Cuba Embargo Opportunities

Obama, hookers, booze, coke-filled sex orgies!

That was the takeaway for most folks in the United States regarding the recent Summit of Americas Conference.

And that’s the way our country likes it.

Give us the dirt that doesn’t dirty our own hands.

Give us a fresh coat of high-def shine on the American dream so we don’t have to pay attention to our political leaders who are dismantling our freedoms from inside the halls of Congress.

Let us cry about high gas prices while turning a blind eye to the economic implosion that’s going to leave our children on the hook for a debt they shouldn’t have to pay.

Let us debate politics on Internet message boards with hostility and vitriol while the bureaucrats we continue to elect conduct business as usual.

And of course, let us ignore the fact that this most recent Summit of Americas Conference further demonstrates how we continue to ignore failed policies and free market opportunities in an effort to placate partisan slaves.

A 40-Year Train Wreck

For the sake of clarification, the Summit of America’s Conference wasn’t a complete dud. After all, Colombia did agree to implement a free trade agreement ratified by the U.S. last year (one that will increase exports to the tune of about $1 billion).

But I would argue that President Obama still dropped the ball on two very important issues addressed at this summit. And these are issues that directly affect our economy and national security.

The first was the discussion of drug policy — more specifically, legalization.

As is typical with any run-of-the-mill politician, the president shied from offering anything substantial, only barely catering to a “potential” debate. In other words, this guy ain’t rocking the boat this close to an election.

But the fact remains the U.S. war on drugs has been the longest-running failed war this country has ever waged.

In 2010 alone, the U.S. spent more than $15 billion fighting this war.

That’s a rate of about $500 per second.

To date, this 40-year train wreck has shown to be a political, social, and economic burden that has cost taxpayers more than $1 trillion. 

And what do we have to show for that money?

Well, since the war on drugs started, drug use has been relatively consistent, particularly among young adults. And with the U.S. serving as a supply chain endpoint, drug-related violence continues to wreak havoc throughout South, Central, and North America.

Our prisons are now insanely overcrowded with non-violent drug offenders. Since 1995, the U.S. prison population has grown an average of 43,000 inmates per year, of which about 25 percent are sentenced for drug law violations.

At an average cost of about $29,000 a year to incarcerate a single non-violent prisoner on a drug-related charge, this is hardly a wise use of our tax dollars, resources, and human capital.

The second issue Obama ducked was Cuba.

Big shocker there.

But you know the story… You can’t win national elections without Florida, and you can’t win Florida if you support opening up relations with Cuba (at least right now).

As a result, we continue to miss out on the dozens of opportunities that the rest of the world has access to.

¡Viva Cuba!

The bottom line is Cuba poses absolutely no threat to the United States.

Moreover, ever since Raul Castro took over for his brother, steps towards economic reforms have increased.

These include, but are not limited to:

• Moving 500,000 people out of the state sector into private enterprise

• Allowing citizens to start small businesses

• Permitting the sale of real estate

And of course, we know there’s a lot of money at stake here for us, too.

The American Farm Bureau has estimated the export market for products of U.S. farms and ranchers could be worth about $1 billion.

And the U.S. International Trade Commission has reported the embargo costs U.S. firms as much as $1.2 billion a year.

Meanwhile, I’ve yet to hear a single rational argument that can justify the continuation of this embargo.

There’s always the hypocritical human rights argument, an issue that’s irrelevant when it comes to plenty of other countries we regularly do business with.

Then there are those who point to Cuba as being an enemy of the U.S. and hosting terrorists. Yet we do plenty of business with Saudi Arabia, home to 15 of the 19 hijackers from September 11th.

And of course, there are the few remaining dinosaurs in Washington who continue to believe if we stand our ground and hold our breath long enough, Cuba will wave a white flag.

But as Congressman Ron Paul pointed out earlier this year, we should quit this isolation business of not talking to people:

We talked to the Soviets. We talk to the Chinese. And we opened up trade, and we’re not killing each other now. We fought with the Vietnamese for a long time.

We finally gave up, started talking to them, now we trade with them. I don’t know why the Cuban people should be so intimidating.

I think we’re living in the dark ages when we can’t even talk to the Cuban people. I think it’s not 1962 anymore. And we don’t have to use force and intimidation and overthrow governments.

We couldn’t agree more.

A Facade of Morality

Of course, despite recent economic reform in Cuba — and really, just the pure logic of it all — there’s still no telling when we’ll have enough lawmakers in Washington with the stones to stand up to this facade of patriotism and morality.

And while I do believe this embarrassing embargo will be lifted some day, it’s nearly impossible to get any clarity on when that’ll actually happen.

So for investors with an eye on Cuba, it should be understood that opportunities will be severely limited for the foreseeable future. Beyond the Herzfeld Caribbean Basin Fund (NASDAQ: CUBA), there remain few opportunities for the average U.S. investor…

Of course, we’re more than happy to continue to profit in the meantime from some pretty sweet natural gas developments here in the United States.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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