Saturday, December 06, 2003

Economic Waffles and Big Sugar

A while back I said I'd offer some information on the sugar industry, but I never got around to it. The recent backtracking on steel tariffs, oddly enough, leads me there again. The following post is lengthy, but contains some fascinating connectors in politics and trade, complete with colorful characters. So if you have some time sometime for a bit of historical intrigue, you might bookmark the post and settle in for a bit.

The articles linked are excellent sources of the history of sugar in this country, including its connection to slave trade, Fidel Castro's conversion to Communism, and current legislative battles in Florida.

Enjoy.

Bush's steel tariff backdown:

Clyde Prestowitz, president of the Economic Strategic Institute and a trade negotiator in the Reagan administration, said Bush's trade policy was driven more by a desire for votes than a strong ideological commitment.

"They're for free trade if it works politically and they're for protectionism if it works politically," he said.

Nothing demonstrates this more clearly than the steel tariffs, which Bush imposed in March 2002 to shield domestic producers from intense foreign competition, he said.

"They introduced these measures knowing full well that they were illegal, but they'd have a couple of years to work it through the World Trade Organization. Now, they're getting marks for being good international citizens and yielding to the WTO," Prestowitz said. "It was a cynical political move."
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Let me ask you this...what isn't? Welcome to the new world.

Dan Ikenson, a trade analyst with the libertarian Cato Institute, said he was troubled by US Trade Representative Robert Zoellick's insistence that lifting the tariffs had nothing to do with the November WTO ruling that they were illegal. Bush and Zoellick insisted they scrapped the duties because US economic circumstances had changed.

"That is akin to United States saying it would just as soon ignore its WTO commitments," Ikenson said. "What in the world is the top US trade diplomat doing suggesting that?"

In the coming week, the administration hopes to complete a trade pact with Central American nations that will again test its readiness to stand up to influential special interests.


On and on. On and on. On and on.

US sugar growers are pleading with the White House to exclude sugar, saying the future of their industry is at stake. That raises political concerns for Bush, who risks alienating the key state of Florida if he guts the US sugar program.

It'll never happen. We're talking Florida. And Big Sugar.

"Big Sugar":

Since the early 1950s our foreign policies concerning Fidel Castro have been dictated by power brokers within our government who had strong ties to the sugar industry.

When Fidel Castro began his revolution against Batista and his Mafia cronies - who allowed prostitution, drug trafficking, gambling, torture, and more - the Director of the CIA, Allen Dulles, had already ordered that Castro be assasinated.

Not because Castro was a communist. He was not. He was an idealistic lawyer, brought up in the Catholic faith, with the utopian notion that the land and businesses in Cuba should be returned to the people. CIA Director Dulles knew that Castro was going to nationalize all the sugar plantations, mills, and refineries and Dulles was looking out for his sugar baron cronies.

According to noted Cuba historian Jane Franklin, Dulles had once been the President of United Fruit, a major sugar company with massive sugar holdings in Cuba. And his brother John Foster Dulles, then Secretary of State under Eisenhower, also had strong ties to United Fruit. Walter Bedell Smith, head of the CIA before Dulles, had been president of United Fruit at one time. And Henry Cabot Lodge (then UN Ambassador) had been on the Board of Directors.

This not the first time these "friends" of United Fruit used their powerful offices to try and assassinate a political leader who threatened United Fruit. According to de-classified CIA documents, released in 1997 on "dirty tricks", the CIA had plans to assassinate Guatemalan President Jacobo Arbenz in 1953. Arbenz had promised reform measures to his people which included nationalizing the sugar holdings . The Dulles brothers came up with a plan to kill him which Eisenhower approved. President Eisenhower's secretary was married to United Fruit's Public Relations's Director. These documents were the only ones released by the CIA concerning dirty tricks. The CIA claims that all other documents were accidentally destroyed.

...Fidel...tried to begin negotiations with the U.S., with one major stipulation - the sugar holdings would be nationalized so that the Cuban people could reap the rewards. Fidel promised to repay the former owners for those holdings, but not return them.

The Eisenhow administration, heavily influenced by the Dulles brothers, decided to lay seige on Cuba. Not only place a total embargo on the country, but increase raids and assassination attempts on Fidel. Castro was convinced that those who were trying to kill him and regain Cuba were the very same corrupt groups he had driven from Cuba. Fearing for his life and the freedom of his country Fidel...sought the aid of Russia. Only after the Russians came to the aid of Cuba did Fidel Castro turn communist.

The Bay of Pigs raid on Cuba took place in 1961. Amongst the 1,200 members of the invasionary force were men who had previously owned over 900,000 acres of land, 9,666 houses, 10 sugar mills, and 70 factories.

JFK failed to allow military support - troops and aircraft - for that ill-fated invasion and the anti-Castro folks in Miami have always hated him for not providing the vital air support that might have guaranteed success.

Recent documents reveal what actually happened. Allen Dulles - still head of the CIA - had briefed JFK on the plans and promised over thirty thousand Cubans, in Cuba, would rise up and come to the aid of the invading forces. That convinced JFK to allow the plan to be implemented.

It is now known that Dulles knew that to be false. He had no intelligence data to suggest that native Cubans would rise up and support the invasion. It was his hope that once convinced, JFK would feel forced to provide U.S. Military forces and planes. When the invasion began it became obvious that no local Cubans would come to the support of the CIA-backed invaders, and JFK called off military support.

Kennedy realized how severly he had been misled and he fired Dulles. The Miami-based anti-Castro groups were furious with JFK.

Meanwhile, Fidel Castro, once again offered to re-pay the exiled sugar barons for all the sugar holdings he had nationalized and they seemed willing to accept that re-payment. But the very same ill-conceived American trade laws that prevented Cuba from doing business with this country - laws heavily promoted by the sugar barons in South Florida - prevented those sugar barons from receiving their money.

The manner in which JFK resolved the Cuban missile crisis was to bring about total hatred from the anti-Castro forces. They had hoped the prescence of Russian missiles on Cuban soil would force JFK to invade the island and remove Castro and the missiles. Instead of confronting Fidel, JFK negotiated with Premier Kruschev directly, and forced an agreement. The Russians would withdraw the missiles from Cuba and, in return, JFK promised he would not invade Cuba.

This shattered the last hopes of the sugar barons of regaining their sugar holdings in Cuba. And the militant anti-Castro groups based in Miami now considered JFK to be soft on communism, therefore a traitor.

After JFK was murdered in Dallas, things changed.

...[The sugar barons] expanded their acreage on the northern edge of the Everglades National Park and, with that expansion, came huge runoffs of pollutants. The environmentalists started "raising cane" and demanding that the sugar folks pay huge amounts to clean up the mess, but the owners had their own plan.

The various sugar merchants-- including Cargill, Archer Daniel Midland, U.S. Sugar, and the Fanjul brothers - formed dozens of PACs (Political Action Committees) in order to funnel millions of dollars into key politician's campaign coffers.

When environmental cleanup laws came up for a vote, the sugar barons managed to "contribute" enough money to sway key votes and prevent the passage of those laws.

[T]he biggest concern of the sugar barons, especially the "first family of sugar" - the Fanjuls (brothers Jose and Alfonso, citizens of Spain) -- was keeping the price supports in tact. The program, started in 1981, kept the price of sugar artificially high. Over twice the price world-wide...

This price support legislation means that Americans must spend nearly two billion dollars more than necessary for sugar-related products.

The sugar barons are equal-opportunity "contributors" when it comes to buying protection for their industry. Alfonso Fanjul invests heavily in the Democratic Party, while his brother Jose sends his money to the Republicans. They compensate in staggering proportions but their totals are continuosly under-reported because they "contribute" through numerous family members, companies, executives, and PACs.

When Florida Congressman Dan Miller (R) introduced legislation to repeal the price supports in 1996, the bill lost by the narrowest of margins -- 217 - 208. Five of the six congressmen who switched their vote - Bobby Rush (D,Ill), Jose Serrano (D, N.Y.) Albert Wynn (D, Md) Sue Myrick (R, N.C.) and Steve Stockman (R, Texas)- subsequently received campaign "contributions" from the sugar industry.

It was during that time that President Clinton was having his illicit affair with Monica Lewinsky. Her testimony reveals that on President's Day, 1996, in the Oval Office their activities were interrupted by a call from someone named "Fanjuli". Clinton returned the call and spoke with Alfie Fanjul for over twenty minutes. Fanjul was quite upset because Vice-President Gore had just announced a plan to levy a penny-a-pound tax on Florida sugar growers. The money would be part of a $1.5 billion dollar clean-up effort for the Everglades which was polluted primarily by sugarcane runoff.

The plan was eventually shelved by the White House. The Clinton campaign received another $50,000 from a Fanjul family company -- Flo-Sun -- out of gratitude.

But the plan was re-introduced as a Florida initiative. It was soundly defeated after a $25 million dollar advertising campaign against it, partially funded by the Fanjuls who reportedly kicked in $3.6 million dollars for the ads.

Despite the millions of dollars spent to bribe and influence our nation's political leaders there is no evidence that the sugar barons have violated any laws. They do not have. to. By skillful use of the PAC laws they have managed buy key votes on a number of issues thereby increasing their profits - then spending some of those profits to buy more favorable legislation.

It is no concern of theirs that polluting the Everglades means poisoning the fresh water supply of over four million South Floridians. They are just doing business.

It is no concern of theirs that Americans are spending an extra two billion dollars for sugar-related products because of unnecessary sugar subsidies. They are just sticking to business.

It is no concern of theirs that their campaign contributions have prevented honorable people from winning elections, and helped easily-corrupted politicians to continue to stay in office and increase their wealth and power. That's business as usual.

Those payments would be called bribes anywhere else in the free world, but are considered in this country - by law - as "legal contributions".

And now, with the advent of the "527" groups it appears that anyone can bribe and corrupt with total anonymity and impunity. Under current interpretation of the law anyone can form a "527 group" - anyone including corporations, individuals, foreign nations, terrorist groups, etc. They can pour millions into that "527" without having to reveal who they are. And the money can be spent in any way they wish without the Federal Election Commission or the IRS knowing about it.

This means that anyone with the money, from anywhere in the world, can form a "527" and bribe American public officials with any amount of money - even create secret retirement accounts - slush funds - in order to buy congressmen, Senators, and even Presidents. And no one would know.

No one would know who contributed the money, who received the money, or how the money was used because all that information is being declared protected by freedom of speech.

So far the FEC has failed to rule that these "campaign funds" must be part of the public record even though the commissioners were appointed to make that kind of decision. Instead, they have passed the buck. Or been bought off by the very "527s" they are duty bound to regulate.

They have left it up to the very congress that is about to receive, or already is receiving, massive, unreported monies from secret contributors. Predictably, congress has yet to amend the "527" laws.
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This is the same 527 law that is allowing George Soros to contribute $10 million to the effort to defeat George Bush. Ooops.

Check out that article for more history about U.S. relations with Cuba.

Big Sugar interests are not limited to Florida, however. They've been a powerful force in politics on the Left Coast for more than a century. The Spreckels family was essentially San Francisco's royalty at the time of the 1906 earthquake, and was heavily involved in its rebuilding and all its politics, as owners not only of a sugar empire, but of a railroad empire as well.

As for Florida's interests today, the current ongoing Everglades restoration effort finds itself smack up against Big Sugar.

There are 450,000 acres of sugar fields in the Everglades Agricultural Area below Lake Okeechobee, blocking the natural water flow of the Everglades. There is a federal program that props up domestic sugar prices, costing American consumers $800 million to $1.9 billion a year, according to the General Accounting Office. The federal government buys back sugar the industry can't sell, costing taxpayers hundreds of millions of dollars more. The industry also uses hundreds of billions of gallons of South Florida's water but pays minimal water taxes.

These and other perks are the direct result of Big Sugar's extraordinary political clout, most famously illustrated in the Starr Report when President Bill Clinton interrupted his breakup with Monica Lewinsky to take a 22-minute phone call from Alfonso Fanjul Jr., chief executive of Florida Crystals Corp.

The industry donates millions of dollars to state and federal politicians, and almost invariably gets its way in public policy disputes. "I saw firsthand how Big Sugar bought the Florida Legislature," said Barry Silver, a former Democratic assemblyman from Boca Raton.

The industry gets its way in water disputes, too. During the drought of 2000, it persuaded the South Florida Water Management District to revise its guidelines to siphon water from an already parched Lake Okeechobee for irrigation.

To environmental groups like Save Our Everglades, the biggest problem with Big Sugar is the phosphorous it pumps south to the River of Grass and backpumps north to Lake Okeechobee. The Everglades is a phosphorous-intolerant ecosystem, and phosphorous-rich sugar runoff has transformed some of its sawgrass plains into dense clumps of cattails.

Environmentalists and sugar barons do agree on one thing: The worst thing that could happen to the Everglades would be the suburbanization of the sugar fields. Route 27 into Clewiston is now a four-lane highway, and sugar executives have warned that if their land can't grow sugar, it will grow golf courses and condos.
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Nice threat. Nice sound bite. Like there isn't a third choice? That was June 2002.

Just this past spring Friends of the Everglades lost an important battle, when a measure to take the burden of industry cleanup off the taxpayers and put it back onto the sugar industry polluter was delayed for another decade.

From the Friends website:

While your tax dollars are flowing to the aid of the Everglades, to the tune of 8 billion dollars over the next 20 years, your tax dollars are flowing to the aid of the principle source of the Everglades destruction - the Florida Sugar Industry.

In a not so rare symmetry of federal irony, the Florida Sugar Industry, the principle polluter of the Everglades, will receive 8 billion dollars in federal aid over the same time period.
And from a lengthy, informative article at Environmental News Network:

...Some environmentalists are even in bed with Big Sugar. The Charles Stewart Mott Foundation, a generous supporter of environmental causes — it spent $800,000 in the 1990s to protect a South American wetland — still has financial and managerial control of U.S. Sugar, which in 1996 spent $3 million to defeat amendments to protect the Everglades. The foundation declined to comment on its involvement with U.S. Sugar.

...Last spring, in a bravura display of clout, the industry succeeded in ramming a sweetheart deal through the Florida legislature that gives Big Sugar more time to clean up its act. The measure, supported by Governor Jeb Bush, pushes back a looming 2006 water cleanup deadline to 2013 and gives sugar companies until 2017 to pay a cleanup tax.

...In the agricultural sector, only the tobacco industry spends more on campaign contributions and lobbying efforts. During a 1994 Florida statehouse debate on an environmental referendum that would have taxed farmers a penny for every pound of sugar milled in the [Everglades], more than 30 industry lobbyists convened in Tallahassee.

...Alfy and Pepe Fanjul never intended to farm in Florida. After four generations in Cuba, where their family empire included 150,000 acres of cane, 10 sugar mills, and three alcohol distilleries, their businesses were nationalized by Fidel Castro in 1959. Moving from Cuba to Palm Beach in 1960, Alfonso Fanjul Sr. and some fellow exiles bought a 4,000-acre parcel of farmland in the Everglades for $640,000.

Florida offered low taxes for land and water, and at an annual expense of more than $50 million to the American taxpayers, Washington kept the Everglades drained in the wet season and irrigated in the dry.

...United States tariffs and price controls keep domestic sugar prices around 22 cents a pound. Most of the rest of the world sells sugar for eight cents a pound. In 1998 sugar-grower price supports in effect cost Americans $1.4 billion in higher prices for candy, cookies, soda, ice cream, gum, and a host of other sweet things from cereal to catsup. That same year, the Fanjuls enjoyed more than $60 million in subsidies, which led Time to suggest that they may be the “first family of corporate welfare.”

...Florida is a far cry from being prime cane habitat. Restricted by a frostier climate and wetter, nutrient-poor soils, farmers in the Everglades spend $150 more to produce a metric ton of raw sugar than do farmers in Australia.
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One thing is certain, Big Sugar and Florida are two very powerful factors in the equation that gives His Slowliness the Dope, George Double-face Butch, his reSelection odds.

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