CANADA SLY

By Charles Lane
New Republic , 5 AUGUST 1996

Ian Delaney’s kids won’t be going to
Disney World this year. Dad’s company,
the Canadian metals firm Sherritt
International, runs a nickel mine and
processing plant in Moa Bay, Cuba, which
belonged to Americans before Fidel Castro
nationalized it. Under the new
Helms-Burton Law, Delaney is considered
to be trafficking in stolen U.S.
property. As punishment, he can’t cross
the border. Nor can his wife or minor
children.

Should we feel bad about this? Yes,
say The New York Times and other
high-minded critics of Helms-Burton. The
new law, the paper laments, runs
“counter to normal American
standards of conduct” and
“offend[s] the sovereignty of
America’s closest allies.”

Canada, Mexico and Europe are crying
foul, threatening retaliatory sanctions
of their own. These countries, along with
American foes of Helms-Burton, also
contend the law (like the U.S. trade
embargo itself) deprives Cuba of
liberalizing contact with the outside
world. If you want democracy, they say,
start with capitalism. ”

But Sherritt’s example, and that of
other Canadians who do business in Cuba,
shows that these foreign operations are a
caricature of competitive capitalism.
Their impact is anything but subversive.
Rather, they reinforce Castro’s grip on
power, just as American banana companies
once bolstered the comprador elites
of Central America. What’s really
“offensive” is the moral
obtuseness with which the political and
business elites of Europe and Canada view
Castro’s dictatorship, and the sanctimony
with which they exploit Helms-Burton to
vent cheap anti-American sentiment.

When Canadian investors come to
Havana, they don’t shop around for
partners among the Cuban populace at
large; the average Cuban can’t own
private property much less engage in
ventures with foreigners. All deals are
negotiated with the government, often
with Fidel personally. No competitive
bids, no international tender offers in The
Economist, just a nod from the man
in charge much as Fulgencio Battista used
to cut back-room deals with U.S. firms in
the Havana of the 1950s.

The Canadian government sometimes
discreetly greases the wheels. Take the
case of York Medical, Inc., an
Ontario-based firm established recently
for the express purpose of marketing
Cuban-made drugs and medical equipment.
Last year, Canada’s foreign-aid agency
paid travel and other costs for a
representative of the firm to meet in
Havana with Cuban biotechnology
officials. The trip included a meeting
with Castro at the Canadian Embassy
arranged by former Prime Minister Pierre
Elliott Trudeau–an “adviser”
to York Medical whose relationship with
Castro dates to the Trudeau government’s
opposition to U.S. Cuba policy.
Saskatchewan’s government invested almost
$250,000 in York Medical and further
subsidizes it by testing Cuban diagnostic
equipment in a provincial public
hospital.

Cuba’s Foreign Investment Law forbids
Cubans from going to any foreign-owned
mine or hotel to ask for a job. Nor, of
course, are there free Cuban labor unions
to bargain for the workforce
collectively. Rather, Canadian companies
agree in advance to hire their Cuban
workers through the island’s national
employment agency, which is controlled by
the Communist Party–and vets workers for
political obedience. Simon Cooper, a
Canadian hotelier on the island, told The
Globe and Mail that he makes sure not
to be “perceived as contracting
directly with individuals [or]
encouraging a free market in any
way.”

So much for liberalizing contact.
What’s more, Canadian firms don’t pay
Cuban workers directly. They give the
employment agency a per-worker fee–in
U.S. dollars–of which the vast majority
is pocketed by the Castro regime. The
Cuban state-run Geominerca enterprise,
for example, gets $2,700 per month for
each Cuban geologist employed by Canada’s
MacDonald Mines. (MacDonald is developing
gold deposits from which the Cuban
government could realize half of all
profits.) The geologists get 350 Cuban
pesos from the government–less than $10
at black market exchange rates. Foreign
firms must set aside a modest number of
dollars for “incentive”
payments to workers, but this doesn’t
nearly make up the difference.

Delaney, the largest Canadian investor
in Cuba, may be the most egregious
beneficiary of this cozy system. In
September 1990, he engineered a hostile
takeover of Sherritt and its shuttered
Alberta nickel refinery. The plant had
gone bust for lack of a cheap source of
raw material. Meanwhile, the Soviets were
pulling out of Cuba, and Castro was stuck
with his own moribund nickel mine: Moa
Bay, which the U.S. firm Freeport Sulfur
built for $75 million, only to have it
nationalized in 1909 and run into the
ground by Soviet and Czech advisers. In
January 1991, Delaney flew his corporate
jet to Havana and cut a purchase deal
with the comandante en jefe. Along
with millions in working capital, Delaney
brought the appropriate political
sensibility to the table. Of Castro, he
has said: “You don’t keep his job by
being a repressive dictator. You keep his
job because you have a deeply felt sense
of national pride and unity. He’s
charismatic, charming, a terrific
listener whose depth of knowledge is very
good.”

Sherritt’s management practices have
brought Moa Bay back up to the level of
production Freeport once envisioned.
Cuban nickel output climbed from 26,000
tons in 1994 to 44,000 tons in 1995.
Castro’s regime profits from its share of
the $16 million annual payroll at Moa
Bay. As of December 1994, it also gets
half the earnings, which totaled $26.6
million in 1995, from sales of finished
nickel made by Sherritt’s refinery in
Alberta. Before his U.S. visa was
revoked, Delaney said he planned to
invest $165 million more in Cuba over the
next five years. He is buying into hotels
and recently paid Castro $10 million for
oil deposits claimed by a U.S. firm.

Cuban workers at Canadian firms are,
to be sure, treated a bit better than
those who drudge away in wholly state-run
Cuban enterprises. Sherritt gave miners
overalls, hard hats, steel-toed boots and
new washrooms. The company is also
investing in an environmental cleanup of
the Moa Bay operation, because residents
have told Canadian reporters of stinging
rust-colored smoke pouring from the
plant’s chimneys and metal-laced mine
run-off flowing into the bay.

Nevertheless, Canadian investors in
Cuba sound defensive about their
participation in a labor system no
Canadian worker would tolerate for five
minutes. Just as Castro’s academic
apologists cite Cuba’s allegedly
bountiful social services to extenuate
Castro’s political repression, so
Canadian businessmen invoke free Cuban
healthcare to rationalize their
exploitation of cheap,
government-supplied Cuban labor. Cooper,
for one, told The Globe and Mail
that Cuba is “a cradle-to-grave
socialist country that takes care to one
degree or another of all the needs of its
people. I wouldn’t presume to judge the
degree to which the population is or
isn’t exploited.”

Delaney, too, poses as a protector of
Cuba’s egalitarian status quo. “If
we were paying them directly, would it be
better?” he mused to The Globe
and Mail “You can have
a long, long social debate about that . .
. if we went in and put all the employees
on a dollar wage, it would destroy the
social fabric of Moa Bay. You would have
a two-tier society and that’s not in our
interest.” Ian Delaney is not one
for long, long social debates. As the Toronto
Star put it, “doing business
with a dictator has been a rewarding
personal and business experience.”
“I only have two
responsibilities,” he said.
“that is to keep the balance sheet
solvent and get the strategy right.”

Trying to contain the ire of Canada
and other Western governments, the
Clinton administration has said it will
postpone implementation of some
Helms-Burton provisions, pending a
campaign to convert the allies to its
cause. One idea is to apply to Cuba a
version of the Sullivan Principles, the
code of humane conduct for U.S.
businesses in South Africa during
apartheid. It’s hard to see how
democratic governments could object to
this, but they’ll probably try.

President Clinton got tough on Western
subsidization of Castro only after the
Cuban air force shot down two
Cuban-American civilian planes in
international airspace last February,
threatening to make Cuba an election
issue in 1996. But Clinton’s lonely stand
is the right one, whether he sincerely
believes in it or not. Helms-Burton may
not be the most surgical instrument.
Certainly it’s not the most diplomatic.
But throwing Cuba open to Ian Delaney and
his ilk is no solution, either. When it
comes to dealing with Castro, it is our
neighbors to the north who occupy the
moral low ground.