Monday, February 11, 2019

Cubazuela

A column of mine on the Administration's approach to Venezuela and Cuba, and Cuba's options.

Monday, January 21, 2019

Why Radio/TV Marti is a joke


How is the U.S. government broadcast to Cuba covering the announcement about Title III of the Helms-Burton law?

In this story, TV Marti reporter Tomas Regalado explains the State Department statement and presents some reaction: from Congressman Mario Diaz-Balart, from Miami radio powerhouse Ninoska Perez, and from a guy who would like to file a lawsuit based on his property claim. Regalado did not indicate that alternative points of view exist, much less say what they are or show anyone espousing them.

On the evening newscast, they brought out reporter Pablo Alfonso to explain the news, and in addition to explaining the issue of lawsuits, he proceeded to describe an aspect of the legislation that doesn’t exist. He said that Title III “prohibits subsidiaries of foreign businesses, who have subsidiaries in the United States, from doing business with Cuba” (see 3:00). That is nonsense, but it’s not hard to guess why he said it. Someone probably told him, accurately, that the desired effect of the law is to induce companies doing business here to stop doing business there. Rather than doing actual reporting, it appears he went with that and garbled it. (Note also at 4:25 that after referring to the Cuban “government” he quickly corrects himself and says “regime.”)

On the Radio/TV Marti website, there’s a story about Congressman Mario Diaz-Balart supporting the implementation of Title III, and another about dissidents in Cuba with the same point of view.

This is not the first time Radio/TV Marti covers a story by providing information and a single point of view, as if it aspires to be a mirror image of Granma. You get the impression that if you were to read the Voice of America’s charter to it management (VOA represents “America, not any single segment of American society,” and presents “a balanced and comprehensive projection of significant American thought and institutions”), they would look at you as if you were speaking Chinese.

Obviously the funding for Radio/TV Marti will go on forever, so I repeat my suggestion: call it Radio Exilio and spare Marti and the rest of us with any association with it.

More on Title III


It appears likely from the State Department’s announcement that Title III of the Helms-Burton law will be allowed to go into effect around March 1. No U.S. President has permitted this: Since enactment in 1996, Clinton, Bush, Obama, and Trump have blocked it every six months.

As a result, those whose properties in Cuba were expropriated and who can identify a foreign business connected to that property, can sue the foreign business in U.S. courts – even if the plaintiff was not a U.S. citizen or resident at the time of the taking.

My opinion on all this is here. Some more info on Title III:

The law is presented as protection for claimants who were never compensated. But the right to sue is limited. Cuban Americans can’t sue for their homes. No one can sue for a property worth $50,000 or less when it was taken. And the right to sue expires if Cuba’s socialist government goes away, or if the President decides to suspend it again.

The law also shields two classes of business from Title III lawsuits.

First are those engaged in “the delivery of international telecommunication signals to Cuba.” In other words, companies delivering voice or data traffic to the Cuban network are protected, while those whose businesses extend into the Cuban domestic network are not.

Then there are those engaged in transactions and uses of property incident to lawful travel to Cuba, to the extent that such transactions and uses of property are necessary to the conduct of such travel.” The House-Senate report accompanying the bill put it more simply: “any activities related to lawful travel to Cuba” are protected. Those who want to sue, for example, based on ownership of a port facility, are surely searching for ways to argue that this language should not apply.

In theory, the damages could be substantial; the law fixes them at three times the property’s current value, plus court costs and attorneys’ fees.

Finally, some U.S. businesses who lost property in Cuba were partially compensated through a tax deduction. In November 1962, the IRS allowed them to deduct Cuba confiscation losses from their business income.

Thursday, January 17, 2019

MLB's good baseball deal


The opposition to MLB’s deal that will allow Cuban pro ballplayers to sign with big league clubs without fleeing Cuba and without the need to establish residency elsewhere, is in part understandable: If you support the embargo, you want to limit any financial flows to Cuba.

But I suspect there’s more to it. In Miami, some are surely rubbed the wrong way at the idea that Cuban players could play here without emigrating, without effectively breaking with the system, without joining el exilio.

It certainly shows that those who want to block the deal are not interested in encouraging some positive changes in Cuba that made it possible: the ability for Cubans to travel and return, and the ability of pro athletes to earn market-based pay abroad and return to Cuba with those earnings. They are not being called desertores anymore.

How do Cuban ballplayers see the deal that Senator Rubio wants to block?

Look at the math from a Cuban player’s point of view. Say he signs a one-year, $2 million deal (half the MLB average).

A “release fee” of $400,000 goes to Cuban baseball – paid by the club, not the player.

If IRS applies U.S. tax (30%), that’s $600,000 to Uncle Sam, and the player pockets $1.4 million.

Cuba decided recently to tax that income at 4%, not the 50% marginal rate applied to, say, a private restaurant or bed-and-breakfast with taxable income above $2000.

Senator Rubio complains about the “new tax” Cuba is imposing (4%), but if it applied the 50% rate on the books since 1996, the player would pay more than ten times more!

After paying the 4%, the player is left with $1.344 million – more than 2,600 times his salary in the Cuban national league.
More on all this in this column in Cuba Standard.