1000´s of Spanish exporters to Cuba fall prey to an ingenious method to default on payments
Shocking News from Valencia Spain reveals today that 90% of companies who have exported goods to Cuba have not been paid in over 12 months.
This situation, which has also occurred in other areas of Spain, appears to be the knock on effect of Cuba stripping its banks of money from foreign company´s accounts. The Valencian Chamber of Commerce has urged the Valencian Financial Institute (IVF) to create a special emergency line of credit to cover commercial transactions while transfers the Cuban central bank has failed to make on behalf of foreign entities are investigated along with Cuban entities who have ordered the payments which have not been processed.
Cuba is located in thirty-fourth place in Valencian destinations of exports, with sales growing, which in 2008 exceeded 77.6 million, according to sources in the Foreign Trade Institute (ICEX ). Most of these sales have remained unpaid because Cuba has recently stalled wire transfers from the island (see previous article) and told those firms with offices in Havana that they can “request” transfers to be made from their accounts but there is no date when they will be made by Cuba´s central bank.
Over the past four years exports have increased to Cuba, but have now encountered the problem of lack of payment and will probably cease depriving Cuba of the goods it needs.
This circumstance is suffering the virulence with particular sector of machinery and mechanical appliances, which accounts for the bulk of exports from Spain.
Manufacturers of electrical equipment and appliances, with 7.4 million, with manufacturing plastic (5.6 million), paintings (5.1 million) and footwear (4.7 million), also part of the list of Cuba’s victim’s of payment delinquencies.
A total of thirty sectors send part of their international sales to Cuba. Valencia is also the fourth largest Spanish autonomy that exports to Cuba.
Specialists advise, it appears that Cuba´s has modified its strategy concerning non payments to obvert the impossibility of attracting imports, due to past unpaid debts. Previously Cuban companies would be used like chess pawns to delay payments to exporters worldwide and become the proverbial scapegoats of the central government. But, as 1000´s of foreign companies who exported to Cuba have boycotted the island through lack of payment, cutting off supplies of essentials, Cuba has used a new strategy since late 2008 and 2009 where it guarantees payment upon arrival of goods but ONLY into the importers local Bank account in Cuba but, when the importer attempts to repatriate the funds back to his country to pay for the imported items he is unable to transfer the money. Transfers are being placed on “a list” which must be approved by the central bank so; while the money is technically paid it cannot be withdrawn or transferred from the island. Cuba also introduced a law this year under the guise of anti money laundering where it prohibits cash withdrawals from foreign held accounts on the island. Most consider this law was introduced to compliment the transfer restrictions to stop foreign entities simply withdrawing the monies therefore, the money in the accounts is technically confiscated, albeit hopefully temporarily. It is thought that 1000´s of companies with over 100 million Euros in goods have fallen for this new strategy to obtain imports but not pay for them.
This article was derived in part from Spain´s ABC Newspaper and local reporters
