Economist’s advice to Czechs: Take the Cuban rum and sell it

PROBLEM: What should the Czech government do with the 23 million bottles of rum that Cuba is offering as payment for its $276-million debt?

Cuba offers to pay a foreign debt with rum, pharmaceuticals

SOLUTION: Easy. Drink some of them and export the rest — for profit.

That’s a simple, practical and lucrative answer to a proposal made by Cuba to the Czech Republic reported Dec. 15 by Progreso Weekly. It was given this week by Yevgeny Nadorshin, chief economist at PF Capital-Moscow and former advisor to the Russian Ministry of Economic Development, in an interview with the Russian online publication Sputnik.

“There is nothing original, extraordinary or ridiculous about this method of debt repayment. Cuba has a deficit of hard currency, so why not pay with what it has in abundance?” he told Sputnik, pointing out that in the 1980s vodka was actively used as a form of currency within COMECON, the Soviet bloc’s mutual economic aid council.

Yevgeny Nadorshin

“No problem. Everybody used it,” he said. “I think that if the contract is written properly, the Czech Republic can handle the deliveries of Cuban rum under conditions not worse than Cuba itself has, simply supplying neighboring trading partners.”

COMECON’s founding countries were the Soviet Union, Czechoslovakia, Bulgaria, Hungary, Poland and Romania. Cuba was an associate member between 1972 and 1991. It incurred the debt by buying military equipment and sugar extraction machinery from Czechoslovakia.

“[The Czechs can] figure out how to use the rum for their own needs as a replacement for other hard alcoholic beverages. With a proper pricing policy, they might to some extent give up whiskey, brandy and vodka in favor of Cuban rum. But it is certainly better to sell it to other countries. Again, it will be necessary to draw up a proper contract and establish the right conditions,” Nadorshin said.

“Of course, the Czechs consume a good amount of alcohol, including hard liquor, not to mention beer,” he added. “I believe that alcohol in the Czech Republic is the cheapest in Europe, just behind Slovakia.

“But I can’t imagine that the Czech pubs will serve rum instead of beer and streets will fill with drunkards, so this rum could be safely used for domestic consumption. According to calculations, Havana will have to supply a little over 23 million bottles of rum to repay its debt to Prague. A considerable quantity, to be sure, but I believe that the people of Czech Republic will be able to handle this booze bonanza,” the economist concluded.

Photo at top: At a Cuban distillery, an employee displays and describes the various types of rum.

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