Identifier
Created
Classification
Origin
06BUENOSAIRES204
2006-01-27 19:19:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

NO DEBT RELIEF FOR CUBA YET

Tags:  ECON EFIN ENIV CU AR 
pdf how-to read a cable
VZCZCXYZ0009
PP RUEHWEB

DE RUEHBU #0204 0271919
ZNY CCCCC ZZH
P 271919Z JAN 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 3238
INFO RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEHUB/USINT HAVANA 0035
C O N F I D E N T I A L BUENOS AIRES 000204 

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/25/2016
TAGS: ECON EFIN ENIV CU AR
SUBJECT: NO DEBT RELIEF FOR CUBA YET

Classified By: Ambassador Lino Gutierrez for reasons 1.4 b and d

C O N F I D E N T I A L BUENOS AIRES 000204

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/25/2016
TAGS: ECON EFIN ENIV CU AR
SUBJECT: NO DEBT RELIEF FOR CUBA YET

Classified By: Ambassador Lino Gutierrez for reasons 1.4 b and d


1. (C) Summary: Despite a GOA debt restructuring offer in
2003 and a partial rescheduling agreement announced in 2004,
Cuba's USD 2 billion debt to Argentina has not been reduced,
nor have the two governments reached any lasting agreement on
how to treat it. Cuba's debt was transferred to the books of
the state-owned foreign trade and investment bank (BICE) in

2005. BICE director Jose Luis Entin told Finoff that the GOC
had "reinterpreted" prior restructuring agreements, and that
they consider the debt uncollectable under current political
conditions. End summary.


2. (U) In October 2003, according to press reports, then-GOA
Foreign Minister Rafael Bielsa traveled to Cuba to discuss
the possibility of resolving Cuba's unpaid USD 1.9 billion
debt to Argentina. Bielsa said before the trip that he would
propose a 50 percent reduction in exchange for Cuba allowing
greater Argentine investment. Under Bielsa's proposal, the
GOA would have emitted bonds that could be purchased by
Argentine companies and be used for investment in trade or
tourism projects in Cuba. The Cuban government responded by
asking the GOA for debt relief on terms equal to those that
the GOA was then demanding from its private creditors (i.e.,
principal and interest reductions totaling approximately 75
percent). Subsequently, in February 2004, Cuban Foreign
Minister Felipe Roque Perez and Bielsa announced an agreement
under which USD 50 million of the debt would be forgiven over
five years in exchange for medical treatment for poor
argentines, with the remainder of the debt still under
discussion. The issue then vanished from public discussion.


3. (C) Ministry of Economy contacts told Finoff in December
2005 that Cuba's debt to Argentina had been transferred from
the Ministry of Economy to BICE, the state-owned foreign
trade and investment bank. Finoff spoke January 23 with Jose
Luis Entin, BICE's director for legal affairs, about the
status of the Cuban debt. Entin said that the Cuban debt was
being carried on BICE's books as outstanding debt, and that
the total was now approximately USD 2 billion. He said that
Cuban debt had been accumulating since the 1970s Peron
administration, and that 75-80 percent of the total was
past-due interest. MinEcon transferred the debt to BICE
because all of it, to the best of Entin's knowledge, was
unpaid trade credits and because Min Econ no longer wanted to
deal with the problem. (Note: most of the debt originated
from an agreement under which Argentina loaned Cuba money to
buy Argentine motor vehicles and farm equipment. End note.)


4. (C) Asked about Cuba's proposal for restructuring the debt
on the same terms as the GOA restructured its private debt,
and the agreement to trade medical services to retire the
debt, Entin said he was unaware of any agreement on terms
similar to the GOA debt restructuring. He then expressed his
frustration, saying that "we've had more than one agreement
with Cuba on how to treat the debt, but each time we have
one, some commissar decides to re-interpret the agreement 30
days later," and that under current political conditions,
"the debt is uncollectable."
GUTIERREZ