The U.S. government obstinacy that keeps a next-door neighbor and a potential multi-billion market off limits to American citizens, farmers, and businesses has potential to become even more ludicrous.

Cuba, 90 miles off Florida shores — but frozen in a tragicomic Never Never Land as a result of the travel/trade embargo imposed by the U.S. more than four decades ago — is being eyed closely by American energy interests as foreign companies search for oil in Cuban waters.

The U.S. companies can't be too happy that our government's policy keeps them on the bench while a major Spanish oil/gas outfit is spending big bucks searching for oil in the Gulf of Mexico off Cuba's northwest coast. As tied to the coattails of Big Oil as the Bush administration is, one can imagine the pressures coming from Halliburton and other U.S. oil interests wanting to get in on the potential gravy train.

Which makes all the more puzzling the administration's recent tightening of the sanctions noose around Cuba's neck, a move apparently aimed at placating the politically powerful older generation of Cuban-Americans who still passionately hate dictator Fidel Castro. The more stringent rules are vigorously opposed by younger Cuban-Americans, who are severely hampered in maintaining ties with families, and by U.S. agricultural and business interests who see billions in trade going to other countries.

In pre-embargo days, Cuba was a leading market for U.S. rice and other agricultural products, and a favored winter travel destination for Americans. In the 40-plus years since sanctions were imposed, the rice market has gone to the Far East, which entails huge shipping costs compared to rice from U.S. ports 120 or so miles away.

Canada has been producing oil in Cuba for years. Other companies have been active in recent times, with limited success. But there is widespread interest in the possibilities for offshore oil, and if it's there you can bet U.S. companies are salivating for a slice of the pie.

Major oil finds would also resolve a key sticking point in trade with Cuba: money. When the Soviets severed their ties, Cuba's treasury took a big hit, making it more difficult to buy foreign goods. Oil — particularly at today's price levels — could finance a lot of purchases of farm commodities and other products.

Since Big Oil has been reluctant to spend any of its billions of dollars for U.S. refineries (not a single new facility has been built in more than 20 years), major discoveries in Cuba could spur the construction of refineries that could be of strategic benefit to the U.S. oil industry (it wouldn't hurt, of course, that such facilities likely would not be subject to the stringent regulations that have hampered expansions in this country).

In the meantime, there may be opportunities for emergency sales of U.S. farm products in the face of a drought, said to be the worst in 40 years, that is devastating crops in Cuba. Food shortages are already endemic, with lines forming at 2 a.m. in markets and fights reported among those unable to secure food for their families.


e-mail: hbrandon@primediabusiness.com