The Cuban American National Foundation (CANF), a group vehemently opposed to the Cuban government, came out in favor of easing the U.S. isolation of Cuba last week. The move opens the possibility that the United States might shift its policies toward Cuba. Florida is a key state for anyone who wants to become president of the United States, and the Cuban community in Florida is substantial. Though the Soviet threat expired long ago, easing the embargo on Cuba has always held limited value to American politicians with ambitions. For them, Florida is more important than Cuba. Therefore, this historic shift alters the U.S. domestic political landscape.

In many ways, the U.S. policy of isolating Cuba has been more important to the Cubans than to the United States, particularly since the fall of the Soviet Union. The Cuban economy is in abysmal shape. But the U.S. embargo has been completely ineffective on the stated goal of destabilizing the Cuban government, which has used the embargo as justification for economic hardship. Although the embargo isolates Cuba from its natural market, the United States, the embargo is not honored by Canada, Mexico, Europe, China or anyone else beyond the United States. That means Cuban goods can be sold on the world market, Cuba can import anything it can pay for, and Cuba can get investment of any size from any country wishing to invest on the island. Because it has almost complete access to the global market, Cuba’s economic problem is not the U.S. embargo. But the embargo does create a political defense for Cuban dysfunction.

It is easy to dismiss the embargo issue as primarily a matter of domestic politics for both nations. It is also possible to argue that, though Cuba was once significant to the United States, that significance has declined since the end of the Cold War. Both assertions are valid, but neither is sufficient. Beyond the apparently disproportionate U.S. obsession with Cuba, and beyond a Cuban government whose ideology pivots around anti-Americanism, there are deeper and more significant geopolitical factors to consider.

Cuba occupies an extraordinarily important geographic position for the United States. It sits astride the access points from the Gulf of Mexico into the Atlantic Ocean, and therefore is in a position to impact the export of U.S. agricultural products via the Mississippi River complex and New Orleans (not to mention the modern-day energy industrial centers along the Gulf Coast). If New Orleans is the key to the American Midwest’s access to the world, Cuba is the key to New Orleans.

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Access to the Atlantic from the Gulf runs on a line from Key West to the Yucatan Peninsula, a distance of about 380 miles. Running perpendicular through the middle of this line is Cuba. The Straits of Florida, the northern maritime passage from the Gulf to the Atlantic, is about 90 miles wide from Havana to Key West. The Yucatan Channel, the southern maritime passage, is about 120 miles wide. Cuba itself is about 600 miles long. On the northern route, the Bahamas run parallel to Cuba for about half that distance, forcing ships to the south, toward Cuba. On the southern route, after the Yucatan gantlet, the passage out of the Caribbean is made long and complicated by the West Indies. A substantial, hostile naval force or air power based in Cuba could blockade the Gulf of Mexico — and hence the American heartland.

Throughout the 19th century, Cuba was of concern to the United States for this reason. The moribund Spanish Empire controlled Cuba through most of the century, something the United States could live with. The real American fear was that the British — who had already tried for New Orleans itself in the War of 1812 — would expel the Spanish from Cuba and take advantage of the island’s location to strangle the United States. Lacking the power to do anything about Spain itself, the United States was content to rely on Madrid to protect Spanish interests and those of the United States.

Cuba remained a Spanish colony long after other Spanish colonies gained independence. The Cubans were intensely afraid of both the United States and Britain, and saw a relationship with Spain — however unpleasant — as more secure than risking English or American domination. The Cubans had mixed feelings about the prospect of formal independence from Spain followed by unofficial foreign domination.

But in 1895, the Cubans rose up against Spain (not for the first time) in what turned into the struggle that would culminate in the island’s independence from the country. With a keen interest in Cuba, Washington declared war on Spain in 1898 and invaded Cuba. The Spanish were quickly defeated in the Spanish-American War and soon withdrew from the island. For the United States, the main goal was less about gaining control of Cuba itself (though that was the net result) than about denying Cuba to other world powers.

The United States solved its Cuban problem by establishing a naval base at Guantanamo Bay on the island. Between this base and U.S. naval bases in the Gulf and on the East Coast, British naval forces in the Bahamas were placed in a vise. By establishing Guantanamo Bay on the southern coast of Cuba, near the Windward Passage between Cuba and Haiti, the United States controlled the southern route to the Atlantic through the Yucatan Channel.

For the United States, any power that threatened to establish a naval presence in Cuba represented a direct threat to U.S. national security. When there were fears during World War I that the Germans might seek to establish U-boat bases in Cuba — an unrealistic concern — the United States interfered in Cuban politics to preclude that possibility. But it was the Soviet Union’s presence in Cuba during the Cold War that really terrified the Americans.

From the Soviet point of view, Cuba served a purpose no other island in the region could serve. Missiles could be based in many places in the region, but only Cuba could bottle up the Gulf of Mexico. Any Soviet planner looking at a map would immediately identify Cuba as a key asset; any American planner looking at the same map would identify Cuba in Soviet hands as a key threat. For the Soviets, establishing a pro-Soviet regime in Cuba represented a geopolitical masterstroke. For the United States, it represented a geopolitical nightmare that had to be reversed.

Just as U.S. medium- and intermediate-range ballistic missiles in Turkey put the Soviet heartland in the crosshairs during the Cold War, Soviet missiles deployed operationally in Cuba put the entire U.S. Eastern Seaboard at risk. Mere minutes would have been available for detection and recognition of an attack before impact. In addition, the missiles’ very presence would serve as a significant deterrent to conventional attack on the island — which is why it was so important for the United States not to allow an established missile presence in Cuba.

The final outcome of the U.S.-Soviet standoff pivoted on the Cuban Missile Crisis of 1962, which ended in an American blockade of Cuba, not a Soviet blockade of the Gulf. It was about missiles, not about maritime access. But the deal that ended the crisis solved the problem for the United States. In return for a U.S. promise not to invade Cuba, the Soviets promised not to place nuclear missiles on the island. If the Soviets didn’t have missiles there, the United States could neutralize any naval presence in Cuba — and therefore any threat to American trade routes. Fidel Castro could be allowed to survive, but in a position of strategic vulnerability. One part of Washington’s strategy was military, and the other part was economic — namely, the embargo.

Throughout Cuba’s history as an independent nation, the Cubans simultaneously have viewed the United States as an economic driver of the Cuban economy, and as a threat to Cuban political autonomy. The Americans have looked at Cuba as a potential strategic threat. This imbalance made U.S. domination of Cuba inevitable. Cuban leaders in the first half of the 20th century accepted domination in return for prosperity. But there were those who argued that the island’s prosperity was unequally distributed, and the loss of autonomy too damaging to accept. Castro led the latter group to success in the 1959 revolution against U.S.-supported Cuban President Fulgencio Batista. The anti-Castro emigres who fled to the United States and established an influential community of anti-Castro sentiment had been part of the elite who prospered from Cuba’s high level of dependence on the United States.

Cuban history has been characterized by an oscillation of views about the United States, with Cubans both wanting what it had to offer and seeking foreign powers — the Spanish, the British the Soviets — to counterbalance the Americans. But the counterbalance either never materialized (in the case of the British) or, when it did, it was as suffocating as the Americans (in the case of the Soviets). In the end, Cuba probably would have preferred to be located somewhere not of strategic interest to the United States.

The U.S. obsession with Cuba does not manifest itself continuously; it appears only when a potentially hostile major power allies itself with Cuba and bases itself there. Cuba by itself can never pose a threat to the United States. Absent a foreign power, the United States is never indifferent to Cuba, but is much less sensitive. Therefore, after the end of the Cold War and the Soviet collapse, Cuba became a minor issue for the United States — and political considerations took precedence over geopolitical issues. Florida’s electoral votes were more important than Cuba, and the status quo was left untouched.

Cuba has become a bit more important to the United States in the wake of the August 2008 Russo-Georgian war. In response to that conflict, the Americans sent warships into the Black Sea. The Russians responded by sending warships and strategic bombers into the Caribbean. High-profile Russian delegations have held talks with Cuba since then, increasing tensions. But these tensions are a tiny fraction of what they once were. Russia is in no way a strategic threat to American shipping in the Gulf of Mexico, nor is it going to be any time soon, due to Russia’s limited ability to wield substantive power in such a distant theater.

But Cuba is always an underlying concern to the United States. This concern can subside, but it cannot go away. Thus, from the American point of view, Russian probes are a reminder that Cuba remains a potential threat. Advocates of easing the embargo say it will help liberalize Cuba, just as trade relations liberalized Russia. The Cuban leadership shares this view and will therefore be very careful about how any liberalization is worked out. The Cubans must be thoroughly convinced of the benefits of increased engagement with the United States in order for Havana to sacrifice its ability to blame Washington for all of its economic problems. If Cuba opens too much to the United States, the Cuban regime might fall. In the end, it might be the Cubans who shy away from an end to the embargo. The Americans have little to lose either way.

But that is all politics. The important thing to understand about Cuba is the historic U.S. obsession with the island, and why the Cubans have never been able to find their balance with the United States. The answer lies in geopolitics. The politics in play now are simply the bubble on the surface of much deeper forces.

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The operation to rescue Capt. Richard Phillips involved dozens of Navy SEALs, who parachuted from an aircraft into the scene near dark Saturday, landing in the ocean. The SEALs were part of a group of Special Operations forces involved in the effort, according to military officials.

The SEALs set up operations on the USS Bainbridge, which had been communicating with the four pirates via radio and had used smaller boats to make deliveries of food and water to their lifeboat. Yet the pirates were growing increasingly agitated, the officials said. At one point Saturday, the pirates opened fire on one of the smaller U.S. Navy craft that approached.

As the seas grew rougher, the Bainbridge offered to tow the lifeboat to calmer waters, and the pirates agreed, linking up the lifeboat to the destroyer with a towing cable that left 75 to 80 feet between the two vessels. Phillips at the time was tied up in the lifeboat, having been bound — and occasionally beaten — by the pirates ever since he had attempted to escape by jumping into the water on Friday, the officials said.

Meanwhile, one of the pirates, estimated to be between 16 and 20 years old, asked to come aboard the Bainbridge to make a phone call. He had been stabbed in the hand during an altercation with the crew of the Maersk Alabama and needed medical care. “He effectively gave himself up,” a senior military official said. The Navy then allowed that pirate to speak with the others in hopes that he could persuade them to give up.

The three other pirates, however, showed signs of growing irritation, as the Bainbridge, 18 miles from shore, towed the lifeboat further out to sea, the senior military official said. “They had no promise of money, clearly no passage. The one ticket they had was the captain,” said the official, who spoke on the condition of anonymity because he was not authorized to discuss the matter on the record.

“In the last discussion, they said, ‘If we don’t get what we want, we will kill the captain,’ ” the official said.

Soon afterward, two pirates moved to one of the hatches of the lifeboat and stuck their heads out. The third pirate advanced toward the captain and pointed his AK-47 straight at Phillips’s back, the rifle touching it or inches away, the official said.

U.S. military observers thought that Phillips was about to be shot. SEAL snipers, who were positioned on a deck at the stern of the Bainbridge, an area known as the fantail, had the three pirates in their sights. The on-scene commander gave the snipers authority to fire.

“As soon as the snipers had a clear shot at the guy who had the rifle, they shot him and the other two in the hatches,” the senior military official said.

A member of the Special Operations team slid down the tow line into the water and climbed aboard the lifeboat. Phillips was then put in a small craft and taken to the Bainbridge.

more articles in the Washington Post HERE

The Reuters headline put it this way: “Pirates Pose Annoying Distraction For Obama.”

So many distractions, aren’t there? Only a week ago, the North Korean missile test was an “annoying distraction” from Barack Obama’s call for a world without nuclear weapons and his pledge that America would lead the way in disarming. And only a couple of days earlier the president insisted Iraq was a “distraction” — from what, I forget: The cooing press coverage of Michelle’s wardrobe? No doubt when the Iranians nuke Israel, that, too, will be an unwelcome distraction from the administration’s plans for federally subsidized daycare, just as Pearl Harbor was an annoying distraction from the New Deal, and the First World War was an annoying distraction from the Archduke Franz Ferdinand’s dinner plans….more HERE

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.

6. Do not give children sticks of dynamite, even if they come with a warning . Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.

8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

In other words, a place more resistant to black swans.

The writer is a veteran trader, a distinguished professor at New York University’s Polytechnic Institute and the author of The Black Swan: The Impact of the Highly Improbable