Captain Sanogo and CNRDRE Create an Economic Catastrophe

             Amidst the sudden coup d’état and disintegration of military positions in Kidal, Gao and Timbuktu, the international media has begun to accord the West African nation of Mali its share of due attention. However, beyond the capital city of Bamako, behind the frontlines of the North, a tremendously more consequential and lethal but less photogenic drama is about to unfold in the towns and villages which constitute the majority of the Malian population. Absent a sudden turn of events, a completely unnecessary, man-made catastrophe is about to unfold, and the international community can do little but watch as it all happens in slow motion.  

            The Economic Community of West African States (ECOWAS) has given the CNRDRE mutineers a 72 hour ultimatum; either step down and abdicate all powers which they now illegitimately control, or the regional organization is about to shut Mali off from all international trade. If CNDRE does not abdicate power, the ECOWAS nations – including the Ivory Coast, Burkina Faso, Senegal, Guinea, and Niger – are going to close their borders and restrict all trade with Mali – a land-locked nation. ECOWAS will suspend Mali’s account at the regional central bank, shutting it off from cash reserves. The deadline for this ultimatum is Sunday night.

Observing what is about to happen to the Malian economy is akin to watching a car speed down a two-lane highway and a much larger vehicle is driving in the same lane straight towards it, for one brief moment you can see exactly how this head-on collision is going to occur, and there is nothing that you can do to stop it.

To understand what these sanctions are going to do to exacerbate the misery of an already impoverished nation, one must understand the Malian economy in this particular stage of development. Mali’s economy is already the third- or fourth-poorest in the world, with a per capita GDP of only $1,300. The vast majority of the population is engaged in subsistence agriculture of millet, sorghum, rice and corn. This year even the rural farming class is beset by a massive food shortage as precipitation last year’s growing season was pitiful. Malian farmers call the time of year before the millet harvest in September “hungry season” because the cereals stored in their granaries is now down to the last dregs, and many families reduce their consumption to one meal a day. This year, “hungry season” has already begun for many families in March – and the next harvest is six months away.

To boot, hundreds of thousands of Tuaregs and Songraï from the North have fled from the advancing MNLA forces, creating a crisis of refugees and internally-displaced persons where a population of displaced farmers can’t farm, and their reluctant hosts don’t have food to feed them. Already, absent any government interventions, Mali is facing one of the worst food crises in a generation. Rice is now hovering around 400 to 500 CFA a kilo (~$1), which is a lot seeing that that 500 CFA is a good full day's wage in a country where very few people are even employed in the formal sector, and each wage-earner has to support between 1 and 4 wives, each with an average of 7.4 children per woman, as well as his parents, grandparents, and extended family.

A food crisis is more complicated than a mere shortage of food. During the Great Global Food Crisis of 2009, there was millet and rice in Malian markets, it was there to purchase. However, due to a global shock caused by a devastating drought in Australia, stockpiling by Thailand, speculation on the global commodities markets, the price for rice soared around the world. In just any plain food crisis, the market in food is so shocked by a massive spike in prices that a significant swath of the population cannot afford to buy it. A spike in the price of rice has a dire affects among the population of consumers who purchase all of the food they eat – namely, the urbanites of Bamako, Ségou, Sikasso, Mopti, Gao and Timbuktu. But the 2009 Global Food Crisis was not so bad for the country folk who grew most if not all of the food they eat – in fact, it was a good year for a number of farmers who could demand more money in exchange for surplus grains.   

But this food crisis of 2012 is a monster of its own. This time, there is actually a great, endogenous shortage of millet, sorghum, corn, rice, and everything else. The people who farm cereals did not produce enough to feed themselves - let alone sell a surplus they don't have. A lot of subsistence farmers are dipping into their seed corn and slaughtering their draft animals. Many otherwise subsistence farmers are now forced to sell what little they have of economic value – cows, goats, sons, daughters – to purchase their food at market.

To fathom the impact of the impending ECOWAS sanctions on Mali, one must appreciate the absolute precariousness of the already-existing humanitarian crisis. When I call my friends in my erstwhile home, they tell me “the villagers are running out of millet, rice is too expensive to buy.” Rice is now between 400 and 500 CFA/kilo, but it is feared that that price might skyrocket to 1500 CFA/kilo. The Malian economy is already so impoverished that it is difficult to imagine how much more miserable it can become. We are about to find out.   

The Malian agricultural sector does not produce enough food to adequately feed its own population, so the food economy is significantly dependent on rice and other foodstuffs imported across the borders with the Ivory Coast, Burkina Faso, Senegal, and Guinea. If the nations of the ECOWAS bloc close their borders to Mali, all Malian imports of rice, corn, and all other foodstuffs will cease (but for the inevitable black market). Mali’s food crisis will deepen even further.

The Malian economy is completely dependent on imported gasoline which is shipped from the Persian Gulf to the port of Abidjan, then trucked overland across the Ivory Coast to the Malian border. As of Saturday, March 31, the price of gasoline had already spiked from 750 to 2000 CFA per liter. Without gasoline, transport and commerce will come to a standstill beyond the local village economy, what little goods can be sold by foot, bicycle, donkey cart, and canoe. Mali’s urban population of roughly 3 million, entirely dependent upon a commercial economy, without any fields to farm, are going to suffer as Malian commerce completely and utterly collapses into a subsistence economy.

            In addition, ECOWAS is about to freeze Mali’s account at the central bank from which the Malian Ministry of the Treasury receives its currency to put into circulation. If all goes as planned, on Monday the various private banks of Mali will have no more bills and coins to distribute to account holders when they come to withdraw money. Last week, the banks were already like a scene out of It’s a Wonderful Life; people are waiting in lines 50 people deep to withdraw from their accounts, and the banks are telling patrons that they can withdraw a maximum of 500,000 CFA (~$1,000). By Monday or Tuesday, the banks will have no currency to distribute at all. Soldiers in the Malian Army, gendarmes, all civil servants and teachers will be unable to cash their paychecks.

The point of the ECOWAS sanctions on Mali is to replicate what occurred in the Ivory Coast last year when dictator Laurent Gbagbo refused to abdicate power to the elected president Alassane Ouattara, and ECOWAS froze the Ivorian account. Without the power of the paycheck, the pro-Gbagbo forces demonstrated that their loyalty was contingent upon a paycheck, and they lost all will to fight. Some innocent people suffered, but Gbagbo fell within a few weeks.  

If ECOWAS does in fact impose crushing sanctions on Mali beginning this next Monday, one might hope that the embargo succeeds in achieving its intended goal: Sanogo & Co. step down as soon as possible. However, there remains the distinct possibility that the CNRDRE mutineers cling to power for an extended period of time, during which the Malian people are going to suffer dearly. Even after the disaster of collectivized agriculture, the droughts of the 1970s and 80s, this impoverished nation might know a period of deprivation unlike no other.

Capt. Sanogo and the CNRDRE junta apparently don’t care. In judging his reaction to recent events, is clear that in Sanogo and his junta have only contempt for the international community and brazen disregard for the Malian people whom they purportedly govern.

Make no mistake; the ECOWAS sanctions on Mali are not the result of other states' "imperialism", but the inevitable conclusion of the CNRDRE mutineers' virulent conduct towards its  economic partners. The junta showed its true colors by preventing a delegation of ECOWAS heads of state from landing their planes. Planes carrying the respective presidents and prime ministers of Ivory Coast¸ Burkina Faso, Niger, Liberia, and Benin were in en route to Bamako to meet with the CNRDRE faction to diffuse the politica crisis, when they turned around amidst reports of a security breach at the Bamako airport. The press reported that the airport runway had been taken over by a violent demonstration of junta supporters. Read between the lines; the Bamako airport is one of the few government installations which the CNRDRE mutineers tangibly control; they have prevented almost all planes from coming or going since the coup began. "These protesters... couldn't have got to the runway if the military didn't want them to," says Bruce Whitehouse, an anthropology professor at Lehigh University. In other words, instead of negotiating with ECOWAS presidents and prime ministers, Sanogo & Co. chose to orchestrate a threat on their lives in order to prevent a dialogue from even commencing.

Therefore, the Presidents of Ivory Coast, Nigeria, Niger, Burkina Faso and Benin did not come to Bamako to negotiate with CNDRE to step down because CNDRE effectively threatened to assassinate them if they landed at the Bamako airport These are not grown-ups we are dealing with, but children armed with AK-47s. The New York Times reports that when ECOWAS met to issue its threat of sanctions on Thursday, a senior advisor to Ivorian President Alassane Ouattara said that Capt. Sanogo’s reaction to the regional body was "basically the equivalent of telling us (fuck) you.”

            As Capt. Sanogo and his cohorts jostle with the ship of state as though it is their plaything, 14 and half million Malian civilians are going to suffer as the collateral damage of a few warlords’ lust for power and wealth. It is not out of hand to predict that tens of thousands of innocent men, women, and particularly children are going to die needless deaths in a completely man-made famine, all but proving Amartya Sen's thesis that famines don't occur in democracies. The cruelest element of this catastrophe is that it is not a matter of natural cause and happenstance, but the will of a few evil men.  

It's Time to End the Embargo on Cuba

“I think it’s time for us to end the embargo on Cuba”, Barack Obama declared as he was running for the Senate in 2004, “The Cuban embargo has failed to provide for the sort of rising standard of living, has squeezed the innocents in Cuba, and utterly failed in the effort to overthrow Castro – who has now been there since I was born. So it’s time for us to acknowledge that that particular policy has failed.”

Since Obama recognized this matter-of-fact truth, the embargo on Cuba failed to overthrow the Castro regime for an additional 8 years, thusfar failing for a grand total of 52 years and achieving the dubious distinction of being the longest-running blockade in in the history of the world. It would be fair to say that the U.S. embargo on Cuba has been the worst trade policy ever made.

So why don’t we just call a spade a spade and finally open up trade with Cuba? Now more than ever, American businesses desperately need to access new markets and increase our exports to other countries. As the Obama administration has sold free trade agreements with Panama and Colombia as part of the Recovery Agenda, it’s time to repackage trade with Cuba as a means of expanding markets for American farmers and manufacturers and creating more American jobs.

Trade sanctions are more than just a means of making a statement; they are economic policies with real world ramifications for the markets of the United States, the targeted country, and third party markets as well. Trade sanctions must be subject to the same cost-benefit analysis as any other economic policy. If Congress were to ban the export of tear gas to Bahrain, that would have a targeted effect on the abilities of the Bahraini state to repress its own people and only a minimal effect on the U.S. economy. The benefits would far outweigh the costs.

However, if you compare such a nominal targeted sanction to our comprehensive embargo on Cuba which prohibits almost all economic activity with the island nation, this policy cannot withstand the scrutiny of any rational analysis. The costs of the United States' self-abnegation from the Cuban market disproportionately outweigh the benefits – that is, if there are any benefits at all.

In the 1960s when Castro was harboring Soviet nuclear weapons and threatening to foment Communist insurrection throughout the Americas, the Eisenhower and Kennedy administrations were arguably justified in restricting trade with Cuba. At a time when Pentagon hawks were advocating for a ground invasion to topple the regime and all-out war with the Soviet Union, economic blockade was a reasonable alternative to gambling with nuclear Armageddon.

But half a century later, the Cold War is over, the People’s Republic of China and the Socialist Republic of Vietnam are among our most important trading partners, and the strategic value of containing Cuba is paltry-to-nonexistant. Uncle Fidel is 85, ailing, and has relinquished all official powers; his anti-American subversion now consists of writing the occasional editorial on his sporadically-updated blog. In the year 2012, Cuba is no more a threat to the national security of the United States than the left-wing Caribbean nations of Dominica, Antigua and Barbuda, or Saint Vincent and the Grenadines.


On the other hand, the costs of the embargo on Cuba to the U.S. economy are enormous. Cuba is a market of 11 million consumers and a GDP of $57 billion. The island nation needs to import $9 billion worth of mostly food, refined oil, farm machinery and chemicals every year. And because of the Helms-Burton Act which codified the embargo into law, this promising market only 90 miles from the Florida coast is all but completely off-limits to American businesses, taking $9 billion in potential U.S. exports, untold billions more output from the ancillary commerce which could result, and effectively flushing them down the toilet.

It is still fair for observers of objectively-discernible reality to decry the Republic of Cuba's contemptible human rights record. The government remains a dictatorship which muzzles opposing views, jails political prisoners and the like. There is a convincing human rights-based argument that we shouldn’t sell them tanks, helicopters, rifles and bullets that could be used in the act of political repression.

But now that Communism is an anachronistic novelty, is there any reason why we shouldn’t be able to freely sell the Cuban people American-made food, clothing, medicine, and toys? Is there any reason why the U.S. should single out Cuba’s lack of multiparty elections to maintain the most restrictive trade sanctions on the books? Even in our own hemisphere, why is Cuba more deserving of embargo than, say, human rights abusing Venezuela ($55 billion in trade in 2011), Colombia ($35.7 billion), or Bolivia($1.5 billion)?

The U.S. embargo of Cuba is so severe that it severely infringes upon the rights of American citizens. Section 515.204 of the Cuban Assets Control Regulations prohibits any person subject to U.S. jurisdiction from engaging in any transaction relating to any product which is of Cuban origin. Section 515.204 doesn’t prohibit the travel per se of U.S. citizens to Cuba, but it does make it a crime for U.S. citizens to so much as pay the bill at a Havana restaurant without an elusive license from the Treasury Department. Any U.S. citizen found guilty of making such a transaction can be fined up to $250,000 and/or imprisoned for up to 10 years.

The cold winter of the unilateral U.S. embargo is beginning to thaw. In January 2011 President Obama quietly issued an executive order easing the travel ban to Cuba – allowing the Treasury and State Departments to authorize “purposeful travel” by academic, religious, and cultural groups to the island. Obama’s executive order also allows for the transfer of funds to Cuban religious and civil society groups – but pointedly refrained from allowing the unrestricted flow of remittances from Cuban-Americans to their family members on the island.

Imagine the possibilities for the U.S. economy if President Obama were to go further and act on his campaign pledge to completely do away with the draconian ban on travel, if he were to use his executive power to eliminate Section 515.204 of the Cuban Assets Control Regulations so that any American citizen could come and go as they please…

Analysts from the Cuba Policy Foundation estimate that if the federal government were to completely lift the travel ban, approximately 1 million Americans would take advantage of their newfound liberty in the first year alone. This would not only be a boon to the Cuban economy, but to the American tourist economy as well. Lifting the travel ban would create thousands of additional jobs at US airlines, cruise ships, tour operators, travel agents, hotels, restaurants, etc. The CPF estimates that in the first year the U.S. economy would grow by about $545 million in GDP and 3,797 new jobs in the first year. As business becomes more established we could be talking about the range of $2 billion in additional economic output and 12,180 new jobs in the United States alone.

Why stop there? Raúl Castro has taken significant steps to liberalize the Cuban economy by allowing private citizens to own their homes and establish small businesses. Why doesn’t the Obama administration allow U.S. citizens to travel to Cuba to meet aspiring entrepreneurs who might want to take out a micro-loan? If a Cuban guy in Holguín wants to open up a pizzeria, why should U.S. trade law prevent him from importing Cabot cheese and Hormel pepperoni?If a lady in Camagüey wants to open up a beauty parlor, is there any logical reason for the U.S. Treasury Department to prevent her from importing Revlon makeup and Pantene shampoo? As it now stands, draconian U.S. trade regulations are stifling Cuba’s transition to a market economy!

Thanks to a crack in the embargo enacted by Congress in 2000, the Treasury Department now allows a modest amount of food exports to Cuba for “humanitarian” reasons each year. Embargo notwithstanding, many Cubans are voracious consumers of American-made rice and beans, mayonnaise and hot sauce to the tune of $560 million a year. Nevertheless, these food exports are subject to extremely stifling banking regulations which prohibit direct wiring of money for transactions. Any wiring of funds must be conducted through third-party countries, and much of the transacting is relegated to cash. If Congress were to relax the Cuba-specific banking regulations to the same level as regulations on money transfers to, say, the Dominican Republic, American farmers could be making between $200 to $300 million in additional revenues.

The Cuban market imports $9 billion of refined oil, food, farm machinery and chemicals every year. It should be one of the greatest markets for U.S. goods. But U.S. goods now constitute only 6.3% of the country’s imports because the market is dominated by the Venezuelans, Chinese, and Spaniards whose governments allow essentially free trade to the country. Even the mighty Canadians are beating us in the competition to meet the Cuban market. We could add billions of dollars to the United States GDP by simply deleting a couple of antediluvian trade restrictions from the U.S. Code.

So why doesn’t Congress simply repeal the Helms-Burton Act and allow Americans to trade with Cubans? There remains the disproportionately powerful bloc of Cubans émigrés still smarting from the events of 1959. Both parties see Florida as the sine qua non of victory in the presidential and Congressional elections, so most "serious" candidates are scared of casting a vote that might let their opponents cast them as “soft on Communism.” Moreover, now that Cuba hawk Rep. Ileana Ros-Lehtinen (R-Fl.) is the Chairwoman of the Foreign Affairs Committee, the prospects for reform are stalled so long as the Republicans maintain a majority in the House.

But yesterday's electoral calculations of Cuban-American/Floridian politics are now as relevant to modern needs as a VHS rental store. Nowadays, a clear majority of Cuban-Americans are in favor of ending the embargo and normalizing relations with the Cuban government. Indeed, many second- and third-generation Cuban-Americans are willing to rethink the embargo because - historical injustices aside - they realize that they would stand the most to benefit if it were curtailed. Fluent hispanophone Cuban-American youth are going to be the most valuable employees in boomtown post-embargo Miami.

The embargo on Cuba has never been an effective means of strangling the Communist regime into submission, it never will be, and it’s about time that Congress finaly adopts a trade policy with Cuba which reflects the facts. It's also about time that Congress adopts a trade policy with Cuba which reflects the needs of the United States economy. The Cuba hawks who vote to uphold the 52-year-old embargo are like the Imperial Japanese soldiers found guarding Indonesian islets well into the 1970s because they never got the memo that their war was over. We can no longer afford to continue humoring the old Cold Warriors’ delusions. It’s time to finally open trade with Cuba.