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TUESDAY, MAY 14, 1985

At 4 p.m. Fidel Castro met Joelmir Beting and me in his office on the third floor of the Palace of the Revolution. The comandante led us through the halls to a suite of rooms where his coordination and support team works. He introduced us to nearly the entire group, explaining the responsibilities of each. The Brazilian journalist asked about imports of oil, the main raw material for the island’s energy system.

“We generate a part of our electricity from bagasse during the sugarcane harvest season,” Fidel answered. “All the sugar mills are run on sugarcane bagasse. Our country produces 20 million tons of bagasse — the equivalent of more than four million tons of oil. We use all of the bagasse. We have five factories that make wood from bagasse, and several factories use it to make paper. We aren’t going to produce alcohol to fuel cars for recreational purposes. We use molasses as an animal feed and in the production of proteins. In addition, it’s the raw material for making rum and domestic and industrial alcohol.”

“What about must?” TV commentator Bandeirantes asked.

‘It’s being used a lot for animal feed. The must is washed, dried in the sun, and given to the animals. Ten factories are producing feed from molasses. Up to 50 percent protein is obtained through a special fermentation process. It is used as poultry, hog, and cattle feed. We trade a ton of this animal feed to East Germany for a ton of powdered milk.”

“I’ve heard that because of an environmental protection law, every automobile in the United States will use yucca alcohol as fuel starting in 1986,” Joelmir Beting said, “and it’ll cost 45 cents a liter. Brazil would be in a position to ship alcohol to US ports at 30 cents a liter, but the legislation of that country keeps it out, defending local industry. Brazil produces 2,500 liters of alcohol from every hectare of sugarcane — enough to meet a car’s needs for a year.”

Fidel said, “Just imagine how many hectares of sugarcane are needed for so many cars! It’s sad to think that all that land is used to feed cars instead of people.”

Joelmir Beting explained, “It takes four million hectares of sugarcane to produce 10 billion liters of alcohol a year; this means a saving of $600 million a year for the country.”

“Cuba produces more than eight million tons of sugar a year in an area of 1.8 million hectares. We want to extend that area by 200,000 hectares.”

“Brazil imports wheat,” Joelmir said. “It’s spending $1.2 billion a year — twice as much as it saves by producing alcohol — on wheat. If Brazil planted a million hectares of wheat, we’d save more than we’re saving now by planting four million hectares of sugarcane for producing alcohol. A policy promoting the planting of wheat — which we don’t have — would be more profitable than the policy of producing alcohol. Unfortunately, fuel for machines is more important to the Brazilian government than energy for people.”

“Here in Cuba, we invest first in human energy.”

Later on, Fidel explained, “We’re building 157 new facilities in the field of public health. We have more than 20,000 medical students. Every year, more than 5,500 young people chosen on the basis of vocational aptitude and school record enter medical school.”

The commander-in-chief invited us to enter a small lounge beside his office. Two people were working there surrounded by IBM minicomputers. These memory banks of the Cuban government contain duly computed data, including the names of the country’s 500 best doctors, by specialty. At Fidel’s request, the compañero operating the machines touched the keys. The information appeared in different colors: Havana now has a population of 1,902,173. The Cuban capital has 7,856 doctors, 10,481 nurses, and 11,136 health technicians; it has a doctor for every 242 inhabitants and a nurse for every 181. There are 20,403 doctors in the country as a whole, for a population of 9,952,699. There are 1,880 pediatricians — one for every 1,500 children.

After leaving the computer room, Fidel Castro invited us to go into a room where all the ministers in the economic field were meeting. He introduced us and exchanged some information on the preparations for the third five-year plan. It was almost 6 p.m. when we left the Palace of the Revolution. In a few minutes, the comandante was due to attend a solemn celebration of the 40th anniversary of the Allied victory in World War II in the Soviet embassy’s new building.

That same night at 10:30, Fidel Castro met us again in his office. Joelmir Beting would have to leave Cuba the next morning, and it was his last chance for talking during this trip. Eight ministers in the economic field and Carlos Rafael Rodríguez, vice-president of the Council of State, were also there. Next to the wall facing a rectangular meeting table was a blackboard and chalk that our host placed at the disposal of the Brazilian journalist. In preparation for this talk Joelmir Beting had read Fidel Castro’s most recent interviews on the Third World’s — especially Latin America’s — foreign debt, including the interview given to the Mexican daily Excelsior, in which the Cuban leader had stated that the debt was unpayable.

“The political solution to the foreign debt,” the journalist, who is a specialist on economic matters, said, “requires changes in US and European bank legislation, changes in the creditor bloc. The participation of parliaments is vital. This is why,” he told the group, “Fidel should send his suggestions to the parliaments. Cuba should issue a document on the foreign debt. The problem won’t be solved unless there are government-to-government negotiations, not government-to-creditor-bank negotiations. At present the understanding is between Brasília and Wall Street, not Brasília and Washington. In this way, the US government washes its hands of the matter and takes part only through the International Monetary Fund [IMF], which is really a bank treasurer. The IMF should be a government-to-government forum. The dollar has stopped being a reference currency and has become a means for intervening in world economic relations. In fact, the dollar is counterfeit currency because it isn’t backed by the US economy; it isn’t backed by the US GNP. It’s as if the United States were buying the world with counterfeit money. It’s an unheard-of situation in capitalism. The last person to challenge this situation was General de Gaulle, and nothing came of it.”

Fidel put his cup of tea down on the saucer and said, “Latin America borrowed devalued dollars and now has to repay its debt with dollars that are worth more.”

“That’s financial piracy, to put it mildly,” Joelmir said. “The proposal of a new economic order should link trade with the debt — something that the big seven of the capitalist world now meeting in Bonn won’t accept. The Third World must be protected from the monopoly the rich countries hold on technology. Brazil has just passed market reserve laws in the field of data processing.”

“What does that mean?” Fidel asked.

“That no foreign industry may build minicomputer or personal computer factories in Brazil. They have to be set up with national capital.”

“When was that?”

“Last September.”

“Why was it done?”

“To protect technological innovations and the domestic market for national industries.”

The Brazilian guest wrote the number 12 on the blackboard and added, “Brazil has to pay $12 billion in interest this year. Half of that could be turned into capital, as ‘new money,’ and only the other half sent. Instead of paying it all, it should turn this capitalization into risk capital for the multinationals. For instance, an automobile plant is going to be opened in Brazil. Instead of making a direct investment, the corporation is using a part of the capitalized interest. So, as soon as General Motors opens its automobile plant in Brazil, a part of the Brazilian debt is transferred to GM.”

“The money that Brazil should pay isn’t paid. It’s used as a transnational investment in Brazil. Is that right?” Fidel asked.

“Yes.”

“Did you hear what [President] Alfonsín said in Chicago? That the interest which Argentina has to pay on the debt should be reinvested there. Is that the same thing?”

“Yes, but there’s a real problem: the United States sets the interest rate. Banks establish an interest rate which is the rate of return on capital. Once that’s turned into risk capital, it’s Brazil — not the banks — that sets the profit remittance rate.”

“How much profit remittance does Brazil allow at present?”

“Fiat of Italy made a $680 million investment in Brazil, not as a direct investment but rather as a loan from the main Italian office to the Brazilian branch through a bank. It was a triangular operation. On that debt, Fiat sends the branch’s interest to the main office and pays Brazil only 12.6 percent tax on the income.”

“It pays 12.6 percent on the remittance of interest?” the Cuban leader asked.

“Yes. If Fiat remitted profits instead of interest, it would have to pay a 35.7 percent tax to Brazil. For remittance of profits and direct risk capital, a 35.7 percent tax has to be paid. Only 12 percent is paid on debt interest. Therefore, Fiat will turn debt into capital only if Brazil changes its fiscal laws so as to favor capital rather than debt.”

“It’s trying to pay the lowest possible taxes,” Fidel said.

“That’s right. There won’t be interest capitalization unless there’s a reduction in the taxes on direct capital, because returns on direct investment are taxed at 35 percent, while the tax on returns on loans is 12 percent.”

“Brazil doesn’t limit return capital? It taxes it?”

“That’s right.”

“How much profit would there be on $680 million?”

“From five to eight percent a year.”

“That’s low,” Fidel Castro observed. “It won’t stimulate investment.”

“It’s low because it costs the main office a lot to finance the branch. Fiat has to pay interest to the main office, and it transfers that cost to the Brazilian economy.”

“Under present conditions how much profit is there? On an investment of almost $600 million, what return does the main office get if there’s been a direct investment without the presence of the bank?”

“In the case of Fiat, it amounts to eight percent of total sales.”

“Of total sales!” our host exclaimed. “What does that amount to in terms of the $680 million? Less than 10 percent?”

“Less than 10 percent; eight percent, liquid.”

“With such low returns on capital invested, what incentive can the transnationals have for investing in Brazil?”

“They want to take over the market in the first stage. There’s idle capacity at the world level, and Brazil is an important market in Latin America which can be a springboard for the rest of the region. Brazil has very liberal laws on foreign capital. Financial costs are a camouflaged, clandestine profit, because returns on capital take the form of debt payments. For the main office it’s the same capital coming back. The main office is the branch’s creditor. It’s a recent invention that international capitalism came up with in Brazil. In Brazil the transnationals owe their main offices $18 billion, all told, through the banks.”

“Isn’t that included in the foreign debt?” Fidel asked, lighting a small cigar.

“Yes. It amounts to a fifth of the debt.”

“Because supposedly that money was lent?”

“Yes, it was lent by the main office to the branch, through the banks.”

“What would be the profit on $600 million in South Korea?”

“Three times as much.”

“Why did they invest so much over there? For that reason? Why did the transnationals invest so much in Taiwan and South Korea?”

“Because they’re some sort of tax-free zone.”

“They must be making more than 20 percent on what they invested.”

“More,” Joelmir Beting affirmed.

“More than 20 percent?”

“Yes, after a maturity period.”

“And in Brazil it’s a lot less?”

“A lot less.”

“Then why have they invested so much in Brazil in the last few years? What motivated them?”

“They did it for the market potential. It’s the scale of the market. Brazil is some kind of Belindia: Belgium plus India. It’s an island of contrasts. In Brazil we have 32 million consumers with the per capita income of Belgium. It’s a big market. Every year a million cars are manufactured. It’s the seventh largest automobile market in the world.”

“Luxury cars,” I stressed.

“Television sets and household appliances are manufactured, too. There are 32 million consumers in a population of 133 million.”

“The consumers don’t amount to 25 percent of the total population,” the comandante remarked. “I’ve been told that 10 percent of the population gets more than 50 percent of the national income. That is, a quarter of all Brazilians constitute an important mass market. How many are out of that market?”

“All the rest.”

“One hundred million?”

“Yes, 100 million people are literally out.”

“Of those 100 million people, how many live in extreme poverty?”

“Thirty million live in a state of absolute poverty and 40 million in relative poverty; that makes 70 million. The 32 million who are on the borderline constitute a market following the international pattern. Between the 70 million poor and the 32 million consumers there’s a working class that basically survives. The 70 million poor are really 70 million political prisoners of the system. This state of absolute poverty is equal to the worst there is in India in terms of hunger, disease, and permanent unemployment. There are 18 million children under 10 years old who have no home or relatives. They’re abandoned like street dogs and may be found all over Brazil.”

“Sixty-four million Brazilians are under 19 years old,” I added.

“Do those homeless children come from the 30 million workers’ families?” Fidel asked, puzzled.

“No. They come from the 70 million people,” the economics journalist explained.

“So that’s where the 18 million abandoned children come from?”

“Yes, from ‘India.’ But the 32 million ‘Belgians’ constitute a larger mass market than there is in Argentina, Uruguay, or Mexico. It’s the biggest market in Latin America.”

“Where are the Brazilian doctors and engineers?”

“In the 32 million.”

“And the teachers?”

“In the 32 million, too.”

“How much does an elementary schoolteacher earn?”

“About $80.”

“It may be that there are elementary schoolteachers among the 40 million living in relative poverty,” the Cuban president commented.

“During the last five years of the great foreign debt crisis, there was a 27 percent drop in the 32 million Brazilians’ purchasing power.”

“For the 32 million? What about the 30 million workers?”

“A drop of 12 percent.”

I gave another statistic: “12 million people are unemployed in Brazil right now.”

Fidel concluded, “It can’t be said that there are great incentives for the transnationals to invest in Brazil right now.”

“That’s right, because of the difficult problem of the foreign debt, the change of government, and the possibility of great international confusion.”

“Do you have information on the transnationals’ investments all over the world? I think they must come to about $600 billion.”

“No, it’s $930 billion.”

“Nine hundred and thirty billion?”

“Yes, that’s the Third World’s foreign debt.”

Fidel said, “No, I’m asking about direct investments, not the debt.”

“They amounted to $640 billion in 1982.”

“Seventy-five percent of that is in the industrialized countries.”

“Yes,” Joelmir Beting agreed.

“So that means around $150 billion in the Third World.”

“Approximately.”

There was a break for coffee, which was immediately followed by a long, exclusive interview that Fidel Castro gave the Brazilian journalist concerning the Cuban proposal regarding an analysis of the poor countries’ foreign debts. I was present at the interview but didn’t take any notes, for the publication of that material is the interviewer’s responsibility; but he has allowed me to transcribe here the first part of his talk with the Cuban leader.

It was 5:30 a.m. Our host rose and said, “I still have to do my exercises and eat something. I haven’t had a bite in 15 hours.”

He walked through a doorway and invited us to follow him. We went into a private elevator that took us to the garage, in the basement of the Palace of the Revolution. We got into the comandante’s Mercedes Benz and drove through the streets of Havana, which were still dark in this pre-summer period. Another Mercedes, with guards, followed ours. A little later the cars parked in front of the house where we were staying. Fidel Castro got out; said a warm goodbye to Joelmir Beting, who had to be at the airport in two hours; and shook my hand as well. In the living room, still feeling the excitement of the long meeting, Joelmir and I had some whiskey and some Cuban cheese. Outside, the blushing night withdrew before the discreet arrival of the day.

Fidel & Religion

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