St Vincent Herald, Fri 20 Apr 2001.
Worldnews.com.
HAVANA - Cuba’s Central Bank president was expected in Paris Thursday
to negotiate the restructuring of $3.5 billion in Cuban debt, Western diplomatic
sources said, but Havana’s reluctance to privatize state businesses or cut
social spending has Paris Club creditors downplaying prospects for a deal.
Cuba’s bilateral dispute with Paris Club member Russia over Soviet-era
debt should also make for rough sledding at the twice-postponed talks, the
sources added in recent days. "The Paris Club has decided to go ahead with
formal negotiations, even though there are a number of outstanding issues to be
resolved," one of the Havana-based diplomats following the issue said.
Final technical discussions, which are a prelude to the formal talks, began
Monday in Paris and were expected to conclude by Wednesday. After that, Cuban
Central Bank President Francisco Soberon would fly in for the next level of
negotiations. "The talks are moving ahead, Soberon will be in Paris
Thursday, but do not expect an agreement any time soon," another Western
diplomat said of the latest moves in Cuba’s tortuous process with the Paris
Club.
Cuban President Fidel Castro is perhaps the world’s harshest critic of
traditional debt restructuring agreements. He considers the debt talks secret
and refuses to comment on them in public or confirm Soberon’s movements.
The Caribbean island, under communist rule since soon after Castro’s
1959 revolution, is not a member of the International Monetary Fund (IMF) or any
other international lending institution.
Cuba wants a different type of accord with the Paris Club, the sources said,
because it says traditional debt agreements strip poor nations of their
sovereignty, bring reduced social services and higher unemployment, and increase
capital flow from poor nations to rich ones.
Cuba also refuses to include the Russian debt in talks with the Paris Club
of rich nation creditors.
Russia claims its former Cold War ally should pay back some 20 billion of
convertible rubles, but Cuba insists Russia should write off part of that as
compensation for "damages’’ caused by the collapse of the Soviet
Union.
TALKS "UP AND DOWN’’
In 1998 the Paris Club formed an ad hoc group of more than a dozen countries
to work on the Cuba debt, as some members, including the United States, were not
participating. The group’s discussions with Cuba, however, only began in
1999. "It’s been up and down, up and down. One minute there is
progress and you are optimistic, and the next all hope is dashed,’’
one Western diplomat said, calling the last 18 months of debt talks with Cuba a
roller-coaster ride.
Cuba and the Paris Club were reportedly edging closer to a landmark
restructuring agreement in January until Russia insisted it be included. That
prevented plans to meet in February, and again in March.
The Paris Club’s ad hoc group said in February that Havana had met most
conditions to move from technical to formal talks, but noted there was the
outstanding disagreement between Cuba and Russia that needed to be settled
first.
The central bank president replied in a letter he was ready to talk anytime,
but Soberon added "under no circumstances" would he be willing to
discuss the Russian debt, said diplomats. "The Paris Club decided to go
ahead with formal talks anyway, fearing further delay might jeopardize
everything, and hoping Russia and Cuba will work things out," a diplomat
said.
The $3.5 billion on the Paris Club negotiating table is part of an $11
billion Cuban foreign debt dating back to the 1980s, when the island defaulted
on foreign loans, then cut off talks with creditors.
The $11 billion does not include debt to former and current communist
countries such as China, Vietnam, and the former Soviet Republics, nor debt the
cash-strapped island has accumulated in recent years.
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