How U.S. sanc­tions tar­geted a Belize ba­nana farmer, and hurt an econ­omy

The Star (St. Lucia) - - LOCAL - By Ye­ganeh Tor­bati in Wash­ing­ton

When the United States black­listed John An­gel Za­baneh, a ba­nana farmer and ex­porter in Belize, for al­leged ties to a top drug lord, it did more than just side­line one lo­cal busi­ness­man from the global fi­nan­cial sys­tem.

The ac­tion, de­signed to tar­get only Za­baneh, his al­leged as­so­ciates and their busi­nesses, also dented Belize's ba­nana ex­ports for months from last Oc­to­ber, throw­ing hun­dreds of peo­ple out of work and un­der­cut­ting a main source of hard cur­rency for the tiny Cen­tral Amer­i­can coun­try.

Za­baneh's black­list­ing shows the rip­ple ef­fects that U.S. sanc­tions aimed at stop­ping il­licit ac­tiv­ity such as drug traf­fick­ing, ter­ror­ism, and hu­man rights abuses can have on the peo­ple and in­dus­tries of eco­nom­i­cally frag­ile coun­tries. Broad U.S. sanc­tions against en­tire coun­tries have drawn crit­i­cism for im­pov­er­ish­ing mil­lions while do­ing lit­tle to hurt those at the top. But Za­baneh's case shows that even laser-tar­geted ac­tions against in­di­vid­u­als and firms -a strat­egy the United States is in­creas­ingly us­ing -- can cause col­lat­eral dam­age.

Belize's ba­nana crop, which makes up a fifth of the coun­try's ex­ports, faces other ob­sta­cles be­yond sanc­tions. Droughts and floods have dam­aged crops and a fur­ther hit is likely af­ter Hur­ri­cane Earl swept through the tiny na­tion this month.

But gov­ern­ment of­fi­cials and in­dus­try ex­ec­u­tives in Belize said Za­baneh's black­list­ing -- part of coun­ternar­cotics sanc­tions aimed at chok­ing off the drug trade in Latin Amer­ica -- had a marked im­pact on the coun­try's over­all ba­nana ex­ports in late 2015 and early 2016 and con­trib­uted to a sharp eco­nomic con­trac­tion. A 42 per­cent drop in ba­nana ship­ments in the first three months of 2016, stem­ming from the clo­sure of Za­baneh's farms and the floods, helped drive a two per­cent drop in eco­nomic out­put in the first quar­ter, ac­cord­ing to the Belize Sta­tis­ti­cal In­sti­tute.

"We're a smaller ba­nana sup­plier, there­fore the eco­nom­ics are very touch and go," said Sam Mathias, gen­eral man­ager of the Belize Ba­nana Grow­ers' As­so­ci­a­tion (BGA). "You re­duce our an­nual vol­ume by a lit­tle bit, it does make a big dif­fer­ence."

Za­baneh, the U.S. Trea­sury said, was a key as­so­ciate of Joaquin "El Chapo" Guz­man, head of Mex­ico's pow­er­ful Si­naloa drug car­tel. In a tele­phone in­ter­view with Reuters, Za­baneh de­nied any con­nec­tion to Guz­man, and said he has sent Trea­sury in­for­ma­tion on decades of his fi­nances in an ef­fort to get his name off the black­list.

A U.S. Trea­sury spokes­woman de­clined to com­ment on the des­ig­na­tion's im­pact on Belize's ba­nana in­dus­try.

The ba­nana crop, ex­ported year-round, is vi­tal to Belize, a coun­try the size of New Jersey with a 40 per­cent poverty rate. It pro­vides thou­sands of jobs to mi­grants and Belizeans in the coun­try's south­east­ern agri­cul­tural re­gion.

The United States has in­creased its use of tar­geted eco­nomic sanc­tions in re­cent years, with of­fi­cials see­ing them as an al­ter­na­tive to more deadly op­tions like air strikes or mil­i­tary raids. They also view them as prefer­able to the kind of broad boy­cotts of Cuba, Iraq, and Iran that stunted those coun­tries' economies, ex­perts and for­mer of­fi­cials said.

"In­creas­ingly the U.S. gov­ern­ment has im­posed sanc­tions on in­di­vid­u­als, en­ti­ties, and com­pa­nies that are wrong­do­ers as op­posed to en­tire juris­dic­tions be­cause the more sur­gi­cal ap­proach is viewed as more ef­fec­tive and more fair," said Adam Smith, a for­mer se­nior ad­vi­sor at Trea­sury.

Wary of hurt­ing a ma­jor econ­omy with broad sanc­tions, the United States im­posed highly tai­lored mea­sures on Rus­sia over its 2014 an­nex­a­tion of Crimea, tar­get­ing par­tic­u­lar trans­ac­tions in the en­ergy, de­fense and fi­nance sec­tors. But even those spe­cific mea­sures had an "out­sized im­pact" on lev­els of for­eign in­vest­ment in the Rus­sian econ­omy, said Eric Lor­ber, a se­nior as­so­ciate at the Fi­nan­cial In­tegrity Net­work, which ad­vises banks on sanc­tions.

Many sanc­tions can lead to un­in­tended dam­age, but it is rel­a­tively com­mon in counter-nar­cotics des­ig­na­tions be­cause ma­jor play­ers in drug traf­fick­ing of­ten have ties to le­git­i­mate busi­ness, Smith said.

"Peo­ple who rise to the level of in­ter­est with re­spect to the U.S. gov­ern­ment al­most by def­i­ni­tion are sub­stan­tial play­ers," said Smith, now an at­tor­ney at Gib­son Dunn in Wash­ing­ton. "They may be im­por­tant com­po­nents of a coun­try's econ­omy."

The black­list­ing of Za­baneh in 2012 had lit­tle im­pact for the first three years be­cause Za­baneh, now 61, quickly stepped away from his busi­ness, once one of the largest ba­nana farms in Belize. Soon af­ter the U.S. Trea­sury black­listed Za­baneh, his com­pany Mayan King, and a hand­ful of other peo­ple and com­pa­nies, Trea­sury and Belize of­fi­cials ex­plored the idea of trans­fer­ring the farms to an­other firm, said Jose Alpuche, chief ex­ec­u­tive of Belize's Min­istry of Agri­cul­ture and Fish­eries.

The of­fi­cials' aim was to fig­ure out how to "keep the ba­nana in­dus­try up and run­ning," Alpuche said. Trea­sury of­fi­cials made clear in a 2012 phone call with Belize of­fi­cials that it was up to pri­vate firms, not the U.S. gov­ern­ment, to de­ter­mine whether the so­lu­tion was ac­cept­able, he said.

An­other com­pany, Merid­ian En­ter­prise, took over man­age­ment of the farms from Mayan King, Za­baneh said. For years, the sole buyer of Belize's ba­nanas has been Ire­land-based Fyffes. The com­pany said in a state­ment that the BGA had con­firmed in 2012 that Za­baneh and Mayan King had re­signed from the trade group, and that the farms were un­der new own­er­ship not con­nected to Za­baneh. It con­tin­ued to buy ba­nanas from the farms for three more years.

But the black­list­ing fi­nally bit late last year when Za­baneh was quoted in lo­cal me­dia speak­ing about the farms' op­er­a­tions. He said he was rep­re­sent­ing his mother, who, he told Reuters, owned the farms through­out the change in man­age­ment.

The re­port pub­licly link­ing him to the farms prompted Fyffes to cut off pur­chases of the ba­nanas, the com­pany said in Oc­to­ber 2015. It has con­tin­ued to buy ba­nanas from other farms in Belize.

The price of ba­nanas is dis­played on a dig­i­tal price tag at a 365 by Whole Foods Mar­ket gro­cery store ahead of its open­ing day in Los An­ge­les, U.S., May 24, 2016. REUTERS/Mario Anzuoni/File Photo

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