Pennsylvanians make a rum run to Cuba

Pennsylvanians make a rum run to Cuba
March 5, 2017 12:33 AM
By Brian O'Neill / Pittsburgh Post-Gazette

HAVANA, Cuba — Pennsylvania legislators flew to Havana last month with a
simple idea for getting around the 55-year-old embargo against Cuba:
Trade our agricultural products for rum.

Two days in, the plan got even simpler: just buy a boatload of rum for
state liquor stores and forget the embargo. Republican state senate
leaders say the 21st Amendment, which ended Prohibition 30 years before
the embargo began, gives each state absolute control over alcoholic
beverages.

"You can't just suspend the federal constitution," said Sen. Chuck
McIlhinney, R-Bucks County and chair of the Senate Law & Justice Committee.

A Pennsylvania play for Cuban rum would be an extraordinary move at a
time when eased Cuban-American relations under President Barack Obama
have given way to mostly guesses about President Donald Trump's stance.
In the mid-1990s, Mr. Trump put out feelers for an investment in Cuba
once the restrictions were eased, but while the Pennsylvanians were away
on the island, Mr. Trump announced that he and Sen. Marco Rubio,
R-Florida, "have very similar views on Cuba.''

Mr. Rubio has been a vocal critic of Mr. Obama's Cuba policy. Toss in
conservative Keystone Republicans venturing into one of the last
outposts of socialism — and finding bureaucrats who have their own spin
on the art of the deal — and the plot is as thick as Cuban molasses.

If Mr. McIlhinney is right, and Pennsylvania has a winning
constitutional argument to bypass the embargo, it's one that might have
worked years ago. The Liquor Control Board is consulting its lawyers and
planning a strategy that could end with Pennsylvania being the only
place to buy Cuban rums — though likely not before a court battle.

Federal impoundment of cases of Cuban rum at the Philadelphia docks
until the case is decided in court wouldn't be the worst publicity; that
surely would make national news and increase the appetite for the
long-taboo spirits. But it's doubtful any ship owner would take that
risk. Ships docking at Cuban ports aren't allowed to dock at U.S. ports
for six months.

It seems more likely Pennsylvania would seek a declaratory judgment. A
federal judge could issue a legally binding decision before any rum
leaves Cuba.

The irony of the state Liquor Control Board being the vehicle for reform
is lost on no one. Senate President Joe Scarnati, R-Jefferson, said with
a smile that this transaction would be "from one controlled state to
another." But such a deal "will do more to help capitalism, and
capitalism breeds democracy," than the embargo ever did, Mr. McIlhinney
said.

"The Russians are gone,'' he said after five days and four nights in
Cuba. "I didn't see any."

If this deal moves on fast-forward, the multi-day talks Pennsylvania
state officials had with a tag team of Cuban government operatives in
around Havana may come to be seen as one uncommonly quiet revolution.

Three of the four minority and majority chairs of the Pennsylvania
legislative committees overseeing liquor, and two of the three LCB board
members, made the stops with other legislators, and they ran into
surprises from the get-go.

Tuesday morning, Feb. 21, AZ Cuba (Cuban Sugar Group)

Rafael Suarez Rivacoba, director of international relations for the
sugar group, asked through an interpreter why all these visitors were
there. When he heard "rum," Mr. Rivacoba shared a story familiar to
every Western Pennsylvanian: the sudden collapse of a single-product
economy.

Before the Soviet Union dissolved in 1991, Mr. Rivacoba said, Cuba
produced seven to eight million tons of sugar a year. The implosion of
the Soviet bloc meant the disappearance of Cuba's principal sugar
market. One hundred sugar mills shut down.

The 1990s were known as Cuba's "Special Period." When the Russians left,
so did their oil, and that left Cuba reeling. By 2004, the country was
producing only 1 million tons of sugar per year, Mr. Rivacoba said. Now
it's about twice that but there's capacity to double production again —
if there's a market.

Meantime, his colleague Rodrigo Diaz Sandoval, director of the group's
division of logistics and exports, said, "We think we have the rum that
an American citizen deserves to drink."

When LCB board member Mike Negra said the Pennsylvanians came seeking to
buy, Mr. Rivacoba then broke in with a question that might as well have
been translated as "so what's taking you?" He had a meeting that
afternoon with the rum group, and it would be a technical detail to
create 750-milliliter bottles for the U.S. market.

Later Tuesday morning, Cuba Chamber of Commerce

Cuba's promoters offered a power-point presentation, touting the
country's central location in the Caribbean in the same way
Pennsylvania's promoters do when promoting the commonwealth's proximity
to U.S. population centers. The visual message: You could do well here.

Cuba trades with more than 75 countries and trade has tripled in the
past 10 years, the island's boosters said. By the time they showed
slides of the Mariel Special Development Zone, "the most modern
container port in the Americas," they were sounding more like students
of Alexander Hamilton than of Karl Marx.

Cuba seeks foreign investment, they said. It doesn't have enough
domestic savings to provide enough capital. They called it "updating of
the Cuban economic model."

So when the Pennsylvanians raised the idea of bartering agricultural
products in exchange for rum, they were told that in bygone days Cuba
sent tons of sugar, rum and citrus fruits to socialist countries in
exchange for oil, equipment and food. They're past that now. They like
to be paid in cash.

Each time the Pennsylvanians tried to talk up a creative international
deal, the Cubans steered attention to the tax breaks for joint ventures
with the Cubans in Mariel, a port made famous by the 1980 boat lift.

"We want to end that blockade," Orlando Hernandez Guillen, president of
the chamber, said.

Afterward, Mike Diven, the former state legislator from Brookline who
organized this trip as a combined amateur boxing exhibition/trade
mission, betrayed no discouragement.

"I didn't hear a solid no," Mr. Diven said. "I hear it's complicated."

Tuesday afternoon, Food Industry Ministry

Juan B. Gonzalez Escalona, president of CubaRon, could match a football
coach at halftime with his enthusiasm for his product. He told
Pennsylvanians that he's sure Americans sometimes smell Cuban rum
wafting across the Straits of Florida. He'd like to end our frustration
"for humanitarian reasons.

Constellation Brands, the Fortune 500 company based in western New York
that imports beers, wines and liquors, has visited a couple of times, he
said, and was expected back in a few days. (A spokesperson for
Constellation Brands said in an email Wednesday, "We don't comment on
rumor or speculation.")

Cuba's message was clear. The island may have problems, but their rum
has international appeal. Cuba, in a joint venture with Pernod Ricard of
France since 1994, sells rum in more than 100 countries.

Pennsylvanians touted their uncommon buying power with $2.4 billion in
LCB sales last year (including taxes, which they didn't mention). Nearly
$147 million of that was in rum.

Betsy Diaz Velasquez, the deputy minister of the food industries, seemed
unimpressed. She replied that Pennsylvania is only seventh among the 50
states in rum consumption. Still, she said, she'd like Cuban products to
be on Pennsylvania's list of more than 100 rum labels.

When Mr. Gonzalez said the rum is aged in American oak barrels, Rep.
Mark Mustio, R-North Fayette, asked where they got them.

American barrels "come every year to Cuba and we don't know how," Mr.
Gonzalez said slyly.

Mr. Scarnati, whose sprawling district in the state's northwestern tier
has a battered timber industry, said he'd love to have a new trading
partner for Pennsylvania oak.

"We'll all go home and be ambassadors for Cuba and encourage our
government to end this unjust embargo," Rep. Adam Harris, R-Juniata
County and chair of the House Liquor Committee, said.

After samples of rum were offered and swallowed,Ms. Velazquez predicted
that Cubans would defeat the visiting Americans in the next afternoon's
boxing tournament in Pinar del Rio. "Our boxers will have rum in their
blood," she said and, sure enough, the Cubans took six of the nine bouts.

Thursday morning, Feb. 23, Matanzas Province Government Building, Matanzas

"Our eyes continue to be opened," Mr. McIlhinney told provincial
leaders. "We wonder out loud why we are continuing with this boycott
when the threat to the U.S. ended a long time ago."

Mr. Scarnati said Tuesday it's pretty clear the embargo has devastated
Cuba but has done nothing to help the U.S. He'll have to gauge whether
there's an appetite in Harrisburg for a legislative resolution to ask
Congress to end the embargo proclaimed by President John F. Kennedy in
February 1962.

John Nichols, a Penn State professor emeritus of communications who has
been making trips to Cuba for 40 years, said before anyone even got on
the plane, "Things work slowly in Cuba. Progress has to be built over a
number of years through a lot of personal relationships."

If Pennsylvania does get Cuban rum into the state stores, it will be
from a scouting mission that used no taxpayer money. All seven
legislators, four Republicans and three Democrats, used either personal
or campaign money to pay for their trips, they said in individual
interviews. Two LCB board members, Mike Negra and Michael Newsome, each
used $4,600 from the State Stores Fund to cover expenses. That comes
from liquor sales and is commonly used for buying trips.

Neither the rum nor any domestic monopoly on its sales would last long
if Pennsylvania gets Cuban rum first. Seventeen states control wholesale
spirits. If Pennsylvania's constitutional argument prevails, Mr.
McIlhinney expects the entire embargo to be broken.

"I'm not trying actually to be bootlegger," he said. "I would like the
question raised and settled.''

Brian O'Neill: boneill@post-gazette.com or 412-263-1947 or on Twitter
@brotheroneill

Source: Pennsylvanians make a rum run to Cuba | Pittsburgh Post-Gazette
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