of 15 Cuba creditors.

Bezard, also director general of the French treasury, recently told AFP that in a matter of months, debt negotiations with Cuba might begin over the approximately $15 billion it owes Paris Club members.

In recent years Russia, Japan, China and Mexico have forgiven a portion of Cuba’s debt and given Havana more manageable repayment terms.

García said that CAF has been exploring the possibility of Cuban membership “for quite some time. The question is when and how and also to be pragmatic. Obviously we have to analyze membership very carefully.”

Cuba’s admission to other international financial institutions such as the World Bank and the International Monetary Fund, however, is much more problematic. Not only does the Helms-Burton Act require the United States to oppose Cuban admission to such international institutions but it also requires the United States to reduce its funding to them if Cuba is admitted over U.S. objections.

But the United States isn’t a CAF member.

García said if Cuba were to join the development bank, the goal “at this stage” would be to provide technical assistance to Cuba rather than loans. In CAF’s 45-year history, García pointed out, it has never had a default.

If Cuba were interested, CAF might, for example, provide technical support as Cuba tries to unify its dual currency system, he said.

Now the focus is on the international seminar, “Opportunities and Challenges for Economic Development in Latin America and Cuba,” that will bring about 150 people together later this month. Among those who have been invited are Enrique Iglesias. former president of the Inter-American Development Bank, and Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean.

“We’ll discuss how we approach development issues — how we see the world and how they see things,” García said. “It’s important to engage.”

Miami Herald World Editor John Yearwood contributed to this report.

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