Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
This site uses Akismet to reduce spam. Learn how your comment data is processed.
Raul Castro
U.S. President Barack Obama is in the midst of a historic trip to Cuba to mend relations between the United States and the long-estranged communist nation. Speaking in a joint press conference yesterday on what's being called by the media as "the Cuba deal," the POTUS and Cuban President Raul Castro traded criticisms of one another's countries. However, they also committed to improved relations.
At one point, President Obama even openly accepted criticism from Castro, which set off alarm bells back here in the States…
Particularly with former Reagan advisor and national security analyst K.T. McFarland, who called Obama's openness to criticism from Castro "distasteful" in an interview on FOX News Channel's "The Real Story." She admonished the president for listing "all the goodies we're giving [Cuba]: trade, tourism, Internet access, education, scientific exchanges. We're going to pay for that."
Here's what she means…
Historical Context: Cuba Already Owes the U.S. $7 Billion
McFarland's skepticism stems, in part, from the fact that Cuba already owes the United States about $7 billion in assets seized by the Cuban government under Fidel Castro's regime in 1959. Alongside what individual investors lost to Castro at the time, the U.S. as a whole lost sugar, mineral, telephone, and electric companies. Oil refineries were taken away from giants like Texaco (now a part of Chevron Corp.) and Exxon Mobil Corp. (NYSE: XOM).
Cuba will almost certainly never make up for these damages.
While some find the idea of opening trade up to Cuba in light of the historical context repugnant, that's not the biggest problem with the Cuba deal for U.S. companies.
This is…
The Biggest Problem with the Cuba Deal for U.S. Companies
McFarland pointed out that Obama's plan to open up economic activity with the communist nation all over again is being done without Congressional approval. The president has gotten this far through executive action alone.
"That train's left the station," the former Reagan advisor warned. "[The president] is already going to have contracts with American companies … tour ships going to go in. It's going to be very difficult for Congress to then undo this, rip it up, tear it up, or do something otherwise."
If you're wondering why Congress might want to nix the Cuba deal, the answer can be found in the Cuban government's history of tossing political promises to the wind…
It is a vastly unstable communist regime. And many pundits and politicians worry that Castro will decide to change policies again one day – completely on a whim. This is what Fidel did when seizing the assets of thousands of Americans over five decades ago. Americans could see their new Cuban investments gone… virtually overnight.
McFarland is not the only critic outwardly expressing concern over Obama's trip to Cuba. Money Morning's own Chief Investment Strategist Keith Fitz-Gerald told FOX Business yesterday that he, too, thinks Americans will wind up paying for the president's brash decision one day:
A History of Executive Action: A quick look at the history of executive orders shows us just how powerful these directives can be. They offer the president an immediate way to advance his policies without the approval of the judicial and legislative branches. Have a gander at how POTUS gets around Congress when the going gets too tough to talk it out…
Related Articles:
I have spent time in Cuba many Cubans speak English and remember times far worse prior to 1959. As a 76 yr old Canadian I see the Cubans wanting more socialist type of structure free University, free hospitals when you are sick. I just came out of a 4 day hospital stay with as usual NO COSTS TO ME!! Cubans generally want their brand of political system and yes they do vote. I doubt if North Americans will ever hand back from American native peoples what we took and probably never will. The spoils go to the victors . The root cause was that people were so mistreated to the point that the majority would rather die then and now so still support the Castro brothers. Cubans need just to have affordable organic food, free medical, free education and a given a place to live in a reasonably clean environment. The Castro brothers delivered this basic human needs package and got majority support. Call it communism or democracy it doesn't matter!!!
My mother-in-law grew up in Cuba and her parents had to ship her to Miami in one day as she was going to be jailed for not attending Castro's assembly at her college. What's so wonderful about it? The family followed few weeks later and the government did not allow them to take anything except for a $150.