Cuba slowly begins to rejoin the global financial system

Cuba slowly begins to rejoin the global financial system
BY MIMI WHITEFIELD MWHITEFIELD@MIAMIHERALD.COM
04/19/2015 11:11 AM 04/19/2015 7:43 PM

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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