CubaBrief: Fidel Castro was Cuba’s first communist oligarch. UK Judge could take months to decide case of Castro-era Cuban debt.

Fidel Castro and Vladimir Putin met in Havana in 2000 as relations thawed after the Yeltsin years.

This CubaBrief provides an update on developments  shared in a previous CubaBrief on January 25, 2023, concerning an ongoing court case in London in which the Cuban government is being sued for unpaid debts dating back to the early 1980s, as well as the revelation that the Castro regime is seeking to transition from the current Castro-military oligarchy to one modeled after the Putin model.

According to Forbes magazine and other publications, Castro enjoyed absolute privacy on his island.

The first oligarch in Communist Cuba was Fidel Castro. The late Cuban dictator owned a private island, 20 mansions, yachts, and according to Forbes Magazine was worth $900 million.  In 2014 upon the release of La Vie Cachée de Fidel Castro (Fidel Castro’s Hidden Life) by the Cuban dictator’s former bodyguard Juan Reinaldo Sánchez, The Guardian published an article on May 20th that dispelled myths about the communist leader.

Fidel Castro lived like a king with his own private yacht, a luxury Caribbean island getaway complete with dolphins and a turtle farm, and travelled with two personal blood donors, a new book claims. In La Vie Cachée de Fidel Castro (Fidel Castro’s Hidden Life), former bodyguard Juan Reinaldo Sánchez, a member of Castro’s elite inner circle, says the Cuban leader ran the country as his personal fiefdom like a cross between a medieval overlord and Louis XV. Sánchez, who was part of Castro’s praetorian guard for 17 years, describes a charismatic and intelligent but manipulative, cold-blooded, egocentric Castro prone to foot-stamping temper tantrums. He claims the vast majority of Cubans were unaware their leader enjoyed a lifestyle beyond the dreams of many Cubans and at odds with the sacrifices he demanded of them. “Contrary to what he has always said, Fidel has never renounced capitalist comforts or chosen to live in austerity. Au contraire, his mode de vie is that of a capitalist without any kind of limit,” he writes. “He has never considered that he is obliged by his speech to follow the austere lifestyle of a good revolutionary.”

Videos and photos would emerge over the years revealing the Castro family’s life of luxury while most Cubans lived in misery and extreme poverty, but the hypocrisy began with Fidel Castro.

This is one of the 20 mansions attributed to the late Cuban dictator.

This life of luxury was paid for initially out of what was looted from Cuban capitalists, farmers, and the middle class, then through Soviet subsidies, drug trafficking, and loans provided by Western countries and businesses. The Castro regime defaulted on the loans, and today is considered a poor credit risk, and a deadbeat. This leads to a question that will be decided in a UK court in the next few months: “Can the Cuban government be sued for unpaid debts from the early 1980s?

“The trial ended last week, but it could be months before the judge, Sara Cockerill, renders judgement in the case of CRF vs Banco Nacional de Cuba & Cuba. Her decision is central to whether Cuba may finally be forced to pay back billions of dollars in unpaid debts. The trial is seen as a test case. CRF1, formerly known as the Cuba Recovery Fund, owns more than $1 billion in face value of European bank loans extended to Cuba in the late 1970s and early 1980s, when Fidel Castro still ruled the island. Cuba defaulted on the debt in 1986.”

Middle class Europeans and Canadian taxpayers are subsidizing the life-styles of the elite of the Castro military dictatorship.

Daniel I Pedreira, an Adjunct Professor of Political Science at the University of Miami, in a 2013 paper presented at the Association for the Study of the Cuban Economy (ASCE) made the case in 2013 that the Cuban government was already engaged in the establishment of an oligarchy. The formal and institutionalized military-economic oligarchy began to be planned out by Raul Castro prior to the Special Period.

“For decades, the Cuban government has developed the framework for an oligarchy comprised of military leaders. Dr. Terry L. Maris (2009:64) asserts: Even prior to the “special period,” Cuba had begun to explore new ways to improve its economy. Raúl Castro, in his role as the minister of the Revolutionary Armed Forces (F.A.R.), designed and implemented a novel education and training program. Under the direction of Raúl’s close friend, General Julio Casas Regueiro, high-ranking officers were carefully selected to attend some of the most prominent business schools in Western Europe to acquire the skills deemed necessary for the salvation of the Cuban economy. In apparent contradiction of the tenets of socialism, the Cuban military quietly embraced the teachings of capitalism.”

The establishment of the so-called “Centre for Economic Transformation” by the Castro regime with Russian oligarchs confirms that there will be no transition to a free market, but rather a formalization of the informal and previously existing kleptocracy run by the Cuban military through its conglomerate GAESA, with a greater role for Moscow in the evolution of this model. At the same time one cannot ignore the presence of Beijing in Cuba, and its links to the Cuban dictatorship, and its oligarchs. In November 2022, Beijing announced that it would restructure its debts with Havana, provide new credits, and donate $100 million to the Castro regime.

CNBC, February 6, 2023

Latin America Markets

Judge could take months to decide case of Castro-era Cuban debt

Published Mon, Feb 6 20239:26 AM EST

By Michelle Caruso-Cabrera

Key Points

  • Cuba is battling an investment fund over millions of dollars in defaulted sovereign debt that dates back to when Fidel Castro ran the communist island nation.

  • The UK judge in the case will likely take months to make her decision in the case.

  • The trial, which wrapped up last week, featured chaotic protests and accusations of corruption.

Can the Cuban government be sued for unpaid debts from the early 1980s – debts so old they are denominated in a currency that no longer exists?

That’s the question before a judge at the UK High Court after a seven-day trial marked by chaotic protests, a bribery accusation and remote testimony from an imprisoned Cuban banker.

The trial ended last week, but it could be months before the judge, Sara Cockerill, renders judgement in the case of CRF vs Banco Nacional de Cuba & Cuba. Her decision is central to whether Cuba may finally be forced to pay back billions of dollars in unpaid debts.

The trial is seen as a test case. CRF1, formerly known as the Cuba Recovery Fund, owns more than $1 billion in face value of European bank loans extended to Cuba in the late 1970s and early 1980s, when Fidel Castro still ruled the island. Cuba defaulted on the debt in 1986.

CRF1, which began accumulating the position in 2009, is suing Cuba and its former central bank over only two of the loans they own for more than $70 million dollars. If CRF wins on this small slice of Cuba’s total outstanding commercial debt, which is estimated at $7 billion, it could lead to further lawsuits from other debt holders, with claims against Cuba rising into the billions.

While the most dramatic testimony has focused on an accusation of bribery, much of the trial has focused on the arcana of Cuban and English law.

Were there enough signatures from Cuban bank officials on the paperwork when the loans in question were “reassigned” or transferred to CRF?  Was the paperwork stamped with a dry-pressure seal or a wet-ink stamp and did they use the correct blue security paper? At one point the barrister for CRF cited a British property case regarding the lease of a fried fish shop.

The question before the judge is of whether the fund has the right to sue Cuba. Still, experts said she could issue a summary judgement in which she rules not only on jurisdiction but also on substance, meaning not just whether CRF can sue, but also whether Cuba must pay.

Throughout the trial, representatives of the fund have repeatedly stated that they did not want to sue Cuba but did so only as a “last resort” after the government ignored their requests to negotiate for 10 years.

“Even at this late date, in a case where we expect to prevail, CRF is willing to settle,” David Charters, chairman of CRF, said at the conclusion of the trial.

During testimony, CRF representatives said they made more than one offer to the Cuban government that would not drain the island’s current cash flow and would help improve its economy. They described offers of long-duration non-coupon bonds and debt for equity swaps, neither of which would force Cuba to come up with cash in the near term, or even the long term, depending on the deal.

The Cubans have argued that it was always CRF’s intention to sue and has described them as a vulture fund taking advantage of an impoverished country.

No matter how the judge rules, the Cuban government will still owe the money. And they will not be able to borrow on the international capital markets until they have settled all their past debts. Cuba hasn’t been able to borrow in the markets since 1986, when the country defaulted. Since then, Cuba has survived on the largesse of other countries such as the former Soviet Union and, more recently, Venezuela and China.

Cuba is not a member of the IMF or the World Bank, institutions that would typically be involved in helping an impoverished country restructure its debts and reemerge into the international financial system.

The Cuban government did not respond to requests for comment.

https://www.cnbc.com/2023/02/06/castro-era-cuba-debt-case-uk-judge.html

TFI Global News, January 31, 2023

Cuba’s transition from ‘Communism’ to ‘Oligarchy’

Is the end of communism finally here? If the answer is yes, you should also know that its replacement is not a desired one

by Ansh Pandey,  Associate Editor, tfiglobalnews.com

What happened in 1991 in Russia is now happening in Cuba. With the privatization of state assets in the 1990s in Russia and Ukraine, the rapid accumulation of wealth happened. What came next was the collapse of the Soviet Union. With the state in disarray, informal deals were made with former officials, resulting in the transfer of state property to private individuals.

Now, for the last few days, Cuba is also witnessing similar changes. This is happening at a time, when the economy of Cuba is tumbling.  Is the end of communism finally here? If the answer is yes, you should also know that its replacement is not a desired one.

Reportedly, Cubans and Foreigners linked businesses have taken over State companies without competition. Several known business chains and firms in Cuba have suddenly become privately owned.

Sylvain establishments, which is famous in Cuba for its sweets and bread, has now transitioned from being state-owned to privately owned. While Sylvian is just a meager example, there have been numerous enterprises that are following the same path in Cuba. Several firms are being rented out by people on short notice and over the course of the night.

In August 2022, the Cuban newspaper Sierra Maestra published a list of state premises that were going up for tender in Santiago de Cuba, they all now are privatized. But, the results of tenders are unknown.

Soditos, the state-owned cafeterias spread over various neighborhoods that sell everything from ice cream to condoms, including bread, tea, juices, and soft drinks, with great success among the population has also got privatized. 

Russia-style privatization

As a matter of fact, this privatization became clearer last week when Cuban President Miguel Daz-Canel and Kremlin adviser Boris Titov met.

The leaders confirmed this pattern that has been observed in public for months. The meeting demonstrated that Cuba wants to, as the island’s president put it, bring its relations with Russia to “a higher moment.” 

This includes letting Moscow lead in a potential opening. Russia is soon going to open a new trading house in Cuba. The establishment of a center to revamp Cuba’s economy “from private companies” has been agreed upon by the two countries. For several think tanks, this means that the “Russian market mafia scheme” will soon replace the “model with a nationalized economy.”

A really confusing state

But, this new model is turning into a real headache for some Cubans. Ever since the privatization started, Cubans are seeing inflation crossing all boundaries even for basic commodities.

A packet of cookies is 380 pesos, an 8-ounce tetra pack of fried tomato sauce for 630 pesos, some even smaller containers of mayonnaise for 280 pesos, and a 3.5-ounce bag of chips for 150 pesos. Whereas, powdered milk’s price has skyrocketed to 1,800 pesos for 2.2 pounds.

On the private side, almost everything is available to Cubans.  But, at a price which is definitely too high for them. This oligarchy could be troublesome for Cuba. 

As a business oligarch is generally a business magnate who controls sufficient resources to influence national politics. So, eventually, the person who is getting the Cuban business chains would have the sole power to turn the tides in Cuban politics. It’s always something far from the “transparency” and “publicity” that the law establishes.

Cuba needs to transition away from ‘Communism’. But, falling into the lap of oligarchy is not a solution.

https://tfiglobalnews.com/2023/01/31/cubas-transition-from-communism-to-oligarchy/

14ymedio, January 28, 2023

Is Cuba Transitioning into a ‘Mafia State’ Like Putin’s?

By 14ymedio

HAVANA TIMES – The creation of a Centre for Economic Transformation — the agreement reached last Friday between Cuban President Miguel Díaz-Canel and the chief of the Cuba-Russia Business Council, Boris Titov Yurievich — confirms the transition from a “model with a nationalized economy” to the blueprint for “a Russian mafioso market”, according to the think-tank Cuba Siglo 21 .

The independent Cuban civil society organization with its HQ in Madrid emphasized that this agreement expresses the “clear decision by the elite” on the Island to make economic transformations under the direction of the Kremlin, that’s to say the “standardization will facilitate the future hegemony of Moscow over the economy”.

The NGO said that when we talk of mafia states, we mean “countries in which a kleptocratic and autocratic elite exercises absolute power to promote its own interests over national interests”, which is detailed in the report, published on 14 January — Cuba: From Communism to Mafia State.

In this report it is shown that the “subjugation” of Havana by Moscow will result in “the new dominant class being a kleptocratic and autocratic oligarchy” that controls the greatest wealth in the country for its own benefit. Raúl Castro, it says, “expanded the oligopoly of the State entity Gaesa, thus strangling the incipient enterprise sector”.

The report warns that Cuba is initiating a transition towards a mafia state market, much like Putin’s. The NGO remindsus that as part of the agreement between Cuba and Russia it was announced that the aim is to prepare “economic transformations in Cuba based on the development of private business”, which would open the market to the Russians.

Cuba Siglo 21 explained that this model will “liberate market relations but put them under the hegemony of an oligarchy” and will be organized in such a way that it will “not be free and competitive”. The organization said that although many will seemingly be able to participate, “it is nevertheless guaranteed that only the oligarchy’s chosen few from the political establishment will rise to the top”.

In the NGO’s opinion this accord is a “provocation” in that it came about in the same week that there were conversations in Havana between the Cuban and American governments.

“We have to keep in mind that the proposition of creating a major economic agreement between the two countries comes at the height of the Kremlin’s war of aggression against Ukraine and the growing impact of western sanctions against Russia”, Cuba Siglo 21 pointed out.

To remove Cuba from the list of countries that do not collaborate in the fight against terrorism “will mean that after this renewed public alliance with Moscow, Cuban banks will be able to launder money” and that they will be able to provide effective support to Putin’s financial maneuvers in avoiding western sanctions.

Boris Titov Yurievich, the independent organization said, is a businessman and politician who “specializes in creating market economies compatible with regimes dominated by autocratic elites”.

This Wednesday, Titov, as part of this alliance, emphasized the start of a “strong exchange effort” at the level of intergovernmental commission, different ministries and other bodies, and the businessmen of his country, on the instructions of Putin, with the principal objective of “developing bilateral relations from all points of view”.

The Cuban government has shown interest in importing Russian fertilizer, gasoline and wheat, the Russian ministry of the economy reported at the end of the bilateral intergovernmental commission held in Moscow before the Cuban president’s visit.

Translated by Ricardo Recluso by Translating Cuba

https://havanatimes.org/business/is-cuba-transitioning-into-a-mafia-state-like-putins/

From the archives

The Guardian, May 20, 2014

Fidel Castro lived like a king in Cuba, book claims

Former bodyguard Juan Reinaldo Sánchez writes that leader ran country like a cross between medieval overlord and Louis XV

By Kim Willsher in Paris

Fidel Castro lived like a king with his own private yacht, a luxury Caribbean island getaway complete with dolphins and a turtle farm, and travelled with two personal blood donors, a new book claims.

In La Vie Cachée de Fidel Castro (Fidel Castro’s Hidden Life), former bodyguard Juan Reinaldo Sánchez, a member of Castro’s elite inner circle, says the Cuban leader ran the country as his personal fiefdom like a cross between a medieval overlord and Louis XV.

Sánchez, who was part of Castro’s praetorian guard for 17 years, describes a charismatic and intelligent but manipulative, cold-blooded, egocentric Castro prone to foot-stamping temper tantrums. He claims the vast majority of Cubans were unaware their leader enjoyed a lifestyle beyond the dreams of many Cubans and at odds with the sacrifices he demanded of them.

“Contrary to what he has always said, Fidel has never renounced capitalist comforts or chosen to live in austerity. Au contraire, his mode de vie is that of a capitalist without any kind of limit,” he writes. “He has never considered that he is obliged by his speech to follow the austere lifestyle of a good revolutionary.”

Sánchez claims he suffered Castro’s ruthlessness first hand when he fell out of favour, was branded a traitor, “thrown in jail like a dog”, tortured and left in a cockroach infested cell, after asking to retire. Released from prison, Sánchez followed the well-worn route of Cuban exiles to America in 2008. “Until the turn in the 1990s I’d never asked too many questions about the workings of the system … that’s the problem with military people … as a good soldier, I did my job and my best and that was enough to make me happy,” he writes.

The book, published on Wednesday, has been written with French journalist Axel Gyldén, a senior reporter at L’Express magazine. Gyldén admits Sánchez has a large axe to grind with Castro, but insists he has checked the Cuban’s story.

“This is the first time someone from Castro’s intimate circle, someone who was part of the system and a first-hand witness to these events, has spoken. It changes the image we have of Fidel Castro and not just how his lifestyle contradicts his words, but of Castro’s psychology and motivations,” Gyldén told the Guardian.

This is not the first time it has been claimed that Castro enjoys great wealth. In 2006 Forbes magazine listed the Cuban leader in its top 10 richest “Kings, Queens and Dictators”, citing unnamed officials who claimed Castro had amassed a fortune by skimming profits from a network of state-owned companies. The Cuban leader vehemently denied the report.

Castro’s long reign ended in 2006 when he was stricken with what was believed to be diverticulitis, an intestinal ailment, and handed power to his younger brother Raúl, who had served as defence minister. He officially ceded power to Raúl in 2008.

Fidel continued penning columns for the Communist party newspaper Granma but gradually vanished from public view, fuelling rumours he had died, only to surface for occasional, fleeting appearances. Raul has made cautious economic reforms but kept tight control.

Visitors such as Ignacio Ramonet, the French journalist who has interviewed Castro at length, have depicted an austere lifestyle of reading, exercise, simple meals and modest home comforts.

But Sánchez, now 65 and living in America, claims Castro enjoyed a private island – Cayo Piedra, south of the Bay of Pigs, scene of the failed CIA-sponsored invasion of 1961 – describing it as a “garden of Eden” where he entertained selected guests including the writer Gabríel Garcia Márquez, and enjoyed spear-fishing.

The former bodyguard says Castro sailed to the island on his luxury yacht, the Aquarama II, fitted out with rare Angolan wood and powered by four motors sent by the Soviet president Leonid Brezhnev.

“Castro would sit in his large black leather director’s armchair … a glass of Chivas Regal on the rocks (his favourite drink) in his hand,” writes Sánchez.

Other presidential properties, he writes, included an “immense” estate in Havana complete with rooftop bowling alley, basketball court and fully equipped medical centre, and a luxury bungalow with private marina on the coast.

“Fidel Castro also let it be known and suggested that the revolution gave him no rest, no time for pleasure and that he ignored, indeed despised, the bourgeois concept of holidays. He lies,” he adds.

Ann Louise Bardach, a veteran Cuba chronicler who has interviewed Castro, said that as a lifelong hypochondriac he enjoyed the best food and medical care but did not have a lavish lifestyle. He was born into money and went into politics for power, she said. “He didn’t do it for the money. He’s not swinging from the chandeliers.”

His current home, just outside Havana, had four bedrooms and would in the west be considered middle or upper-middle class, she said. Focusing on any material advantage he may enjoy missed a larger point, said Bardach, author of Without Fidel: a death foretold in Miami, Havana and Washington. “He owns the island of Cuba. It’s his personal fiefdom.”

Sánchez says Castro’s dolce vita was a “crazy privilege” while Cubans suffered serious hardship in the 1990s as the economy “collapsed like a house of cards” after the disintegration of the Soviet Union and eastern bloc with which Havana had done almost 80% of its foreign business.

His compatriots, he says, were also unaware of their leader’s complicated love life, his womanising and subsequent tribe of at least nine children, not least because Cuban media was forbidden to mention them.

The Cuban leader kept a gun at his feet when travelling in his Mercedes and never went anywhere without at least 10 bodyguards, including two “blood donors”. At home he would get up late, and start work around midday “after a frugal breakfast”.

“His favourite film that he saw I don’t know how many times was the interminable and soporific Soviet version of Tolstoy’s War and Peace … which lasted at least five hours.”

He recalls how Castro bugged everyone, including Hugo Chávez, and insisted his bodyguard jot down everything he did in a notebook “for history”.

Sánchez says for nearly two decades he saw more of Castro than his own family. “He was a god. I drank all his words, believed all he said, followed him everywhere and would have died for him,” he writes.

He claims he finally realised that Castro considered Cuba “belonged” to him.

“He was its master in the manner of a 19th century landowner. For him wealth was above all an instrument of power, of political survival, of personal protection.”

Recalling how Castro kept Angolan diamonds in a Cohiba cigar box, he writes: “Sometimes, Fidel had a little of the mentality of a pirate of the Caribbean.”

La Vie Cachée de Fidel Castro is published by Michel Lafon on Wednesday.

https://www.theguardian.com/world/2014/may/21/fidel-castro-lived-like-king-cuba