Latin American Network Information Center - LANIC


PY041102 Sao Paulo FOLHA DE SAO PAULO in Portuguese 2 Jun 85 pp 14-18

[By editorial staffer Joelmir Beting]

[Text] Fidel Castro Ruz is 58 but looks younger.  A health buff, he
exercises twice a day in his office, has switched from rum to herbal tea,
follows a strict diet, and advocates his own recipes for lobster and
shrimp.  He sleeps only a few hours a day and does not follow any kind of
work routine, so much so that we met in the afternoon, at night, and even
in the predawn hours of the morning.  During our final meeting, in the
company of six ministers we discussed the Brazilian economy and the foreign
debt of the Third World from 2300 to 0600.  All the meetings took place in
his office at the Palace of the Revolution in Havana.

Our first contact was on 9 May during a dinner held to honor Algerian
President Chadli Bendjedid.  Fidel told me: "I have invited you to come to
Cuba not just as a journalist but also as a consultant.  I would like you
to tell me about the Brazilian economy and to discuss my ideas about the
foreign debt.  We will not talk about politics or about rapprochement
toward Brazil, the Vatican, or Washington; will that be all right?"  Fidel
is currently concentrating on economic matters, leaving politics to the
government and the Communist Party.

Castro is well equipped and well informed, he has all the problems related
to the foreign debt at his finger tips, and what be can tell about it would
fill a book.  He likes to talk, but he is not the kind of person who grants
interviews easily.  He told me that he has 156 requests for interviews from
newspapers and magazines from all over the world on his waiting list.
Concerning the debt, the subject which most prominently holds his attention
at the moment, Castro has already talked to THE WASHINGTON POST, Mexico's
EXCELSIOR, the Spanish News Agency EFE, and the Chicago magazine PLAYBOY.
The first three have already been published, while PLAYBOY's interview will
come out in August.

This exclusive interview was recorded by Chomy Myard, the Cuban president's
private secretary, who files all the tapes.  Fidel explained to me: "I do
this for all journalists.  I like to compare what I tell them with what is
published.  It is the responsibility of a chief executive."  Fidel gave me
a cigar and said in a serious manner: "Now we will discuss how to save

FOLHA: According to economists, the 1980 world crisis is worse than that of
1930.  Is the world plunging toward a catastrophe, or can it still be

Fidel Castro: Unless someone can prove otherwise, I would say that the
world is plunging toward an abyss and that this abyss could well turn out
to be bigger than the world.

FOLHA: Cuba is not an island, it is part of the world.  Won't socialism
burn in the same bonfire along with capitalism?

Fidel: What is bad for the world is bad for socialism.  However,
capitalism is to blame for the crisis, and it is up to capitalism to avoid
the general catastrophe, its own included.

FOLHA: President Reagan has said that the worst is over, that the
doomsayers failed in 1930 and have repeated their gaffe in the 1980's.
This was made clear at the Bonn summit.

Fidel: That was the speech of the major beneficiary of the crisis of
others, the one who makes the rules of the game.  The apparent recovery of
the U.S. economy is being financed by the rest of the world.  From this
comfortable position it is easy for President Reagan to say that everything
is going well in the world.

FOLHA: Better than next year?

Fidel: The following must be clearly understood: We are living in the third
world war, an economic war.  This is an undeclared war, a war of extortive
interest payments on the debt, a war of depressed prices for commerce.  The
world is already counting the corpses and walking through the rubble, and
the aggressors in this war, still not confronted by their victims, maintain
that this war does not exist and that the corpses are healthy.  The
aggressors are the rich countries, which in the past few years have become
richer at the expense of the poorer ones, something which never happened
before, not even during the capitalist depression of the 1930's when
everyone became poor, some more than others.  This is not the current case.
Now the rich countries are sucking the blood of the poorer ones without
consideration or remorse.

FOLHA: A blood transfusion from the poor to the rich?  A liquid donation of
the poor's capital to the rich?  That is the case of Brazil.

Fidel: Yes, that is the case with Brazil, Mexico, Argentina, Africa, and
Cuba.  Cuba is included.  We are losing capital even though only one-sixth
of our trade is with the capitalist countries.  Capitalist trade with Cuba,
which should result in an addition, has become a loss.

FOLHA: What are your losses?

Fidel: Cuban losses can be accounted for by the rising costs of the foreign
debt in convertible currency and by the deterioration of the trade terms
with our capitalist trading partners.  In trade accounting, for instance,
we made a global profit of $40 million in 1983 but then we suffered a
$66-million deficit in 1984.  The important fact is that we went into the
red despite selling.more and buying less, speaking in terms of trade
volume.  This means that we are giving more and more in exchange for less
and less on account of the mechanisms of the free pricing system.  The
deficit is completely concentrated in our exchange with the so-called
market economies.  The disaster has not been worse because we are launching
a tourist campaign.  We received nearly 200,000 tourists last year, out of
which 84 percent of them came from capitalist countries, including Latin
America, Canada, and Japan.  The greatest number of tourists came from
Germany, Italy, and Spain, our leading trade partners.

FOLHA: Let's go back to the state of war, the third world war, launched by
the rich countries and led by the United States.  The aggressors are
walking toward an abyss, an abyss greater than capitalism.  How will this

Fidel: It can and will happen in the midst of the current international
economic disorder, which is more financial than commercial in nature.  The
warning must be sounded that the poor countries have nothing more to lose.
The collapse that is drawing near will topple the U.S. and European banks,
which are the creditors of a bankrupt world, The banks are the physical
foundation of capitalism.

FOLHA: The Midas syndrome: The system will die of hunger and thirst on top
of the mountain of gold taken from the indebted.  Is this what you mean?

Fidel: Of course, the creditor cannot kill the debtor.  This is a basic
rule I learned in a boarding school run by priests where I spent 12 years
of my life with vacations Only during Holy Week.

FOLHA: Any program for the solution of the "debt crisis" is therefore a
program for the salvation of capitalism.  Does Cuba want to save

Fidel: Yes, the other capitalism, the capitalism of the indebted, even
speaking in the humanitarian sense.  The guided missiles of the interest
rates and the terms of trade are killing millions of people in the
plundered world.  They are being killed by starvation, sickness,
unemployment, and crime.  As if the massacre by debt and trade were not
enough, the indebted countries are being monitored by external
decisionmaking centers on matters regarding the economic "adjustments" of a
recessionary character, just like a well-meaning physician who forces the
weak patient to observe a regime to lose weight...

FOLHA: Is the physician in this case, the IMF, a mad scientist?

Fidel: The IMF itself should be saved as a decisionmaking forum for
governments, not of the banks, but it will have to review its methods, its
doctrine, its statutes.  On the contrary, the IMF will continue to treat
the sickness of the poor countries with medicines prepared to cure the
sneezes and allergies of the rich countries.  This is a double error of
diagnosis.  It is so absurd that it seems like a contrived case.  First:
The disease is different.  Second: The patient is someone else.

FOLHA: How can the IMF be tamed, considering that the votes are cast by the
law of the more wealthy, the power of the bigger partners?

Fidel: The distortions created by the IMF are a by-product of the bigger
crisis, the disorganization of the monetary system, the undiscipline of the
financial system, and the truculence of the practices in international
trade.  Without a new order negotiated from the bottom to the top, all
international institutions of regulation and promotion, not just the IMF,
are doomed to failure, even if they still manage to do something about the
situation under the jackboots of the capitalist powers.  The U.S.
Government rules the world economy, and the world economy simply reflects
the I.Q. of the U S. Government.

FOLHA: How can the world, economically dominated and politically disunited,
change the rules dictated by the White House and induce the U.S.
Government to adopt a new standard of behavior?

Fidel: The process is complicated.  It will have to begin with a firm
reaction on the part of Washington, the world leader in trade, and the EEC,
not to mention Canada, which today only sells $66 billion per year on the
U.S. market, more than Japan, which is content with selling $60 billion.
The Europeans should not be happy with the endemic unemployment that has
already beset them for a decade nor should they be content with the
devastation caused in the currency exchange market by the super-dollar.
The reaction of these privileged partners, which are not at a disadvantage
in capital (they are creditors, not debtors, of the United States), but are
deprived of sovereignty over internal decisions, began to emerge at the
recent Bonn summit, especially on the part of Mitterrand.  France showed
that the United States does not rule GATT as it does the IMF and the IDB.
The Europeans are inclined to be less insensitive to the human tragedy of
the Third World, which sees itself in the cross fire of interests on the
debt and terms of trade.

Deep down, I believe in the good sense of men, and I believe that ideas do
not create crises but crises spawn ideas.

FOLHA: The European contribution, let's call it that, doesn't seem

Fidel: Obviously, but let's go step by step.  Human selfishness does not
abide by the laws of reason and even less of ethics.  Its modification can
be brought about by the impact of disaster or by the implosion of
privileges.  A regime of privilege creates its own condemnation.  I believe
that economic theory has an explanation for this: When only one side
profits, the best business in the world gives out.  Last year, Latin
America gave the creditors, without creating a scandal, $37 billion in
interest and $20 billion in trade losses.  Sugar, for instance, is sold by
Cubans and Brazilians at one-third of its production cost.  Doesn't this
clash with the vaunted rationality of the market economy, which is
supposedly self-regulating?  Is this in line with the rationality of
political relations based on cooperation and mutual respect?  In 1980,
Latin America traded 1,000 for 1,000 with the industrialized countries.  In
1984, the same goods were traded 1,000 (purchases) for 780 (sales).  To
manage to obtain a surplus in order to service the debt, the debtor
countries must export at a loss, a loss internally covered up by the
inflation that impoverishes the poor even more.  This does not take into
account the lateral losses caused by the artificial revaluation of the
dollar or the flight of foreign currency from destabilized economies to the
coffers of the creditor countries.  The rise of the super-dollar, the pride
of President Reagan, draws the blood of the indebted both through losses in
trade and through the cost of the debt.  What is worse, the rise of the
dollar feeds the rising interest rates, which in turn reinforces the rise
of the dollar...

FOLHA: This reminds one of the ticking of a time bomb.

Fidel: A time bomb all the more powerful because the senselessness of the
interest rates and the dollar exchange rate are in relation to the
stupidity of the trade protectionism of the Americans and the Europeans,
with the damage caused to debtor countries that must earn dollars at
whatever price.  The U.S. trade deficit itself, through imports of $1
billion per day, can be explained by the external appreciation of the
dollar, which today can buy half the world with a forged currency.

FOLHA: The deficit brings on protectionism and the protectionist barriers
make no distinction between creditor or debtor countries, rich or poor
countries, surplus-carrying or deficit-carrying countries.  Everything is
wrong, isn't it?

Fidel: Yes, everything is wrong.  So much so that in Cuba we already have a
model to separate the legitimate from the nonlegitimate portions of the
foreign debt of Cuba, Brazil, and Latin America as a whole.

FOLHA: For instance?

Fidel: Last year Latin American had to pay a total of $70 billion to
creditors.  By our model to evaluate the bill we are paying, the creditors
received a legitimate sum of $25 billion and an additional illegitimate sum
of $45 billion.

FOLHA: Just like the restaurants that add to the bill the table number, the
date and the time one has waited for the food...

Fidel: I do not understand.

FOLHA: It is just a Brazilian joke.  What does Cuba understand as an
illegal debt?

Fidel: An illegal debt is made up of usurious interest rates, which does
not mean that we believe in the Muslim concept that no interest should be
charged.  In our opinion, interest rates higher than 8 percent a year
applicable to current contracts signed at the time when the market was
satisfied with just 6 percent constitute a spurious debt because it is a
clearly usurious rate, considering that the economies of the creditors have
to deal with inflation rates of less than 4 percent.  Equally illegitimate
is a debt that results from declining terms of trade that creditor
countries have forced upon the debtor countries through the apparently
innocuous mechanism of free trade.  This exploitation can be measured in
kilograms, liters meters, or dollars.  The artificially highly rated dollar
itself is responsible for a portion of the illegitimate debt.

FOLHA: What you mean is that last year a $45-billion swindle was
perpetrated through interest, trade, and exchange rates?

Fidel: Having no reserves at all, Latin American had to assume an
additional debt of $45 billion to compensate for the exploitation disguised
as a free market.  Not one single dollar of this amount was used to finance
projects, production, or employment.  Is the free market, the market
economy to blame for this?  What wonderful advertising for the market
economy the rich countries are making at the expense of the daily suffering
of debtor countries...

FOLHA: The bankers blame high interest rates on the budgetary problems of
the White House, financed through successive issuance of public bonds.  The
bankers swear this race, after savings on the financial market, is
inflating interest rates.

Fidel: Then the blame lies with the holders of savings accounts, the
investors, the brokers, the patriots who are not satisfied with financial
returns below 12 percent while the inflation rate is under 4 percent.
Isn't that so?

FOLHA: Unless you can lower savings interest rates you cannot lower lending
interest rates; this is applied physics.

Fidel: My apologies to applied physics.  This is totally illogical; it
falls in the realm of collective madness, political fiction.  In this case,
the foundations of capitalism-rest on mud, not rock.  The structure will
end up falling apart. If the savers do not want to avoid the catastrophe,
it will have to be defused by the takers, especially the exploited Third
World debtors who have nothing to do with the profits of people or
corporations in the United States, Western Europe, or anywhere else.  Will
it be necessary for the debtors to break the contracts to lower the rate of
profits of the savings holders?

FOLHA: Private banks do not accept lowering interest rates or stretching
out terms of payment and demand that the debts be serviced according to
contracts and at the going market rate.  On the speculative market, the
interest rates have already been as high as 21 percent per year.  The
governments of creditor banks wash their hands of the whole business and
the governments of the debtor countries pay the bills in the name of
national dignity and to show that they are well-behaved members of the
credit union.  Is there any way to break this system?

Fidel: We are in the middle of the third world war, as I have said. In this
war the aggressors do not want a peace or truce.  The wealthy countries are
not interested in saving capitalism.

They believe that capitalism is not in jeopardy, at least not their
capitalism.  Not very long ago a high-ranking official of an international
financial institution stated in Basel that indebted countries do not
deserve any sort of help or respite because they have gone into debt owing
to their own incompetence and corruption, with a good part of the loans
received going to engross personal accounts in the very same banks that
granted the loans.  Other governments have borrowed money to purchase arms
for domestic or foreign use, like Chile and Argentina, respectively,
according to the banker.  This is a moral judgment passed by the creditors
on the debtors.  However, the exploitation through interest rates and
unfavorable terms of trade is not included in this moral judgment because
for this banker it is not a crime.

FOLHA: Does this kind of charge, which may have some grounds in isolated
cases, morally undermine Third World demands?

Fidel: Naturally, that is its objective because it undermines the morale of
the debtors and assuages the conscience of the creditors.  However, an
objection could be made at this point.  Nations have moral responsibilities
that cannot be foresaken at will.  However, when one is speaking of a
nation, one should not mistake the people for a government.  In any place
and under any circumstances the people are the ones who pay the bill, be it
for a well-used loan or for mismanaged or pilfered money.  In Latin America
or in Africa, the people pay for the loan with lower employment rates,
lower salaries, greater misery, and more violence.

FOLHA: In January, Tancredo Neves said that Brazil would not pay its debt
at the expense of making the Brazilian people go hungry.

Fidel: Can a system that makes the holder of idle savings richer at the
expense of impoverished debtors be considered moral?  Have the Latin
American people benefited from each and every dollar out of the $360
billion of their debt?  How much of this debt has been devoured by
incompetence and corruption?  How much of this debt has been contracted to
pay the escalating interests of the initial debt?  I do not want to
question, once again, the legitimacy of the debt itself.  I would rather
question whether it is possible to pay the debt.  It would seem that as far
as this is concerned all of us Latin Americans agree, as evidenced by the
diplomatic contacts within the Cartagena Concensus: The foreign debt is an
essentially political problem and, therefore, the solution will have to be
political.  The effects of the debt, that is, a social explosion of the
people and a political implosion of the governments, will not be averted
through standard banking approaches or financial statements.

FOLRA: What is the political solution for the physical collapse of the
debt?  So far, a lot more is being said than done.

Fidel: It could not be otherwise.  The indebted countries do not speak the
same language nor row in the same direction.  They play into the hands of
the creditors' bloc and prefer to believe in bilateral solutions, in the
so-called case-by-case approach.  It is true that each case is different,
and each account number has a name.  So far, so good.  However, it would
seem that someone has forgotten to tell this to market interest rates,
which currently make no difference between a computer plant in California,
a hospital for burn victims in Colombia, or a farmland irrigation project
in Brazil.  In the same manner, U.S. and European trade protectionism makes
no differentiation between products "Made in Brazil" and those "Made in
Japan."  It seems that Japan owes no one and has the greatest trade surplus
in the world.  Where is the special treatment favorable to Brazil or
Argentina?  Is the case-by-case approach only applicable to summary
payments of the debt?  The exploitation through interest rates and trade
affects the entire bloc, but the bloc cannot renegotiate the debt jointly.

FOLRA: So far we are still in the diagnostic phase.  Where is the political
solution for the debt deadlock?

Fidel: Bloc renegotiation at government level.  A renegotiation that must
begin politically by separating the legitimate debt from the illegitimate
debt.  The legitimate debt must be paid, but the illegitimate debt must be
written off.

FOLHA: Is that your proposal, to simply erase more than half of the debt of
the Third World, which now totals close to $1 trillion?

Fidel: I am not dreaming aloud, nor have I had too much rum.  I have a
mature, well-thought out, well-planned, and perfectly viable, not to say
urgent and unique, scheme.  This scheme will. save the banks, not only the
members of the credit union.  This is a proposal to save capitalism from
the collapse that is looming on the horizon, due to arrive in 1988 at the

FOLHA: In 2 years?

Fidel: The countdown for the time bomb called the "debt crisis" [preceding
phrase in English] could reach zero in 1988.  The indebted countries will
not be able to pay their bills in 1986, even if they manage to pay the
interest due in 1985.  The cracks will then appear in 1987, and the palace
will collapse on the king in 1988.  This is not just my forecast, it has
also been stated by some U.S. economists and certain European bankers.  One
of these economists just visited Havana.  I do not know whether or not he
is a good prophet, but be has been awarded a Nobel Prize in economics.

FOLHA: Is there still time to disconnect the timer on the bomb?

Fidel: That is the problem.  It will take time to organize the political
aspect of the project because international institutions that have not yet
been called upon or even remembered will have to be set in motion to handle
the debt problem, such as, among others, the Latin American Economic
System, SELA; the Economic Commission for Latin America; the Organization
of African Unity, OAU; the Socialist International; the Group of African
Unity, OAU; the Socialist International; the Group of 77; the Nonaligned
Movement; and UNCTAD.  We must set into motion forums that have
decisionmaking power in economic affairs where each country has a vote.
Through this operation the world must not only seek to remove the shambles
of the foreign debt but also to reorganize the world economy by linking
monetary and trade mechanisms.  For example, the IMF and the GATT, placed
on a new footing, must make joint decisions.

FOLRA: So far they have been pulling in different directions.

Fidel: The United States, in particular, is not interested in mixing the
debt with trade, as though currency and GDP were different compartments of
the so-called market economy...

FOLHA: Very well.  All of a sudden, by the waving of a magic wand, the
world goes to a summit in Geneva or the Vatican called by the United
Nations to take the final vote on your proposal.  The legitimate debt is
cancelled and Latin America no longer has to pay $50 billion over the next
12 months...and the banks go bankrupt one after another?

Fidel: Are bankruptcies a problem?  Then let's save the banks.  The
uncollectible debt of the Third World would be paid by the banks' home
governments, with the approval of the congresses, through a simple
budgetary transfusion, in small annual installments.

A small slice of the military budget would be transferred to the financial
system, which is the foundation of capitalism, the foundation of national
defense.  In this way the capitalist democracies of the Third World would
be saved, which is a question of international security.  The political
instability of the Third World provokes the arms race, which is financed by
the U.S. taxpayers.  The U.S. taxpayers would like to see a tenth of that
money invested in a more lofty cause.  The hunger of the poor is the
trigger for the third world war, the last one, the war of final
annihilation.  This catastrophe can be touched off by the servicing of the
foreign debt.  In Latin America, the legitimate and illegitimate payments
may reach, by accumulation over the next 10 years, the apocalyptic sum of
$500 billion, a fantastic sum drained away from domestic development.  This
vision does not disturb my sleep simply because Latin America will not be
able to perform such a feat, and the system will have to be reformulated
one way or another before the 1980's are finished.

FOLHA: In the wake of the Cuban revolution, President Kennedy wanted to
donate $20 billion over a 10-year period to his allies in Latin America
under the Alliance for Progress.  This $20 billion in assistance was not
disbursed in the 1960's.  What is happening is a bleeding of $400 billion
in the 1980's, exactly 20 times the $20 billion but in the reverse
direction.  Is this picture valid?

Fidel: That is a good recollection.  President Nixon brought back the
rethoric in the 1970's: More trade, less aid.  However, up to now, Latin
America is losing trade and receives no aid.  Are Argentina and Brazil
satisfied with the price of soybean?

FOLHA: Brazil is not even satisfied with the price of the aluminum that it
has began to export below cost.  However, if the creditor countries dictate
the interest rates and the prices, should the solution to the foreign debt
include unilateral moratoriums, not to say outright cheating?  What will be
the reprisal?

Fidel: Moratoriums and cheating are extreme resources, if there is no
alternative.  The alternative of renegotiation does exist, and it should
be explored to the end.  Aren't we sovereign countries?  Reprisals cannot
be taken into consideration.  Commercial, financial, and political
reprisals by one or more creditor countries against a single debtor country
can be accepted, but not against the debtor countries as a bloc.  The
industrialized countries need our raw materials and our markets.  The
multinational companies are not multinational just by chance: They have
duly infiltrated the economies of the debtor countries.  This strategic
point should not be left out of consideration.  Europe and Japan,
especially, depend on the Third World, even for the chocolate and the
orange juice they drink in the morning.

FOLRA: Does that mean that the decision can be simply moved from the
creditor bloc to the debtor bloc?

Fidel: Yes, provided the debtor bloc believes in that and gets organized
for that.  The reprisal is a way to frighten unruly boys.  In imperial
Rome, which had a senate as democratic as that of the United States, the
debtor who did not honor his debt was automatically made a slave, in
conformity with Roman Law.  Could the U.S. Senate, which votes on
questions of foreign relations, decree the slavery of 4.2 billion people
spread throughout the world?  The slavery lies in the payment of an injust
debt, not in its technical, ethical, or political renegotiation.

FOLHA: What would the creditor bloc gain by that?

Fidel: It would gain the respect of civilized men.

It would also gain the preservation of affluent capitalism, not just the
redemption of the oppressed capitalism.  It is worth repeating that the
greatest risk of collapse hovers over the creditor bloc, no longer over the
debtor bloc, which is losing everything, including its decisionmaking
sovereignty on economic matters.

FOLHA: What are the economic advantages, as far as the creditors are
concerned, of a partial amnesty on the Third World's debt?

Fidel: The advantages are in the fact that the indebted countries will have
to reorganize their internal economies.  For the industrialized nations it
will mean recovery of the structure that supplies them with raw materials,
more trade with developing countries, which will start to grow once again,
and continuing business for multinational corporations in currently
indebted nations that import capital and technology.  Latin America will be
able to purchase twice the amount it currently purchases on the U.S.
market.  This will help reduce unemployment in the United States, the main
political drawback of Reagonomics [preceding word in English].  According
to my estimates, the purchasing power of the Third World on the European,
Japanese, and U.S. markets would grow by almost $100 billion in the next 12
months; not a negligible figure by any means.

FOLHA: This amount would be with held from the banks, regardless of whether
or not it is legitimately theirs.  What would be the bankers' reaction?

Fidel: That of an ostrich.  They do not want to invest in correcting the
system.  They believe that they are passengers on a different ship or
inhabitants of a different planet.  Now, we are not proposing bankruptcies;
what we are doing is indirectly trying to save the banks, as I have already
said.  First of all they would receive from their respective governments, o
the taxpayers, the illegal portion of the debt that would have been
"erased" by the international bodies.  A 10- or 12-percent reduction in
military expenditures, which are excessive anyway, would bring about a
miracle without weakening national defense, without increasing taxes.
Achieving peace on the interest rates means securing the peace of the
missiles.  One-tenth of military expenditures would pave the way for
international detente.

FOLHA: In the final analysis, the whole thing would be resolved through a
simple accounting operation, is that right?

Fidel: The tragicomic aspect of the debt is the fact that a mere distortion
of accounting procedures has made the lives of more than two-thirds of
humanity sheer hell.  The solution is equally simple.  However, simple
things are not taken into account.  My proposal, taken by itself, would
mean going against the terrible alliance of bankers and generals.  The
former do not want to change the rules of the game, and the latter do not
want to pay the bill.

FOLHA: Would the debtor countries, Cuba included, also make proportionate
cuts in their military expenditures?

Fidel: In an atmosphere of internal relaxation and external detente, yes.

FOLHA: President Reagan claims that he has saved the U.S. economy and that
he will save the economy of the entire world, of course without changing
the rules of the game.  Wouldn't this proposal, as utopian, shall we say,
as yours, prevail, resulting in the shelving of the Cuban scheme of
renegotiating the debt and reorganizing economic relations on a global

Fidel: First of all, the project is not Cuban because we do not have a
monopoly on common sense.

In the second place, if my proposal is regarded as utopian by foolish men,
President Reagan's project for the recovery of the world economy is based
on a beautiful fabrication, not to say an elegant lie.

FOLHA: What is Reagan's fabrication?

Fidel: Of believing himself capable of reenacting Roosevelt's prowess of
streamlining the economy and of extricating the United States from the grip
of a crisis much worse than that of the thirties.  In fact, the U.S.
economy has grown by 6 percent while inflation has remained at less than 4
percent.  The growth of the GDP while prices remain stable is the greatest
achievement of any administrator.

FOLHA: Where is the lie?

Fidel: In the mirage of the oasis in the desert, in the illusion not only
of the President of the United States but of a good segment of the U.S.
public and of a good number of economists and politicians, both inside and
outside the United States.  The essence of this illusion resides in the
building of a magnificent sand castle a few feet from the sea.  The U.S.
recovery is only a facade.  Its basis is not secure, and the internal
process is a repressed volcano as is the nature of the monetarist economic
thinking with which the capitalist administrator has been brainwashed.
This can first be verified from the outside: The U.S. recovery, which has
some impact in Western Europe, is taking advantage of the extortive profits
on interests on exported capital and of the unfair gains on the relative
prices of imported and exported goods, gains that are multiplied by the
artificial appreciation of the dollar at the expense of the artificial rise
in interest rates....  The super-dollar is buying more and more with less
and less.  And not only is it buying foreign goods and services, but it is
"internalizing" them at a lower cost, deflating internal consumption.  The
order of magnitude, in this case, is $1 billion per day since January.
This means that the United States exports inflation in its interest rates
and its prices while importing deflation in relative prices and real
interest rates.

FOLHA: Where is the eruption of the repressed volcano?

Fidel: The U.S. public sector is carrying the largest deficit in the world
in absolute terms, and it is trying to set a record in relative terms.  The
gap between the revenues and expenditures of the central government is
projected at $210 billion in the next 5 years.  The public debt expressed
in government securities, which are sold precisely to finance the public
deficit, is heading toward the $2 trillion mark, which to me seems beyond
imagination, more like science fiction.  I grant that I do not understand
how it can be administered, even from. the accounting standpoint.  But I
know through my economic advisers that the U.S. Government is, technically
speaking, the holder of the largest foreign debt in the world....

FOLHA: By how much?

Fidel: I don't care.  The U.S.  Government has a callable debt almost as
large as that of the Third World.  This must be thought about in economic,
political, and military terms.  In a few words, the Government of the
United States, the greatest power in the solar system, owes its soul to the
domestic and foreign financial market.  A simple accounting problem,

FOLHA: In plain terms, thanks to Bretton Woods, the United States owns the
world mint.

It can afford the luxury of operating the world's economy with a forged
currency, printing the universal dollar without national backing....

Fidel: Unbelievable, isn't it?  The manager of that fantastic machinery is
the IMF.  In 1972, Nixon started the project rolling.  He ended the gold
backing of the dollar, by telephone.  He did so because the gold backing is
an accounting asset that depends on a physical asset the evil metal of
which the Soviet Union, the pariah of the monetary planet, is the largest

FOLHA: Let's keep the skein of thread in our hands.  Is the economic
recovery of the United States under Reagan a mirage of the Mojave Desert,
the desert of death, and why?

Fidel: The Mojave is well remembered.  The rattlesnake of the world economy
is the so-called FED [Federal Reserve Bank], the central bank of the United
States.  The FED president, who is not accountable to the President but to
Congress -- which seems to me a wholesome democratic rule -- dictates the
monetary policy which, in turn, sets the limits of the budgetary policy.
The fiscal effect of the budgetary policy has an impact on the foreign
exchange as part of the monetary policy -- and there the manipulation of
the world economy begins.  Through the FED monetarists, the White House
strategists decree the rates of inflation, unemployment, and the discontent
of the rest of the world.

FOLHA: Do you mean the rest, literally?

Fidel: Yes, because the market that includes the socialist orbit also
suffers from the vagaries of crazy capitalism.  We are passengers on the
same ship.

FOLHA: Before going on to that subject, that of the interdependence of the
countries and their respective systems, I would like to resume the
discussion of the thesis of Reagan's fantasy.  Is the U.S. fabricated
recovery of the world economy nothing but a bluff?

Fidel: The true bluff begins with the existence of that universal currency
called the dollar, which has been financing the economy of the United
States, both internally and externally, since the postwar reconstruction.
What was the military adventure in Vietnam financed with?  What is
financing the deficit of the U.S.  Treasury, a debt that reaches nearly $1
trillion, with rollovers guaranteed by securities that are worth only the
paper they are printed on?  Have you imagined the political advantage of
waging war without taxes, of a deficit without taxes, of the conquest of
space without taxes, of the star wars plan without taxes?  Have you
imagined how easy it is to govern that way, carrying out projects without
paying the bills?

FOLHA: The latest White House budget has reduced expenditures at the
expense of social security....

Castro: Yes, this was a move to disguise other expenditures, However, the
fiscal savings obtained through a reduction in the investments in
education, health, and social security is far from compensating for the
increased expenditures for weapons, ammunition, and military research.  The
1980 military budget during Reagan's first administration was slightly in
excess of $135 billion.  The current military budget already totals $277
billion and is on the road to the $314-billion mark in the next fiscal
year, with a "strong dollar" to boot.  The military budget more than
doubled over a 5-year period.  Precisely over this 5-year period the
interest rates on exported capital more than doubled and, if the dollar
quotation in foreign countries is also calculated into that perverse
equation, the relative prices on trade involving the importation of goods
and services have dropped to one-half.

FOLHA: Is the United States exporting revolution?

Fidel: Yes, they are exporting revolution in the form of inflation,
recession, rebellion, and subversion.  And in that fierce destabilization
campaign against friends and foes alike, even to a greater extent against
its friends than against its foes, it is using the "austerity policies" of
the IMF, an international or transnational organization that has assumed
the role of a task force for U.S. interests in all the economies of the
world.  I used to say that the IMF is the Aladdin's lamp of the White
House, so much so that Reagan reelected himself with more production and
less inflation, besides the largest military budget in history, without a
tax increase....

FOLHA: If the submissive world is the foundation of the castle, I feel that
the foundation is firm.  Where does the risk to the Yankee system lie?

Fidel: It lies in the illusion of impunity.  The capitalists say that there
are no free lunches.  Well, then, the United States is having free lunches
at the expense of others.  We even have available the exact amount of their
unpaid bills.  In this case, it is the public internal and foreign debt of
the treasury, totaling approximately $1.5 trillion, which is on the road to
the $2-trillion mark. . . . One-third, a fiduciary liability totaling $650
billion, is in the name of foreign savings account holders.  Who will honor
such a commitment?  The illustrious government mint will, because that
martial debt will be "rolled over" by using printed paper.  It will not be
paid with production, with hardship, with recession, with inflation, with
unemployment, or with poverty.  Overnight, the modern printing machines of
the U.S.  Treasury pay off debts worth billions.  This is how "Reaganomics"
is supported.  The public debt of the U.S.  Government needed 205 years to
reach the first trillion and less than 5 years to reach the second

FOLHA: Even so, the world will continue paying the bill.  I repeat, where
does the risk to the system lie?

Fidel: In the material fatigue of that magic model.  The public debt of $2
trillion in this decade cannot be eliminated by decree.  The recourse to
"rollovers" using printed paper inflates the interest rates universally.
The financial cost of that public debt, although it is merely an accounting
item, refuels the budgetary deficit, which this year has been placed at
$222 billion.  At least the growth of that deficit goes through the sieve
of Congress and catches the attention of the voters and taxpayers.  Besides
the accounting discomfort there is a physical constraint, that is, the
surging trade deficit, which is getting closer to $500 million every day,
nearing almost $13 billion per month.  How many unemployed does it take to
make up a trade deficit of $150 billion?

FOLHA: According to Robert Watkins of the Department of Commerce, there are
nearly 380,000 men, just in the automobile-producing industry alone.

Fidel: Imported automobiles have already seized one-quarter of the U.S.
market and are on the road to the one-third mark.

FOLHA: The U.S. market is the most open in the world.  According to
projections made by the Department of Commerce, the United States will be
importing 43 percent of its cars in 1988, 34 percent of which will be

Fidel: Within the rhetoric of free trade, the United States is demanding
that the Japanese market open to U.S. made automobiles.  Well, Japan has
just done that.

Prime Minister Nakasone appeared on television and asked the Japanese
people to please buy automobiles "Made in the U.S."  How many automobiles
have been sold through reciprocal "marketing"?

FOLHA: None.

Fidel: As a result, whoever does not practice reciprocity with the Japanese
and the Europeans, who are jetting the best returns from productivity,
quality, and pricing, winds up decreasing tariff barriers against the raw
materials and the manufactured products of the Third World, who are
precisely the partners with dollar debts.  How does that short-sighted
protectionism harm Brazil?

FOLHA: A surcharge on 24 percent of our products affects 42 percent of our
sales to the United States, not to mention the European protectionist chain

Fidel: This is, undoubtedly, a magnificent endorsement for socialism.
Since when does retaliatory protectionism rule the market economy?  My
judgment on this is as follows: 85 percent of Cuban trade is carried out
with the socialist countries, under CEMA regulations.  Reciprocity is
guaranteed by medium- and long-term reference prices and quota contracts.
The remaining 15 percent of trade is carried out with capitalist countries
with which we sustain losses, particularly in the case of sugar, which is
the most debased product in the world economy.  The so-called free market
does not even pay for a third of its cost.

FOLHA: With the sugar trade, Brazil loses $1 million per day.

Fidel: Who is the terrorist, then?  The German beets, the American corn, or
the British diet products?  The terrorists are the irrational subsidies to
producers, which are paid by the taxpayers, who, in turn, are the consumers
themselves.  The rulers are violating the market laws, which are the
essence of free enterprise.  They make donations with the people's money
and they are applauded by the people themselves for this....  Then, on the
international front, they impose barriers and surcharges on their
capitalist trade partners, and afterward they deliver speeches in defense
of the free market economy, and blame their ideological opponents, who are
blackmailed as promoters of the arms race, for all the evil things in the
world.  This arms race, which has been transformed into a new economical
and technological "frontier," is financed by the indebted, plundered, and
native countries.  Japan may be the next victim.

FOLHA: In what sense?

Fidel: Well, the Japanese do not make bombs or missiles.  They work hard,
with discipline, and manage to have the world's second largest GDP.  For
an island that was pulverized by Truman's atomic bombs, they are at the
vanguard in managerial techniques and bravely compete on the "front" of
high technology.  Japan adopted a capitalist system that turned out to be
successful, one that can be regarded as an example.  But bow long will
Japan be able to sustain its trade surplus, which is growing toward a
$50-billion bilateral trade with the United states yearly?  It is a surplus
obtained with hard work and efficiency.  Let me say more: Considering that
Japan is a bad commercial example for the United States, Will Brazil be
able to repeat Japan's success in the future?  No.  It has been decreed: It
is prohibited from becoming a success.  The 30 million unemployed on both
sides of the North Atlantic are charged on Japan's and the Third World's
account, not to the administrative obsolescence of the industrialized
economies, an obsolescence that is covered up now with progress in

FOLHA: Will capitalism be poisoned by its own venom?

Fidel: No.  I still believe in the reasonableness of the people.  If it is
true, as I said before, that crises are the seeds of ideas, the IMF is now
planting a huge crisis at the bottom of the international financial system,
inasmuch as it does not let the indebted work to pay the debt.  Here we
pick up the thread of the skein: The "debt crisis" will reach its climax in
1988, and at that time, the idea should sprout in the form of some sort of
opening or solution.  Things will have to change, for good or for bad.
This is a law of nature.  In 1988 at the latest, the utopian or fantastic
proposals of renegotiation of the foreign debt outside the bank offices
will function as lifesavers on the cresting waves wrecking the ship.

FOLHA: The wrecking of the Titanic...

Fidel: Yes, the Titanic, the financial system, which is vaunted as
unsinkable.  On that day, we will stop paying the illegitimate portion of
the debt, and we will negotiate, from a position to strike a bargain, the
honest repayment of the legitimate portion by reshuffling rates and payback
periods within the limits of solvency of the nearly 120 borrowers spread
over the planet.  The project is simple in this case: reestablishing the
terms that were used until 1979.  The banks for more than a century had
been lending money at 6 percent per year, regardless of the variation in
internal prices.  In 1978, when the West was already hit by the oil crisis,
the interest rates still remained below the rate of inflation in the
credit-exporting countries.  Why not save the rich and the poor by
reestablishing the rules of the capitalist game?  Am I dreaming of an
utopia?  But I will go even further: Will it be necessary to see the
explosion that is in the offing to realize that the service of the debt is
linked to the trade balance?  The payment of interests will have to be in
relation not only to the value of exports, but with the formation of a
liquid balance in trade because the debtors need to make essential imports.
Of course, superfluous purchases would not be entered in the calculation of
the liquid balance.  And why not involve the IMF and GATT in the same
statute, by sponsoring preferential trade tariffs in creditor-debtor
relations?  Foreign debt can only be paid with GDP converted into the
creditor's currency, right?

FOLHA: The mounting crisis of the debt plays the role of an "iceberg"
[preceding word in English] on the course of the financial system dubbed
the Titanic.  The collision course is set for the "crash" [preceding word
in English] in 1988.  The solution to all the evils of the world will
appear just as the ship is sinking.  Must we wait for disaster to strike?

Fidel: No, we must avert the disaster.  Prevention is cheaper than
treatment.  Using your own description I would say that the "iceberg" that
is threatening the creditors is rudderless, impelled by its own momentum.
It is up to the creditor's Titanic, equipped with sophisticated controls
and capable of navigating by instruments, to avert a collision...

FOLHA: As long as the captain can read the instruments properly.

Fidel: That is where the problem lies.  I do not believe that the bridge
crew is fully qualified.  The alarms have been sounding since 1982 and we
are now half way through 1985 without any change of course having taken
place so far.  As far as the captain of the ship is concerned, the sea is
calm, the night is clear.  This is what they said just now in Bonn at the
summit of the seven powers.  The radar of the Willy Brandt Commission has
not been taken on board, it was not part of the Bretton Woods project, and
it did not even cross the minds of the bankers, the guests in the ballroom.

FOLHA: Is the captain really deaf and blind, or does he play dumb for
reasons of his own?

Fidel: I would not like to suggest hidden intentions; I would prefer to
assess what I can see from my own point of view.  I am not a banker, nor am
I chief executive of a capitalist country.  The reorganization of
international monetary and trade relations affects Cuba's short-and
long-term interests.  The placing of the system on rational or fair
foundations is, as far as Latin America is concerned, a way out of the debt
deadlock.  For Cuba it would mean the possibility of borrowing money, that
is, gaining access to additional savings that would allow us to carry out
plans for fast growth in keeping with the guidelines of our third 5-year

FOLHA: Have your ideas on multilateral renegotiation of the Third World
debt been offered to the bankers, if not to President Reagan himself?

Fidel: I am sending copies of my projects to Latin American, African, and
Asian heads of state.  Just the other day I received an answer from
Tanzanian President Julius Nyerere, who speaks for the Organization of
African Unity.  In March President Nyerere spoke at The Hague Institute of
Social Studies and at the Royal Commonwealth Society in London.  He
established the connection between debt and misery, a debt contracted to
put an end to misery.  It seems that he managed to arouse the feelings of
the listeners.  I have just discussed this issue with the Algerian
president, who is visiting us.  I am planning to send the material to
President Sarney or at least to ministers Joao Sayad, Dornelles, and

FOLHA: Before or after relations are resumed?

Fidel: The urgent nature of the crisis allows us to waive formalities.
Brazil and Cuba share the same interests in this matter.  Furthermore, my
thoughts on this issue and related material are set forth in a 240-page
book which was originally submitted to the seventh conference of Nonaligned
Movement countries held 2 years ago.  I repeat that I have been
concentrating on the "debt crisis" [preceding word in English] since 1982.
I am fully convinced that breaking the debt deadlock is a "sine qua non"
prerequisite of resolving world problems.  Thus, this debate is of interest
to all men of goodwill, to all nations, to all systems, to all
corporations, to all governments.  We are all passengers on Noah's ark and
the deluge is into its 39th day.