Caracas’ oil central to convoluted nexus of global players’ interests – US-Cuba trade council chief

SS: So we have lots to talk about, but allow me to start with Venezuela, because it's such a hot topic right now in the news. From one side, we have the U.S. government that is supporting the opposition leader as a legitimate leader, putting in sanctions. On the other hand, Maduro’s government is still somehow holding on. What do you think will happen at this point, because America is so involved in this crisis, and the crisis is nowhere close to being resolved? Do you think it will actually have to intervene directly in Venezuela at some point?  

JK: Venezuela has become a contagion in the Americas, just like Syria has become a contagion in the Middle East. It's quite likely that Mr. Maduro will eventually leave, the challenge will be: how do you go about doing that? I think that the Chinese government and the Russian government have privately come to terms that the relationship that's important with Venezuela is the commercial one, so this is now about how do we extract what we're owed, and how do we do it efficiently. With respect to Mr. Maduro, the biggest problem now is where does he go. Because the likely place would be Cuba, and, of course, Cuba's relationship with Venezuela is well-known. But the problem is that if Cuba were to say to Mr. Maduro: “Come here!”, and if Mr. Maduro were to leave, then, for a moment, Cuba would be looked upon as: “Great, you've helped solve a problem, now we can move forward”. But the problem with that is, immediately, the United States and other countries would call upon Cuba to send Mr. Maduro to the World Court, so then we have another problem. In terms of Mr. Guaido, he's played a useful role, but I think that the mistake he's made thus far is not announcing that he would not stand for President. So to say to the Venezuelan people and to the international community: “I've done my role, which I believe is a constitutional one, it’s the interim president, but don't look for me to run”. I think if he were to do that, the situation in Venezuela would be perceived as less one of the United States' control, and countries like Russia and countries like China may then look at it as something that's a little more easily resolvable. I don't think there'll be military confrontation, because there are too many players. You have the Venezuelan military, you have the Cubans, the Russian Federation, the United States, Brazil, Colombia, there's a lot going on there that would be combustible, and I don't think we'd bring a resolution. So I don't see a military confrontation. But I do see Mr. Maduro eventually leaving, the likely place is Cuba, but Cuba is going to need some assurances that in the morning it won't be seen as a hero to resolve something, and then, in the afternoon, be penalized for not sending him somewhere.

SS: So you've mentioned yourself that if the opposition leader in Venezuela were to say: “I'm not running for president, I've done my job”, then the American involvement in Venezuela wouldn't be so, so to say, spoken loudly about. Because if you go outside America, for this part of the world, for instance, the intervention in Venezuela's inside politics is very clear-cut. America is taking sides and is making a point to be on one side. Why do you think the United States administration is so deliberately taking sides, because you're saying, other countries like Russia and China are also having a secret consensus, that this is an economic thing, and as far as we can move from there on, then that's fine. But America is very vocal about supporting one side, why, do you think?

JK: Well, Venezuela gets somewhat metastasised. It was initially a Venezuelan issue, you had a President of Venezuela that was causing economic and political pain within the country. The United States looked at that, I think, in terms of members of Congress specifically, looked at it in terms of, this is an issue that potentially is good politically, and also, we can make a change. The problem is the connectivity with Cuba, and when Cuba's interest is to maintain its commercial, economic relationship with Venezuela, and that means, Mr. Maduro in place. You now have this triangulisation. And in U.S. politics, whenever you can add Cuba to something, you're going to maximize its value. And with Venezuela, and I hate to say it, but it is true, the state of Florida is incredibly important politically now, and during the last presidential elections, the last three of them, the state of Florida has been won by approximately less than 1 percent of the vote. So when you have what is now estimated at one hundred and fifty thousand people of Venezuelan descent living in South Florida, when you have 2 million people of Cuban descent living in South Florida, and South Florida remains very, very important in terms of how the state goes. For any administration, that's going to be tantalizing, and so you have two U.S. senators, Senator Rick Scott from Florida, Senator Marco Rubio from Florida, who've taken the lead in terms of helping the President. So there is a domestic political dynamic to this. The optics, as you said, are that the U.S. has already invaded Venezuela. The optics globally are, you know, this is, we created it, now we are trying to manage it, and we're trying to then have some kind of a resolution.

SS: I certainly understand the domestic optics and the logic behind it, because elections are coming. I understand that. But there's also the international optics to it. So when America says Maduro is a socialist dictator who treats his people really badly, that argument would stand ground if American administration, all throughout 20th century, didn't change regimes in Central and South America and didn't put up dictators that would actually also treat their people just as badly, and in some cases, even worse. So I'm thinking, maybe it's not that much about Maduro treating his people badly, but really, about erasing Chávez legacy?

JK: The Chavez legacy is... It's going to take much more than just the erasing Mr. Maduro to erase Chavez's legacy. But there is a reality, and the reality is that Venezuela is an economic mess. And because Venezuela is an economic mess, because it can't pump oil, you then have the oil issue coming into this, and this is where it gets byzantine, but, in order for Russia and China to get repaid, oil prices need to be high. Because that way, Venezuela, if it can pump more oil, it can get more for it to repay what it owes. The problem is that for Russia, high oil prices are good – it's a producer, it's an exporter. China is a net importer. So in order for China to get money that Venezuela owes it, oil needs to be high, but it's not in China's interests for oil prices to be high. Cuba, which has a role in Venezuela, they want oil prices to be low in terms of what they pay for it, but in order for Maduro to have enough money, and Venezuela to have enough money to provide them with subsidised oil, oil needs to be high. But that doesn't help Cuba, because then the subsidies go, well, the subsidies go up, but still, the price goes up. And then you have OPEC. OPEC wants high oil prices, but that's not necessarily good for the United States. The United States needs relatively high oil prices to help the domestic producers, the frackers. So you've got all those... My point of all that is there isn't anyone that can win and anyone that can lose, it's not zero-sum, everyone's going to win anyway.

SS: But do you think the U.S. has a strategy, because what has been done time and time again is that U.S. would involve itself in a war with a country that has oil and a dictator, but then, that country would be in shambles, like Libya or Iraq, because there is no post-war or post-intervention strategy that would actually put that country on the world map as a progressive democracy. Do you know what I mean?

JK: Yeah, I think it would be fair to say that if we wanted… You know, talking about, let's say, Syria, for example, because…

SS: Libya or Iraq.

JK: Libya. You have disasters in terms of what came next. And that, I think, was a problem of every actor that was involved. And they're trying to look at today, and they're not looking at tomorrow. Syria is a great example, because when that conflict began internally, the smart play during the Obama administration would have been to ask Lebanon, to ask Jordan, to ask Turkey to close their borders, and basically snuff it out. It would have been much easier at that stage, as opposed to what they decided not to do, and then closing the embassies, all of all of the European Union and other countries... You leave diplomats on the ground, you leave the embassies open, it makes it much harder for governments to take actions that are very harsh. So there were a lot of mistakes there, and look where we are today. Look what we have in terms of the catastrophic damage that's in Syria.

SS: That's why everyone's so cautious looking at American involvement in Venezuela now, because the big question is, do you have a strategy, or is it all about just overthrowing Maduro? That's the big question.

JK: I don't know what the Trump administration strategy is, but how they’ve presented it, Elliott Abrams, who is the Special Envoy, he has a lot of experience, but he doesn't have the greatest table manners when it comes to sharing what it is he wants to get done. I think that's one of the problems of the Trump administration has is, who's out front and what they're saying out front as opposed to what they're trying to do behind the scenes. But it... There isn't going to be a nice, clean resolution to this, there are going be some unhappy players.

SS: John, do you see Trump's logic behind his moves towards Cuba, because it was a big breakthrough during the Obama era, when the relations between the United States and Cuba were finally starting to normalize. I mean, even people over here were like, oooh, that's great! Why do you think he has reversed that? Why is he about, sort of, reversing everything that Obama has done, especially in terms of diplomacy?

JK: The Trump administration has a visceral reaction, and the President does. Basically, whatever his predecessors did in office, he looks to undo, and whatever they didn't do, he looks to do. In the case of Cuba, there's shared blame here. The Obama administration and the Castro administrations did do quite a bit, but they also didn't do much of the hard stuff. And primarily, the reason that neither of them did the hard things was because they both expected an election outcome in 2016 that didn't happen the way they expected. The Cubans were basically going along and slow walking, because they figured Mrs. Clinton would win. During the transition, then they could deal with the Obama administration that would want to clean everything up and move on. Obama administration, you could have waterboarded them, and they would have told you, there is not going to be a victory by Donald Trump. So they never planned for what they didn't want or didn't expect. They didn't plan for the unknown. So then we get to when President Trump is elected, and then what happens during the transition? Fidel Castro dies. So it puts Cuba right at the centre, and everyone looking for a job in the Trump administration now is outdoing themselves to be harder on Cuba than the next person. And then you move into 2017, there isn't much done at the beginning. Then the president starts to do some things, and basically it's because they're focusing a lot of issues, just like George W. Bush – when he was elected, the perception was he was going to get very hard on Cuba right away, and he didn't. With President Trump, it's been disappointing, from the business community's standpoint, U.S. companies…

SS: I was going to say, because Cuba is a country with an educated workforce, with an infrastructure. I mean, surely, there are such good business opportunities for Americans, and President Trump… You can say many things about him, but he's a good businessman. I mean, he should surely understand that this is something he shouldn't be passing on.

JK: And it's frustrating. Right now, the U.S. business community, we want the claims to be resolved, because that's basically the foundation upon which everything else rests. And it would be natural, because President Trump says: “I'm a negotiator, I like to negotiate”. What they've done thus far with Cuba isn't about negotiating, and it isn’t about moving the commercial relationship, sort of, back together or re-healing it, it's more about the politics, and it's more about looking tough, and it's more about, basically, creating distance as opposed to solving problems.

SS: Couldn't business lobby lobby its interests into this?

JK: For the most part, businesses… Cuba's just not worth it, and that's one of the problems. One of the… On my recent travels, I’ve been meeting, whether it's with EU representatives, with companies, with governments, is to try to get them to encourage the Cubans to agree to negotiate the claims, because the claimants are very willing and very interested to settle the claims. They're basically the Cuban government's best supporters, and what we're trying to do is to get the Trump administration to say: “Look, you said that the purpose of recent policy changes is, yes, to encourage democracy, but it's also supposedly to settle these issues. Well then, why aren't you doing some things to settle these issues, you seem to be going the other way?” And unfortunately, again, it's politics, it's domestic politics, it's the state of Florida, but also, Cubans haven't been great either.

SS: Let me clear something up about the state of Florida, I understand that's a very important state for the elections. But are the Cubans who are living in the state of Florida against the Cubans that are living on the Cuban island, what do they want? Do they want a better relationship with Cuba, or not? What would score points?

JK: It’s not monolithic. That's... The problem is that, if you're a political consultant and you see that you may… Your victory and defeat may be 1%, then, it no longer matters whether someone tells you, look, this 2 million potential vote bloc, they're not 90-10, they're not 80-20, they're not 70-60, maybe, 50-50. But if you're looking for a victory, you're like, ok, how many of them am I going to lose if I'm tough? How many am I going to gain if I'm tough? And the calculus thus far, and we see it every presidential year, is generally: get tough, and you're likely to keep more votes than you're going to lose.

SS: Also, I'm thinking, you said, when Castro died, everyone was so quick to be harsh…

JK: It was horrible, it was the worst timing ever.

SS: But I mean, you still have a Castro rule in Cuba. Do you think normal relations between U.S. and Cuba is possible while a Castro is at the helm of the country?

JK: It’s a great question, and the answer is: no, until both of them are under ground. There is a certain segment of people in the United States, not just Cuban Americans, but political people that are just conservative, that are going to say: until they're both dead, we're not going to move on. Now, the good news is that President Diaz-Canel is the perfect post-Raul Castro President, because he's sort of benign, he's a technocrat, physically, he's not threatening, doesn't wear a military uniform. So he basically has all those credentials. I predict that he'll probably be a one-term president.

SS: Visuals really matter, huh?

JK: They do, they do. I'm not endorsing it, I’m not saying it's great, but they do. And when, you know, Fidel Castro, the scraggly beard, the military uniform – what did that remind people of? Raul Castro, the military uniform, the same, and, being older, the same sort of thing. How people perceive a country is really important, especially in the United States, so when you've had two Presidents that wear military uniforms, and now you got one wearing civilian – it makes that messaging a little easier. But you're right, the military is still very much in control of Cuba, and Raul Castro still controls the military. And that's another issue, because the Trump administration has now grabbed on to that, the military control of the Cuban government. And that scared off companies, sort of circling back to what you asked about. One of the reasons companies are very quiet is, the Trump administration has been brilliant about connecting commerce and the Cuban military. So no company wants to go on your program, go on CNBC, go on Fox News or CNN and say: “Yes, we like dealing with the military, we think it's good to have military controlling a country, controlling the economy”. No one wants to go there.

SS: So do you think it will ever go back to Obama-time paradigm between Cuba and the United States?

JK: It will. So I think the answer is, it will. The question is, when? I think that much will happen when Raul Castro dies, it'll just make it easier for people to take that next step, saying: “Ok, I may not still forgive everything, but the two of them are dead, so maybe now I can make some things work”. The other will be, what Cuba does? And traditionally Cuba has grabbed defeat from the jaws of victory. When they have an opportunity to move forward and to make the relationship a better one, there’s always sort of something that they decide to do that just makes it really tough. Sometimes it's, it can be as little as a statement that they might make about North Korea, or about Libya, or Syria, or Iraq, or something, and it just sets the political momentum backwards. And then everybody just freezes in place, and no one wants to be out there sort of supporting the Cuban government, when they're unsure of what the Cuban government's going to do next. Right now, it's basically about the claims. You get the certified claims settled, everything else starts melting away. And what's most important, countries that are involved in Cuba, the Russian Federation is, in meaningful ways, China is, et cetera… The value of all their assets go up as soon as the claims are wiped away, because then, there are no impediments. So from that standpoint, it's all in their interest to move something.

SS: Last question, about the wall, the border wall between Mexico and America, because we spoke so much during this interview how a lot of political decisions are taken because people want to score points in domestic policies, and for the elections, elections that are coming up now. This wall is a multifaceted mystery, in terms of Trump being so unpopular in his own country because of this wall, he has walked into a media scandal, a PR crisis for himself. Everything that's going on with that wall, like families separated and children in cages, this is all for the cameras. Everyone is seeing that. On the one hand, you understand that probably his electorate is anti-immigration, and he wants to fulfil his pre-election promises. On the other hand, we're talking about the fact that Florida's vote is very important. How would that be favourable for the Latin American vote in America? Building a wall.

JK: It could have been managed in a much more different way. Some of the visuals are just horrifying, especially with the children. But they've decided, rightly or wrongly, but they've decided that all of that doesn't matter as much as pushing forward and being able to say that, as he does and as he successfully has: “When I ran, I gave you a list of what I was going to do, and, rightly or wrongly, people want it or not, I'm checking off the list, moving the embassy in Israel…” So he's going through the stuff, and for him, I don't think it matter much how many kilometres, how many miles get done. It's that there's something there that's happened under his watch that will generally be defined as a wall, as opposed to a fence, barrier or burn, whatever you want to call it, but that he can go to, and he can stand in front of, and he can say: “All right, you can argue on how long it is and the rest of it, but I told you that we were going to build something, and we are.”

SS: All right, John, thank you very much for this very interesting insight. We wish you all the best of luck, and have a nice rest of this day.