Castro Screws Foreign Investors Again!

Western companies that bucked the U.S. embargo and set up shop in Cuba are shutting down and leaving as Fidel Castro’s government rolls back market reforms – just as NewsMax.com predicted it would three years ago.

Writing in NewsMax.com in February 2002, pundit Humberto Fontova said: "Liberals insist in Congress, on CNN, in the New York Times that doing business with Fidel is a can't-lose proposition for any American and that moral and material blessings will shower all involved."

Then Fontova – author of the new book "Fidel: Hollywood’s Favorite Tyrant" – warned: "The momentum for the long-awaited opening with Cuba is mounting, my friends. I have some advice: Hide your wallets."

And in May 2001, NewsMax.com pointed out that several years earlier, Cuba had opened up certain areas for real estate investment by wealthy Europeans. Castro allowed them to come and plunk down millions to buy sea-front condos.

The idea worked like a charm – then Castro pulled the rug out from under them.

As we reported in 2001: "Last year, his government, without warning, announced that any foreigner who bought property in Cuba would not be allowed to resell said property. Poof – up in smoke went the investment of these foreigners."

Flash forward to 2005. Small and medium-sized foreign businesses are complaining that they no longer feel welcome in the Communist country and fear they won’t recover money owed to them by Cuban partners.

The Cuban government usually retains more than 50 percent control over joint ventures with foreign companies, while the overseas investor provides machinery, credits and supplies in exchange for a chunk of the profits.

But Castro has been moving to cut back the autonomy granted to state-run companies to do business with outside investors and is restoring central control over trade, Reuters reports.

"Fidel thinks he does not need small joint ventures anymore, so they are only keeping the big ones in strategic sectors such as telecommunications," said one investor who had to abandon a business in Cuba after 12 years.

In recent speeches, Castro has said Cuba reluctantly opened up to foreign investment during the financial crisis that followed the collapse of Cuba’s benefactor, the Soviet Union.

"I don’t think they ever wanted us here," said the manager of a European firm that is pulling out after 10 years in Cuba.

"They always tried to get the most money, machinery and knowledge they could out of us while giving little in return. They owe us millions, but we are leaving mainly because of their attitude, the way they treated us."

According to Reuters, "Western embassies report increasing complaints from their nationals whose businesses were liquidated without any guarantee they would be compensated."

Of the 313 cooperative production ventures operating in Cuba in 2003, only 133 remained at the beginning of 2005 – and most of them would be closed, said a source with Cuba’s Foreign Investment and Economic Cooperation Ministry.

Why does Castro feel so smug as to turn away foreign investment?

The answer is simple: Venezuela’s communist strongman, Hugo Chavez, is giving his ally Castro billions in free oil. Castro, in turn, is helping Chavez create a Cuba-style police state in Venezuela.

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