Cuba’s Rum-for-Debt Offer to Czechs
Cuba’s offer to send rum to the Czech Republic to pay off Cold War-era borrowings may not be as preposterous as it seems, judging by some previous distressed-debt proposals.
Short on cash, officials in Havana have offered to send unspecified commodities and cases of the sugarcane-derived spirit to settle the debt, which a report by Agence France-Presse put at $270 million. The swap between the former Communist comrades — Cuba and Czechoslovakia were among each other’s 10 largest trading partners in the 1980s — is the latest in a series of proposals that have seen countries offer up everything from pasta to doctors to settle their borrowings.
The Czech Republic imported about $2 million worth of rum from Cuba last year, according to the European nation’s statistics office. At that rate, it would probably take more than a century for Czechs to drink the booze coming their way if it was used to pay off Cuba’s entire debt.
There’s no word on whether the Czechs are going to take the deal. But it wouldn’t be unheard of if they did. Here are three other times distressed borrowers proposed odd swaps to pay off debt:
An herbal remedy
In 2010, North Korea sought to settle 5 percent of its $10 million in debt to the Czech Republic with ginseng, according to the Financial Times. During the Cold War, Czechoslovakia was one of the Asian nation’s largest equipment suppliers. Czech officials balked at the offer; they wanted zinc instead.
Diving equipment for dairy products
Russia offered a nuclear submarine and two MiG fighter jets to New Zealand in 1993 to pay $100 million it owed for imported dairy products, according to a book on the industry by Clive Lind titled “Till the Cows Came Home.” Jim Bolger, then New Zealand’s prime minister, politely declined the second-hand military hardware. New Zealand later secured periodic payments from Russia totaling roughly a third of the debt, the Guardian reported.
Food staples and teachers
In 2010, the Dominican Republic agreed to send black beans, pasta and sugar in exchange for Venezuelan crude shipments. The following year, Guyana shipped the oil-rich nation 170,000 metric tons of rice and Nicaragua sent an assortment of goods that included meat, milk and 20,000 pairs of pants. Meanwhile, Cuba compensates Venezuela by sending doctors, military advisers and teachers the other way.
Source : Bloomberg