Cuba-US: Hola amigo, let’s do business

Cuba US

The ink has barely turned dry on the Iran nuclear deal, but Russia has declared that it will be supplying S-300 missile systems to Tehran. The delivery of S-300s was cancelled in 2010 after the United Nations imposed sanctions on Iran. The nuclear deal is supposed to be an interim one and has many enemies. Israeli Prime Minister Binyamin Netanyahu, US senators such as Tom Cotton and hard-line Iranian mullahs are united in their opposition to the agreement.

Ayatollah Ali Khamenei has already declared that there is no guarantee of a final deal. Congress has pushed through a compromise bill that has forced US President Barack Obama to give it a voice on the final agreement with Iran. But Russia is treating the nuclear deal as fully done. The S-300s are on their way to Iran despite Israel and the United States jumping up and down in woolen underwear.

More importantly, Iran and Russia have begun a $20 billion oil-for-goods swap, exchanging grain, equipment and construction materials for up to 500,000 barrels of Iranian crude a day. Russian Deputy Foreign Minister Sergei Ryabkov argues that “this is not banned or limited under the current sanctions regime.”

Love is in the air not just for Russia and Iran. ménage à trois is going on that involves China, too. Russia sold S-400 missile systems to China even as 300 US paratroopers arrived in Ukraine. With a tottering economy, Russia has few things to sell to the world and defense is the quickest way to earn some cash. China is not only beefing up its defense but also securing access to energy. Its insatiable thirst for oil and gas make it cozy up with Russia and Iran. Iran is already a founding member of the Shanghai-based Asian Infrastructure Investment Bank (AIIB), and the Chinese are planning huge investments in Iran’s energy sector to develop both gas and oil fields.

In 2014, China’s state-owned Xinhua News Agency published features titled “New Silk Road, New Dreams” and “New Maritime Silk Road” that delved into China’s historic, cultural and trade ties with neighboring countries. Both of these are now rumored to touch Chabahar, the only Iranian port with access to open seas. AIIB is planning to finance a number of New Silk Road projects in Iran. Russia is also promising to pitch in.

It is little surprise that this week the BBC published an article titled, “Is the West Losing Its Edge on Defense?” In the article, a former British general bemoans two decades of “physical and moral disarmament” by the West. Wage inflation and exorbitantly expensive equipment mean that Western budgets for defense look inflated. Furthermore, politicians in ageing Europe are increasingly unwilling to commit time, money and energy to defense issues. Research supports the arguments made in the BBC article, and it reveals that tectonic plates are shifting to create a new balance of power on the planet.

As power shifts, even the US is taking a backseat in the Middle East. In a breathtakingly brilliant article at Fair Observer, Landon Shroder cuts through the noise to lay bare the tectonic plates that are on the move. Even as three weeks of Saudi airstrikes have failed to stem the advance of the Houthis in Yemen, al-Qaeda in the Arabian Peninsula has taken over Mukalla, a Yemeni port. Shroder says that the Saudis are committing strategic suicide. They will get bogged down in Yemen and play into Iranian hands.

As the Saudis commit hara-kiri, the US is finally changing course in Latin America. Years of meddling and supporting dodgy generals during the Cold War have led to resentment against Uncle Sam in the Western Hemisphere. Finally, President Obama had a historic meeting with Cuban President Raúl Castro at the Summit of the Americas in Panama City. Obama promised an end to meddling, and the US has taken Cuba off the list of state sponsors of terrorism, where it was placed in 1982.

Leaders of the United States and Cuba last met in 1958. Much of Latin America has admired Cuba if not liked it for standing up to big brother. The US-Cuba rapprochement is immensely popular among Latin American leaders and it is a big feather in Obama’s cap. Since the success of the Cuban Revolution in 1959 and the days of the Cold War, relations between these two neighbors have been fraught with distrust. Now, despite Castro’s railing and ranting against the US, both countries are burying the hatchet.

Perhaps it was symbolic that Eduardo Galeano, the fiery Uruguayan writer who penned Open Veins of Latin America: Five Centuries of the Pillage of a Continent, died this week. Since 1971, when the book was first published, it has fired up generations of Latin Americans to fight for justice. Galeano himself declared that his book belonged to “a past era” and the new era has finally begun.

The US-Cuba deal works well for both countries. Cuba needs investment to generate employment and raise living standards. The US needs new markets and relationships in a region that is increasingly leaning toward China. The Middle Kingdom is now the de facto banker of countries like Venezuela, Argentina, Brazil and Ecuador. As per Forbes, China lent Latin American countries $22 billion in 2014 alone, taking the total since 2005 to $119 billion. Chinese goods flood Latin American markets and commodities make their way from the region to China. It is little surprise that Obama is paying heed to Latin America.

Even as there is good news from Latin America, South Africa is witnessing xenophobic violence against foreigners. Immigrants from other African countries have long faced discrimination and now face spreading violence. This is most embarrassing for South African leaders, who were once given refuge by other newly independent African states when they were fighting apartheid.

As per the World Bank, 54% of the South African population lives below the poverty line. Unemployment is over 25%, and for the 15-24 population, it is as high as 53%. Unsurprisingly, desperation runs high. Entrepreneurial immigrants tend to outperform struggling natives and become obvious villains because they are seen as stealing resources and jobs. Urban ghettos and a culture of crime socialize people into violence. A tiny spark can lead to an eruption of long accumulated resentment. Only economic growth and a rebuilding of the social fabric can contain violence, but that is easier said than done.

Finally, technology giant Google was in the news. Many years ago, Microsoft was targeted by competition authorities that nearly broke up the behemoth. Today, it is the turn of Google. European authorities think that Google is abusing its dominant position by pushing consumers to purchase in-house shopping services. Android, Google’s mobile platform, is also under investigation. It is the first time that the “don’t be evil” company faces an antitrust investigation. This may be a sign of things to come.


About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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