Brand Cuba

By MICHAEL CASEY

As Fidel Castro brings his reign in Cuba to a long overdue end, we are left to ponder how a leader with such a dismal economic record could retain power for a half-century.

There is merit to many of the standard explanations for Castro's longevity -- both those of his critics, who cite political repression, and those of his fans, who believe the Cuban majority was won over by advances in health and literacy. There is also some merit in the arguments blaming Washington, either for its self-defeating trade embargo or for not being tough enough.

But these only tell part of the story. Instead, if we view Castro's political machine through the apolitical prism of the market, we can attribute its durability to a concept that's alien to his socialist rhetoric, and deeply rooted in the American capitalist system he claims to despise: branding. Castro's political "success" is a case study in managing the global information economy.

The Cuban Revolution is and always has been a brand. Its face has changed over time -- from the "barbudo" rebels of the Sierra Maestra to Che Guevara's piercing stare, from Cuba's graying salsa legends to its globe-trotting medics -- but incredibly, its essence has survived.

Marketing gurus tell us that a successful brand functions as a store of values. It encapsulates a pool of attractive ideas that satisfy customers' desire for meaning. To encourage loyalty to a brand, they say, the marketer must cultivate a sense of belonging and personal identification with the individual.

For many within a core constituency of left-leaning, relatively well-educated people both inside and outside Cuba, Castro's "revolution" achieved precisely this. To this niche market, Cuba evokes a set of magical buzz words long-favored by the radical left: "resistance," "social justice," "struggle." It represents an idealized, selfless counterpoint to ruthless, greedy capitalism. It is the alternative to brand U.S.A.

This is, of course, a constructed "Cuba," one with little relation to the real Cuba, with its dysfunctional, increasingly inequitable social and economic structure. But savvy brand managers are rarely hindered by a divergence from reality. Has the availability of perfectly safe, free tap water stopped marketers from touting the life-giving powers of their bottled alternatives?

Castro has long been blessed with a great ability to manipulate information and images in the interest of self-promotion. During a pivotal 1957 interview with New York Times correspondent Herbert Matthews, he had his men move around in the trees to create the illusion of a bigger rebel force. Five decades later, the art had not deserted him. After his intestinal illness was first revealed in July 2006, the delayed, staggered release of photos of the convalescing Cuban leader in an Adidas tracksuit seemed designed to give his archenemies enough rope to hang themselves. Many Miami Cuban bloggers prematurely pronounced Castro dead and denounced the first images as fakes.

In the early 1960s, Castro was forever trailed by a clique of talented photographers -- including Alberto Korda, who took the most famous photo of Che Guevara. Preferring Life magazine's documentary style over the bleak genre of Soviet socialist realism, they portrayed the bearded Cuban leader in a humanistic light, and gave his revolution a vibrant, hopeful and distinctly American aesthetic.

Later, when CIA-backed Bolivian soldiers killed Guevara in 1967 -- converting the Argentine-born revolutionary into a martyr-hero for Paris and Berkeley radicals -- Castro wrapped himself in the image of his former comrade-in-arms, which conveniently helped him cover up Cuba's very un-revolutionary submission to Soviet dominance. The Cuban government actively promoted Korda's iconic image, which the country's poster artists soon gave a Pop Art makeover. The now-ubiquitous Che brand was born.

Years later, in the 1990s, branding helped hide the wealth divide and graft in Cuba that arose out of the post-Soviet dual-currency system. Decrepit Havana was marketed as a giant museum, a revolution frozen in time -- complete with rusted '50s Chevys and octogenarian musicians. Later, with the rise of the anti-globalization movement, Che was re-resurrected in a pitch to younger tourists, one that came with Cuban-made calendars, watches, postcards and all manner of trinkets bearing Korda's image.

Now Cuba's brand centers on health care. Its free hospitals are depicted as alternatives to an unfair, inefficient U.S. system, while its foreign-posted doctors put a face on the country's projected spirit of humanitarianism.

Some 200 of these medics turned up at last October's 40th anniversary of Che's execution in La Higuera, Bolivia. They demonstrated how the Cuban revolution's brand has been simultaneously altered and preserved through a period of sweeping transformation on the island and in the world outside it.

These doctors -- members of a 30,000-strong foreign medical corps, whose work gives Havana access to badly-needed goods like Venezuelan oil -- are unwittingly contributing to a mounting problem back home. Their absence exacerbates staffing constraints in Cuba's once well-regarded hospitals, now stretched by the demands of an aging population. Nonetheless, in the long string of speeches at La Higuera, Cuban, Venezuelan and Bolivian officials feted the physicians as model revolutionaries -- guerrillas with stethoscopes in place of rifles. And in case the branding tie-in wasn't clear, each medic was dressed in a white lab coat opened to reveal a red or blue Che T-shirt.

Mr. Casey is Dow Jones Newswires bureau chief in Buenos Aires, and author of "Che's Afterlife," a forthcoming book to be published by Vintage on Alberto Korda's famous image of Che Guevara.

McCAIN'S TAX CUTS PLAN

Bush and the Dollar

By DAVID MALPASS

When President George W. Bush addresses the Economic Club of New York on Friday, his comments on the dollar crisis will be the crucial issue for markets and the economy. The best thing he could do would be to state clearly that he wants a stronger dollar. That would draw liquidity back to the U.S., lower inflation risks, and head off the growing calls for government bailouts and support programs.

Absent administration support for the dollar, recent Fed rate cuts have simply sped up the flood of capital away from the U.S. without providing enough domestic stimulus. The rest of the world is already full of cheap dollars, pushing gold and oil to new highs, European tourists onto Madison Avenue, and petro-dollar sovereign wealth funds into building islands to use up their excess.

A clear presidential preference for a stronger dollar could cause an immediate leap in financial markets. U.S. stocks and corporate bonds are attractively priced -- except for the dollar risk. No matter how high a bond yield or how strong the track record of a U.S. private-equity manager, the threat of continued dollar weakness holds global liquidity at bay. The prospect of a stronger dollar would reverse that.

This week, Mr. Bush may well use the same inadequate mantras that the administration has repeated since 2001: A strong dollar is in the "national interest," and the dollar should reflect U.S. economic "fundamentals." U.S. Treasury Secretary Hank Paulson used these standard phrases, now taken to be code words for a weaker dollar, on March 3, with predictable results -- the dollar hit new lows last week. Jean-Claude Trichet, the hard-money head of the European Central Bank, perhaps holding his nose, voiced similar encouragement for the dollar on March 3 (and yesterday): "I consider it very important what has been affirmed and reaffirmed by the U.S. authorities . . . according to whom a strong dollar is in the interest of America."

Damned by faint praise. The officials are not saying they want a stronger dollar, or that they will do something to stop the dollar's plunge. In fact, the U.S. has repeatedly prevented the G-7 group of finance ministers and central bankers from discussing ways to strengthen the dollar, most recently by imposing a dollar-lite agenda at the February G-7 meeting.

The current dollar mantra, coined in the 1990s, never made sense. Saying a strong dollar is in our "national interest" ignored the need for dollar stability. It set no upper bound on the dollar's strength, causing a destructive global deflation cycle from 1997 to 2001.

The dollar is now weaker than the loonie, the Canadian dollar, yet the same hollow 1990s phrases are being mouthed. If a strong dollar is in the "national interest," then the seven-year dollar collapse is clearly in need of a remedy. There's an equally deep logical flaw in claiming that the dollar should depend on economic "fundamentals." A strong, stable currency is itself one of a country's most valuable fundamentals, not a byproduct of other fundamentals. Our fundamentals haven't been nearly as bad as the dollar's seven-year slide. More likely, the weak dollar trend is itself a bad economic fundamental, masking health elsewhere.

The policy shift to a stronger dollar is as critical for national security as it is for economic health. Oil would cost less if the dollar were stronger, slowing the transfers to our antagonists in Venezuela, Iran and Russia. A stronger dollar would allow U.S. wealth to grow as fast as foreign wealth, adding to our strength and independence.

Though many economists still support the theory of unlimited free-floating exchange rates, no weak-currency country has had a healthy economy. Momentum takes over and pushes currencies to extremes that can't be hedged. Many also think current interest rates control currencies. But 1% more or less in annual interest won't make up for a country's longer term intentions for its currency. Markets have labeled the U.S. a weak-currency country. That's an albatross that the president should dump.

An administration decision to support a stronger dollar would be dramatic, and probably so unexpected that it would break the dollar's downward momentum, and with it the defeatism now dragging us down. If the dollar started up, the vicious cycle -- dollar weakness causing economic weakness and more dollar weakness -- could be reversed.

The president's dollar preferences matter even in the short run, setting expectations that become self-fulfilling. The many speculators now short-selling the dollar, or betting against the U.S. in favor of commodities and other currencies, would have to reduce their positions. This would immediately add to U.S. liquidity, and improve the outlook. Treasury would begin working to achieve a stronger dollar, opening the possibility, anathema to dollar shorts, of a G-7 preference for a stronger dollar or even coordinated currency intervention.

There's more at stake in the dollar debate than a recession, inflation and a bear market. In the economic confusion created by the weak-dollar policy, presidential campaigners are blaming Nafta and free trade, not the weak-and-weaker dollar, for hard times.

The president should state a preference for a stronger and stable dollar. It has a good chance of stopping the credit crunch. It's free and easy. And let's face it: Other measures aren't working.

BEST OF THE WEB TODAY

Political Diary

Just What the Doctor Ordered

House Ways and Means Chairman Charles Rangel has been spending time in the hospital with the flu the last few days, but he is likely to have gotten a real morale booster yesterday with the news of Gov. Eliot Spitzer's meltdown.

Mr. Rangel, who has represented Harlem in Congress for 38 years, is known to hold the prickly governor in minimal high regard. He has often snidely referred to Mr. Spitzer as "the smartest man in the world," a reference to the governor's well-known arrogance.

Should Mr. Spitzer resign, Mr. Rangel would also be in the catbird's seat. Lt. Gov. David Paterson, a former state senator from Harlem, is a longtime protege of Mr. Rangel and would likely grant his mentor wide influence over patronage and fiscal issues. "Rangel could have instant access to Paterson anytime of the day or night," is how one New York Democratic leader evaluates Mr. Rangel's likely importance in a Patterson administration.

So if Mr. Rangel makes an even swifter recovery from the flu than is expected, there will be good reasons for that new spring in his step and twinkle in his eye.

-- John Fund

Deus Ex Machine Politics

There is little chance that New York will be competitive in the presidential race this year, but the Spitzer scandal will breathe new life into New York's battered GOP. Poised to fill the governor's seat is Lt. Gov. David A. Paterson, a Democrat who has little name recognition and lacks the force of personality that animated Mr. Spitzer's political career. Mr. Paterson, an ally of Rep. Charlie Rangel, will likely be a seat-warmer while both parties prepare to battle for the governor's mansion in 2010. Democrat Attorney General Andrew Cuomo will likely now become the de facto leader of his party in the state.

Meanwhile, Senate Republican leader Joe Bruno, a veteran political infighter, will take the lieutenant governor's seat, giving him a larger platform to use for Republican advantage. He could run for governor himself in two years. But it's more likely that he'll find someone else within his party to carry the Republican banner. If Rudy Giuliani wants to get back into the game, this is his chance. There's also a possibility that New York Mayor Michael Bloomberg could be interested. And then there's John Spencer, the former mayor of Yonkers who ran against Hillary Clinton for senate in 2006. He has a fundraising base, knows what it takes to run a statewide campaign and has executive experience.

A little more than a year ago, Eliot Spitzer's gubernatorial landslide (69%) was the biggest the state had ever seen. New York seemed on a path to becoming a one-party state. Democrats tightened their grip on the state's General Assembly, won every state-wide elective office and even won in a few upstate congressional districts that traditionally favor Republicans. This year, led by Mr. Spitzer, Democrats looked likely to win control of the last vestige of Republican power in New York, the state Senate. How quickly things change. Republicans now see an opening to reverse their fortunes in New York, only helped if Mr. Spitzer tries to cling to office. It remains to be seen if the state and national GOPs are up to seizing the opportunity.

-- Brendan Miniter

Quote of the Day

"In lead stories Monday night about New York Governor Eliot Spitzer being linked to a prostitution ring, neither ABC's World News nor the NBC Nightly News verbally identified Spitzer's political party. Must mean he's a liberal Democrat -- and he is. CBS anchor Katie Couric, however, managed to squeeze in a mention of his party. On ABC, the only hints as to Spitzer's party were a few seconds of video of Spitzer beside Hillary Clinton as they walked down some steps and a (D) on screen by Spitzer's name over part of one soundbite. NBC didn't even do that. While ABC and NBC failed to cite Spitzer's political affiliation in the four minutes or so each network dedicated to the revelations, both managed to find time to applaud his reputation and effectiveness as the Empire State's Attorney General before becoming Governor" -- Brent Baker of the conservative Media Research Institute.

Follow the Money

The fall of Eliot Spitzer, caught in the roll-up of a high-end prostitution ring, is bound to be an occasion for a great deal of dime-store psychoanalysis about what led to his self-destructive behavior.

But perhaps the most interesting detail isn't the all-too-familiar tale of a politician imagining himself immune to the laws and standards he prescribes for others. The most interesting detail is how he got caught.

The New York Governor, who made his bones doggedly pursuing alleged financial crimes, was undone by his own bankers. The financial transactions by which he endeavored to conceal his payments to the Emperors Club were unusual enough that they prompted a referral by his bank to the IRS, which in turn brought in the FBI and ultimately the prosecutors. Based on the information currently available, Mr. Spitzer himself was the thread that began the unraveling of the Emperor's Club prostitution ring.

Prosecutors are supposed to know better. But in this case, Mr. Spitzer appears to have left behind precisely the kind of paper trail that he once used himself in pursuit of Wall Street malefactors, real or imagined. The latest burble from the TV talking heads this morning now suggests that Mr. Spitzer is delaying his resignation as leverage for a favorable plea bargain. If so, he apparently learned at least one thing from his years as a dictator of humiliating plea bargains to those caught up in his publicity-seeking investigations. All the more ironic, then, that the Sheriff of Wall Street gave himself away with his slippery financial dealings, rather than his sordid appetites, ending in his disgra

Obama, Clinton Turn Focus to Pennsylvania Primary (Update1)

March 11 (Bloomberg) -- Democratic presidential candidates Barack Obama and Hillary Clinton kept up their sparring while campaigning today in Pennsylvania even as voters in Mississippi headed to the polls for a primary there.

Obama made a final appeal to Mississippi voters this morning, talking about energy, education and the economy in Greenville, before heading north. Obama, who's vying to become the first black U.S. president, is heavily favored in the state, where more than half of the Democratic electorate is black.

Clinton renewed her line of attack on the Illinois senator's experience and record, telling a crowd of several thousand people in Harrisburg, ``There's a big difference between talk and action.''

The former first lady ``will say and do anything to win this election,'' Obama spokesman Bill Burton said in a statement sent to reporters ahead of her speech.

Both campaigns are turning their attention to Pennsylvania, which has 158 pledged delegates available in its primary on April 22, compared with 33 at stake today in Mississippi. Clinton, a senator from New York, trails Obama in the race for Democratic convention delegates who will select the party's nominee. She has set Pennsylvania as a key test of her campaign.

Labor Support

Clinton stood on stage at a downtown concert hall with dozens of supporters behind her, including a group representing union workers. She's counting on organized labor to help her score a victory in Pennsylvania, which has lost more than 200,000 manufacturing jobs since the beginning of 2001.

The 35-minute speech focused on the economy and on Clinton's experience as a senator and first lady.

``I want you to be voting on the basis of who you believe will be our best president, who can be our commander-in-chief from Day One,'' Clinton, 60, said. ``I don't want you voting on a leap of faith, I want you to look at the record, I want you to look at the results.''

She told the audience that the ``eyes of America and the world are on Pennsylvania.'' She also drew applause from the audience when she said she would reduce U.S. dependence on foreign oil.

In Greenville, Mississippi, this morning, Obama made a campaign stop at Buck's Restaurant, where he ate a breakfast of scrambled eggs, grits, turkey sausage and wheat toast with the town's mayor and other city officials.

They spoke about education and ``clean energy'' jobs, among other topics. As they talked, some in the crowd outside were chanting ``Yes, we can,'' Obama's campaign slogan.

Obama Supporter

Restaurant owner S.B. Buck, 60, said he's supporting Obama over Clinton, even though he thinks the candidate's husband, Bill Clinton, was a great president. Buck, who is black, said he was turned off by some of the tactics used by the Clinton campaign that have injected race into the political debate.

``I think they did more to put people in his corner than take them out,'' Buck said in an interview.

Obama's aides spoke out against statements made by Clinton supporter Geraldine Ferraro, a former U.S. representative from New York and the Democratic vice presidential nominee in 1984. In an interview with the Daily Breeze newspaper in Torrance, California, Ferraro said Obama has advanced because of his race.

Ferraro Remarks

``If Obama was a white man, he would not be in this position,'' Ferraro was quoted as saying by the newspaper in a story published March 7. ``And if he was a woman he would not be in this position.''

Clinton today disavowed the remarks and called them ``regrettable.'' In an interview with the Associated Press, Clinton said, ``We ought to keep this on the issues.''

Obama adviser David Axelrod called on Clinton to remove Ferraro from any position with her campaign and said doing anything less would encourage other supporters to make such statements. Another Obama campaign adviser, Susan Rice, said the remarks were ``really outrageous and offensive.''

``It is the sort of comment that we have heard repeatedly, I'm afraid, from some of the Clinton surrogates,'' she said on MSNBC today.

An Obama adviser, Samantha Power, resigned last week after she was quoted in a Scottish newspaper calling Clinton ``a monster.'' Rice said Ferraro's comments were ``far worse.''

Senator John McCain of Arizona, who has secured the Republican presidential nomination, is holding fundraisers this week while campaigning in townhall-style forums.

Economic Downturn

In St. Louis today he promoted his economic agenda and emphasized his understanding that the economy was in a downturn.

``We know that Americans are hurting. We know that these are difficult times,'' said McCain, 71.

He also took shots at Clinton and Obama over their statements that they would begin withdrawing U.S. combat troops from Iraq if elected and would demand that Mexico and Canada agree to modifications to the North American Free Trade Agreement.

Pulling out of Iraq too soon would mean that ``the conflict will spread and we will be back, with greater sacrifices,'' he said.

McCain said an attempt to renegotiate the free-trade agreement with the nation's two neighbors would throw U.S. credibility into question in other treaty talks.

Fallon Stepping Down as Mideast Commander, Gates Says (Update2)

March 11 (Bloomberg) -- Admiral William Fallon is stepping down as head of U.S. Central Command because of perceived differences on Iran policy with the Bush administration, Defense Secretary Robert Gates said today.

Fallon, 63, assumed command of all U.S. forces in the Middle East and Central Asia a year ago, with responsibility for the wars in Iraq and Afghanistan. He informed Gates of his decision today in the wake of an Esquire magazine article that portrayed him as an ardent opponent within the administration of war with Iran to halt its possible building of a nuclear bomb.

While the U.S. is pursuing a policy of diplomatic pressure on Iran at the United Nations and unilateral sanctions to weaken its access to the international banking system, the Bush administration hasn't ruled out military action as an option.

``Recent press reports suggesting a disconnect between my views and the president's policy objectives have become a distraction at a critical time and hamper efforts in the Centcom region,'' Fallon said in a statement.

Fallon said while he doesn't believe a policy rift exists, ``the simple perception that there is makes it difficult for me to effectively serve America's interests there.''

Gates said Fallon ``reached this difficult decision entirely on his own.''

`Right Thing'

``I believe it was the right thing to do, even though I do not believe there are in fact significant differences between his views and administration policy,'' Gates told reporters at the Pentagon.

The Esquire piece praised Fallon as ``the rarest of creatures in the Bush universe: the good cop on Iran, and a man of strategic brilliance.''

The article said Fallon had created tensions with the White House by opposing the administration's Iran rhetoric and cited well-placed observers as saying ``it will come as no surprise if Fallon is relieved of his command before his time is up next spring, maybe as early as this summer, in favor of a commander the White House considers to be more pliable.''

Gates described as ``just ridiculous'' an idea raised in the article that if Fallon leaves, it may mean the U.S. is going to war with Iran.

Fallon will leave his post at the end of the month. Army Lieutenant General Martin Dempsey, the deputy commander of Central Command, will serve as acting commander once Fallon steps down, Gates said.

`Enormously Talented'

``Admiral Fallon will be difficult to replace,'' Gates said. ``He is enormously talented.''

Before taking the Mideast command, Fallon was in charge of U.S. forces in the Pacific.

Democratic Senate Majority Leader Harry Reid called Fallon's departure ``yet another example that independence and the frank, open airing of experts' views are not welcomed in this administration.''

In an interview last month in Doha, Qatar, Fallon said Iran continued to supply lethal aid and training to extremist militias in Iraq and said the U.S. was looking for ``a long-term change'' in Iranian behavior.

Fallon, a former fighter pilot known to friends as ``Fox,'' routinely rejected news stories that suggested he clashed with General David Petraeus, the top U.S. military commander in Iraq. Fallon's resignation comes just weeks before Petraeus is scheduled to testify before Congress on security conditions in Iraq.

Iraq Pause

In the interview last month, Fallon endorsed Petraeus's decision to pause this summer before deciding whether to continue withdrawing U.S. combat brigades from Iraq later in the year.

Fallon's appointment was part of a broad shakeup of the U.S. military's command structure in the Middle East that coincided with President George W. Bush's decision to add 21,500 combat troops in Iraq to the 131,000 already there, with the primary goal of stabilizing Baghdad.

Bush, in a statement, said Fallon, a Vietnam veteran who previously served as head of U.S. Pacific Command, had served the U.S. ``with great distinction'' for 40 years. He was the first Navy officer to head Central Command.