The Outlook For Miamis Future Links With Cuba
Written by Michael Hayes on November 9, 2000
By Michael Hayes
President Clinton late last month signed into law a bill to allow food and medicine sales from this country to Cuba.
There was no indication, however, of an easing of the overall trade embargo, which continues to have widespread support in Miami — a Florida International University poll in October showed that 62% of local Cuban-Americans strongly favor maintaining the embargo. That stance also was publicly supported by both presidential candidates during the recent campaign.
Current and future opportunities for Miami’s business community to have a commercial role on the island do exist, though.
Miami Today held a roundtable on Thursday to explore just what the situation is today, what may lie ahead for Miami-Cuba links, and what’s being done — or should be done — here to prepare for that new situation.
The event, co-sponsored by The Codina Group, was held before an invited audience in the new Conference Center of the Americas at The Biltmore Hotel, Coral Gables.
Pedro Freyre, an attorney with the firm of Akerman Senterfitt & Eidson in Miami, chairman of the Free Cuba Committee of the Greater Miami Chamber of Commerce, chairman of FACE (Facts About Cuban Exiles) and a board member for the Florida Council for the Humanities, to which he was appointed by Gov. Jeb Bush.
Manuel Lasaga, president and co-founder of Strategic Information Analysis Inc. in Miami, formerly founder of International Management Assistance Corp. and head of the global economics department of Southeast Bank, a board member for the Cuban Banking Study Group and the Governor of Florida’s Council of Economic Advisors.
Joe Garcia, executive director of the non-partisan, non-profit Cuban American National Foundation and former chairman of Florida’s Public Service Commission, executive director of the Cuban Exodus Relief Fund and assistant director of the Salvadoran American Foundation and chairman of the National Association of Regulatory Utility Commissioners.
Carlos Saladrigas, CEO of ADP TotalSource, a major professional employer services organization, who chaired the Mesa Redonda, a group of prominent Hispanic business and community leaders, that led to formation of the Miami-Dade Alliance for Ethical Government, of which he is chairman. He was recently named by Gov. Jeb Bush as a director of Enterprise Florida.
John S. Kavulich II, president of the US-Cuba Trade and Economic Council, a non-profit group based in New York.
Q: Mr. Freyre, is the chamber’s Free Cuba Committee which you head producing a report on possible Miami-Cuba links?
A: Yes, we’re in the process of producing it. The issue of free trade with Cuba seems to be the topic of the future and always will be, and we continue to wait.
The Free Cuba Committee of the Greater Miami Chamber of Commerce was founded in the heady days of 1989. At that time people were getting their champagne bottles chilled and our luggage ready to move immediately. There were contingency plans made all over Miami, not only in terms of commerce with Cuba but also crowd control and having a massive party at the Orange Bowl to celebrate the downfall of the Castro regime.
Well, here we are 11 years later, and we’re still talking, and in certain ways still speculating, about the same topic. Sooner or later things will change.
The chamber produced the first report in 1991 called "Trade Impact of a Free Cuba." We refreshed it in 1994. Time has gone by, and we felt it appropriate to have another go at it.
A couple of things are going to be quite different about this report. No. 1, there’s now a lot more data available from more reliable sources as to the true state of the Cuban economy. No. 2, we hope it will be the first true focus and serious study that has been done locally by the chamber on a Cuba that’s a post-Soviet era Cuba, with all the contradictions, paradoxes and problems that has entailed for the Cuban government, its political system and the economy.
In terms of what we’re going to be looking at, you can’t look at Cuba without looking at sugar. There’s an old Cuban saying that without sugar there is no country.
Apparently the country is slowing waning away, because the sugar production has been waning away for many years now. Yet tourism now seems to be on the rise and seems to be the main focus of effort of the government. So we’re going to take a long, hard look at that.
Nickel is a narrow niche market. Some other interesting industries would be winter fruits and vegetables, the fishing industry, which in its heyday in the ’70s and ’80s was a mainstay of Cuba’s economy, and then some other, innovative things such as light industry maquiladora operations, and maybe even some dot-com operations should the state of Cuba’s communications ever get to a worldwide competitive level.
All those things will be looked at in the context of the study.
The study doesn’t purport to be a crystal ball, You could have any range of scenarios, from a bang to a whimper, transition to revolution. Rather, we want to focus on more factual issues.
But there are some things that are fairly evident about Cuba in terms of its economic prospects as a trading partner. One gets the feeling that the Cuban government is sort of playing Monopoly — they seem to be playing with the board and moving the little houses around. On the one hand there’s a speech inviting foreign investment, then the rules of the game get changed capriciously and often.
Above everything else the one thing about Cuba that stands out is that there simply is no rule of law. Under the Cuban Constitution the judicial system reports to the Popular Power Assembly, which in turn reports to the executive — and in Cuba, that’s an individual, not a power.
With that system, the odds for an investor are rather long, so investment in Cuba tends to be short-term, high return, taking advantage of the abusive labor conditions so a quick return can be made, because the rules of the game continue to be terribly unstable.
The Economist about two years ago had Cuba ranked something in the order of 155th in terms of desirability of the 160-odd countries in the world. That’s indicative of what kind of a market it’s going to be.
We’ll continue to watch and wait — all things come to he who waits, if he works like hell while he waits!
One thing that can be said about Miami is that we’re very focused on Cuba, almost obsessive you might say. But there’s a lot of very knowledgeable folks.
Q: Does the measure allowing food and medicine shipments to Cuba strengthen or weaken the trade embargo, in your view?
A: This law is a typical product of the US legislative process. One party wanted a giraffe, the other a camel — and we got an elephant with the head of a horse.
I don’t think anybody’s terribly happy with the law. The people who want to weaken the embargo were not terribly happy that the travel restrictions were now solidified in the legislation. And the people who favor the embargo were not terribly happy that this is the first actual step back from the harsh measures of the embargo.
The net result of the law, I think, is yet to be seen. My sense is it’s going to be a little bit more of that paradoxical situation where we have the embargo in place yet there’s a substantial portion of the Cuban community that have family in Cuba and continues to send aid, medicines and so forth.
Q: Dr. Lasaga, what do you see as the economic factors affecting preparations for doing business with the Cuba of the future?
A: I think that it all boils down to the starting point of how we’re able to do business in Cuba that will eventually depend first of all on the political changes that take place. Once they do take place, then we can talk about a transition.
Every single country that’s been through a change from a socialist-communist government to a democratic, market-oriented economy has been different. The best rule is that there is no rule as far as what to expect except that it’s going to be particularly difficult for Cuba, which is not prepared for any transition.
There are some so-called reforms in the past few years which I don’t consider reform but rather measures by the government. They do reflect the fact that there are elements within the government that would like to see some changes. But Fidel Castro simply will not allow them to take place.
An example is that Cuba passed a law which allows self-employment, but you cannot open a corporation and hire other individuals. If only one individual can work, that defeats the purpose — it’s like giving somebody a new automobile and saying you can use it, the only problem is that it doesn’t have an engine.
So that really is a measure that doesn’t prepare the economy for the change. At the same time, the government now is decentralizing government enterprises. Supposedly that gives greater incentive to management to become more efficient. In theory it does. But the state owns every entity in the government, therefore the decisions are made at the highest level of the state. No matter how decentralized you are, no matter how many incentives you have in place, you still are controlled by the dictates of the state.
Another example in the scenario I’ve looked at as part of the Cuban Banking Study Group is the banking sector. In 1997, they announced financial reforms. Quite frankly, what it consists of is a game of musical chairs of financial shells.
Basically, they created a central bank that has no real autonomy — it does in law, but there is no legal capacity to apply that law in terms of its ability to regulate the fiscal and monetary side of the economy. The banking system basically has one client, which is still the state.
If you look at what little information is published on the banks, it states loans to the public sector and enterprises — and "enterprises" is another euphemism for the word "state."
So none of the structures in place now can really serve. They will have to be completely revamped and the banking system will have to be started pretty much from scratch, although there is some basic infrastructure.
One of the biggest challenges should we see a transition in the Cuban economy and one that will allow us to do business there, is that we’re going to have to see what’s going to happen during that transition to inflation in the economy and to the exchange rate.
I’ve heard comments about dollarization of the Cuban economy or whether Cuba should have a peso. There are many dogmatic arguments on both sides. The decisions are going to be made by the Cuban government. I don’t think there’s going to be any real unanimity about any of these regimes, except that things are going to be a mixture of market-type reforms and of government still playing a role in the economy.
Whether it’s dollarized… I think that’s probably unlikely because it wouldn’t have the conditions even during a transition.
In the US-Cuba Business Council we’ve just made a rough analysis of initial five-year financing requirements during a transition. We could easily come up to a number of $12 billion during that five-year period.
What’s going to provide the kickoff to the rebuilding of the economy is going to be financing from the World Bank, the IMF, the IDB, the US Export-Import Bank — all the other bilateral credit agencies of the world. That could well represent 40% to 50% of the total financial requirements, with most of it occurring during the first three years.
Of course, this is not free money — for instance the World Bank and IMF are going to have strings attached to that money. Basically what that will mean is that Cuba will have to get its act together during the transition, according to the market-oriented reforms that these institutions support.
What does that mean as far as opportunities? I think a lot of these credits will be earmarked for infrastructure improvement — a lot of roads, airports, transportation. A lot of the $1 billion, $500 million loans will be in that area. There will be good opportunities in terms of the initial reconstruction for businesses in Miami.
Privatization will be another area. But basically what will be privatized will be the franchise value of the businesses in terms of the fixed assets. There will be nothing that really has value except very strategic industries — tourism, the mining area. Privatization will be a key. Depending on how much risk somebody wants to take, I think there will be some opportunities to make some investments initially.
In terms of new areas for the economy, we’ll certainly see Cuba very much in the context of a Caribbean-based economy, which means that it has advantages in the areas of light manufacturing, assembly industry, agri-industry. Those are areas that already have been analyzed.
The question is will people be willing to take the risk of putting money down when they will be dealing in a situation, even during a transition, with a government with which we’ll never know what direction it’s going to go. It could be changing directions every six months.
So it’s going to be fairly difficult. Nevertheless, I think if you really do your homework and take chances, there will be opportunities for doing business with Cuba.
It’s going to be long-range opportunity. The best we can do is not get our expectations up too high.
Q: Do you have any indication of any transition being prepared in Cuba?
A: If you look at the economy and what’s happening, the government has made some attempts — for instance cooperatives in the agricultural sector are allowed to operate. In that case, I think it does give incentives for individuals that they can sell surplus products.
But the problem I have with these schemes is that basically at this point they only have one client. They can only buy inputs from one client — and that’s the state — with some marginal escape valve where they can do business in somewhat freer markets.
Some steps have been taken but when you look at the experience of all the countries that have been through a similar transition — in Eastern Europe, Nicaragua, the Soviet Union and its republics — you’ll find that the changes have varied considerably, with some countries experiencing extreme difficulties.
A lot of that had to do with the political transition. The countries that haven’t had a clear consensus about what needs to be done politically haven’t been able to get support for the reforms and have had substantial problems during their transition. So when we look at the economic changes and those opportunities, I think we can’t forget that it’s going to be the political transition that will be the toughest one to deal with.
Q: What effect is there from the fact that the dollar is now allowed to circulate more widely in Cuba?
A: This is a way in which individuals who have recourse to dollars from abroad, for example by family remittances, are able to use those dollars. It helps in terms of the extreme social difficulties that the population in Cuba is having.
From a general political point of view, I don’t think dollarization is looked upon as viable. The government recently said it wanted to allow the euro to become the official currency. They were probably thinking that the Europeans were going to print a lot of euros and ship them to Cuba so they could become euro-ized!
It doesn’t work that way. The only way you can dollarize an economy, as Ecuador is now finding out, is to generate substantial surpluses in international trade, to exchange that surplus and inject it as circulation.
Cuba has to generate value enough to get those dollars into people’s pockets. It has to be earned — and that’s extremely difficult.
Q: Mr. Garcia, what is the role that the Cuban American National Foundation is playing and how do you see events developing?
A: The foundation is a group that advocates democracy for Cuba. The central issue is precisely the embargo. It’s something that was put into place a little bit less than 40 years ago by the Kennedy Administration as a reaction to this nation’s having the property of its nationals confiscated by the government of Cuba, to the tune of $5 billion — with interest today it’s calculated to be in the neighborhood of $11 billion to $12 billion, for which there’s never been compensation.
We at the foundation believe that the embargo is good. To go further, we opposed what was agreed to this year. Nobody got what they wanted, but certainly Castro didn’t get what he wanted.
The issue is precisely not to allow any more recourse or resource to a nation that clearly is a rogue state, by the definition of this nation and of those that leave that state, a nation where one-fifth of its population lives in exile, a nation that in every sense of the word is an illegal player on that market.
I think the role of the foundation and perhaps more importantly the role of the Cuban-American community, is that role that many other immigrant groups have played in this nation, in terms of the hopes, dreams and aspirations of achieving liberty, democracy and being a guaranteer of that.
We’re experiencing a change in America’s foreign policy to a different tune. You’re seeing certain aspects of the Republican Party, perhaps more conservative elements of the Republican Party, who are free traders. That’s the concept that we will do business with whoever is willing to do business and buy our grain. It’s partially the lack of focus or the lack of need to justify foreign policy in the context of a competitive nation.
There is one super power — it’s the US. The business of America is business, let’s do business.
That absurdity plays itself particularly well in Cuba. In any business analysis, it’s a loser for even those who are investing in Cuba right now; unless you’re willing to engage in a pirate economy — which is try to get in with as little as possible, to get out maximum returns before the government figures out how you’re making money and confiscates you. Under that scenario, it’s a waiting game, where many of the people who are in Cuba are waiting for America to change its foreign policy.
What does the foundation advocate? We advocate precisely the opposite of what we’ve had for the past four to five years, which is status quo. We believe that policy has to be engaging and that you have to force the issue.
This is a place where change isn’t going to come from within, in terms of a dictatorship. This is a government that does not, and is not willing to, change on any level.
Secondly, it’s not to fall into the arguments that so often happen when Americans who deal with the world in real terms find an obstacle, which is to engage in some type of reasoning that makes at least some kind of business sense — when you look at Cuba you say, well, the Cuban people would be fed better if there were no embargo, therefore we should remove the embargo.
It’s an absurd analysis because Cuba has had years where it received Soviet subsidies to the tune of $7 billion and it made no tangible difference in the life of the average Cuban. In fact, what it did was it had a much stronger repressive apparatus which to some degree was used not only in Cuba but in other places.
So the foundation’s goal is to try to engage policy on Cuba. We need to ask the question. It’s not about the embargo, it’s about democracy. It’s about humanitarian aid — no one questions that. The foundation has supported humanitarian aid for Cuba for years. We supported a bill two years ago which would have made Food For Peace program funds available. The only condition we put on it was that the Castro regime not be the distributor of that aid.
What was the purpose of that? Precisely to remove the linkage between food and government.
When you look at the Cuban model and the Cuban context, you look at what has occurred in the past three years — probably the most aggressive anti-embargo campaign in years — and the result.
If Fidel has one thing it’s his great sense of gall and drama. He has a wonderful speech on the embargo where in a dramatic pose he raises his hand and says, ‘Not even one aspirin penetrates this nefarious blockade against the island of Cuba!’
Well, last week he made another speech, a very similar one. He said, ‘I will not buy one aspirin while this nefarious system is in place!’
That is the absurdity of how we deal with Castro — we try to think of Castro as someone whom we can engage on some level of business possibility, saying, if you took away his excuse, his regime would fall. In other words, if we removed the embargo, he would have no excuse. He would be shown as the phoney, tin-horn tyrant that he is.
The truth is, that isn’t what would happen. He has said it on many occasions. He has actually said the US owes him a total of $50 billion, of which he’s willing to concede $12 billion to pay for the expropriations. That would mean we only owe him $38 billion and he’d be more than happy to take that in short-term bank notes.
This is the type of regime you’re dealing with. It’s not a question of lack of excuses. This is a regime that continues to basically defy what we would understand as a regime that deals in a legal system in trying to justify its policies.
So the foundation’s goal to some degree is to continue the isolation, to make sure that this regime is recognized for what it is, hopefully eventually to engage and obtain an indictment for murders of American citizens or aliens, family members who have been in this country, or other nationals around the world who have been murdered by this regime.
What we have to do is isolate this regime. This is a dangerous scenario that we play out. We tend to think that because the boogie man is gone this is no longer here. Sometimes in this very community we tend to forget where we are and where we’ve been to. We won the Cold War. We should be proud of that. We saw an evil, as a nation we engaged it and we won.
Cuba is a Cold War relic. The way to engage its end is simply to stay the course. We made the right decisions back then. We should engage in the same thing when we deal with Cuba.
We should be willing to see this for what it is, a regime that’s cruel, dictatorial, a 41-year dictatorship. There’s no accomplishment within that regime that justifies this dictatorship.
The last thing we should be doing is giving up. We should stay the course to force change — even when change is not wanted — so that we can bring about the correct change in the government of Cuba.
Q: A recent poll by Florida International University shows that 34% of those polled were in favor of establishing a dialogue between Cuban exiles, dissidents and Cuban officials: How do you view that issue?
A: A dialogue with whom? The Cuban government has 11 million people on the island. Let them engage in a dialogue. It has recognized leaders within that community. Let it engage in a dialogue.
The parameters for this debate are clearly adaptable to American goals and American law. Castor basically has to go to a democratic system, recognize human rights and the whole process begins to change.
In fact, the Torricelli bill allows for a calibrated response. But it goes further. The Helms-Burton Act, as much as it may be seen as some nefarious extra-territoriality concept, is in truth a very sophisticated piece of legislation, which we had a hand in drafting, the whole purpose of which was not to get Spain or France to put themselves in a position where we’d have to create a blockade, but simply get a nation such as those, or any other, to engage in some basic concepts of a market economy before they invest there — to begin the whole process of engaging some type of moral parameter for the regime.
Castro doesn’t need us to bring about democracy in Cuba. What he needs us for is to be able to engage the international markets, to be able to reach American credits. That was the whole debate this year. Had the embargo been lifted, the issue would have been credits.
Q: Mr. Saladrigas, what are your views on how business between Miami and Cuba might be developed?
A: I’m an optimist. I hear an awful lot of pessimism both here and elsewhere.
I think the process of change is a lot closer than most of us think, simply because of two conditions. No. 1, I believe that Castro is becoming substantially irrelevant to the future of Cuba and the people in Cuba know that.
No. 2, his own chronological age is catching up with him. He will be less relevant to the present situation in Cuba over time.
Another factor is that most of the people in the government, in my opinion, are keenly aware of the economic failures of the regime and of the need for some significant change to bring about a totally different scenario.
The questions they’re dealing with are pretty much the same ones we’re dealing with — how do you tie the expectations of society for the things that the revolution has promised over the years, such as free education, free health care, with the economic reality of the country and its ability to afford those services? How do you bring about this transition? They’re looking for models, just as much as we are. They’re looking at Eastern Europe.
I don’t think there’s any model anywhere that’s going to fit the Cuban situation exactly right. So ultimately the solution’s going to lie in a transition model developed by Cubans for Cubans for the situation there, with all its problems and challenges.
Like the foundation, I believe it’s in our best interest, from both the perspective as a Cuban and the perspective of America, to stay the course on the embargo. But for different reasons.
I don’t believe the embargo is the issue. I think the issue is the failure of the Cuban government’s economic system to produce enough of an internal market that can fuel that particular economy. Having said that, I think the gist of US policy today and the basic rationale for that policy today ought to be to continue to place enough economic pressure on what I call the second-tier leadership, beyond Fidel Castro — the people who are going to be making the decisions at some point in time — to put enough pressure on them to bring about the necessary changes.
The reason the embargo is working in that sense isn’t that it’s prohibiting the Cuban government from buying anything — we know the government can buy literally anything anywhere from anyone. The real issue is that the embargo raises substantially the cost of foreign investment in Cuba.
The country’s risk rises. Therefore the expected returns of a foreign investor in Cuba rise higher as a result of the embargo, notwithstanding all the other risks — the lack of an independent judiciary and of a stable business code and all those things that bring stability to foreign investment.
As a result of that high cost of foreign investment, therefore, there’s a shortage of foreign investment. What little investment there has been is relatively minor, in the periphery of the economy. That will continue to be the case.
Should the embargo be lifted, I personally don’t believe Castro will be buying anything from the US. What he wants is to be able to get access to credits and other conditions that will allow him to buy some time, some breathing room for the regime to continue to sort out its options and how they’re going to bring about the transition and at the same time continue the repression that the regime is so well known for.
Because of that, I think it would be a mistake at this stage of the game to remove that pressure — clearly the pressure is on for the leadership of the Cuban government to recognize that things aren’t working and need to change.
Anything we would do to provide short-term relief I think would be a mistake and would prolong the suffering of the Cuban people more than perhaps otherwise would be the case, certainly longer than would be necessary.
Where Joe Garcia and I differ is I that I think this is our problem — this isn’t a Washington problem. The focus of the solution needs to shift back from Washington to Miami. Until the Cuban nation gets reunified, Cuba will not ever see prosperity.
If we can’t reunify the nation Cuba will not see prosperity. The Miami community’s too strong and too much of an integral part of the present and future of Cuba to exist in perpetual alienation. We have to bring those two together.
So while I agree with maintaining significant economic and political pressures on the government for change, I don’t necessarily agree with isolating it.
Cuban-to-Cuban exchange I think is way more important than having an American tourist from Idaho visit the island. More Cubans ought to have contact, talks, visits and exchanges with our own people. That’s the type of change that I think will be fruitful and could lead to a scenario that certainly would promote and facilitate change a lot sooner.
Having said that, it highlights the importance of the exile community to the future of Cuba. It’s clearly in the best interests of Miami to do whatever we can to not diminish the strength and importance of the exile community in the determination and development of American foreign policy toward Cuba.
A weakened, estranged and isolated exile community would become marginalized to the future of Cuba and by definition Miami would be bypassed as the focal point of whatever trade and business develops with Cuba.
I know we have competitors — I’ve been to the city of Mobile, AL, which happens to be a sister city to Havana; they’re doing all they can to position themselves as the major port of entry and trade between Cuba and the US if and when the economy opens up.
It’s of vital importance to everyone here in Miami to ensure that the Cuban-American community remains a vital and effective link in the whole process of change and that whatever happens and however that process of change develops, the exile community becomes an integral part of that particular change.
The key realization we have to make is that right now the only entity with capacity to change is the Cuban government. So clearly we need to put as much pressure as we can continue to place on that government to effect some changes.
The policy I’d tend to advocate is one where we’re on the one hand carrying a big stick, continuing to apply economic pressure, but on the other hand you’re opening doors behind you because you don’t know where that wind of change may come from and you don’t want to have those doors locked if and when that wind does begin to blow.
Q: How do you respond to those who say the Cuban government and its likely successors will never deal with those in the US who are not now seeking to lift, or at least ease, the embargo?
A: I personally don’t believe that. The next layer of government officials, beyond the Castro brothers, are highly intelligent people. I don’t know their motivations or their ethics. But it’s clearly evident that they’re smart. I speculate that they need to know the constructive participation of the exile community is necessary in a process of change.
When and how all that comes about is very difficult because of the personality of Fidel Castro himself. But I do believe they will see the possibility to seek some kind of cooperation with the exile community to bring about some changes.
What we ought to do in the exile community is be prepared for that, so we can input and influence in turning it into as much of a constructive process as we can.
Q: Mr. Kavulich, is the role of the US-Cuba Trade and Economic Council to provide the US business community with valuable and reliable analysis and information on US-Republic of Cuba relations?
A: We hope it’s valuable and reliable. Basically, we were established in 1994 because the interest of US companies toward Cuba was increasing while the ability to provide information was decreasing.
We felt that that vacuum could be somewhat alleviated by establishing an organization that would work its best to stay out of the political aspect of the relationship — which wasn’t easy. The Cubans weren’t particularly enthusiastic about the establishment of the organization back then, because it wasn’t going to be a lobbying organization.
Traditionally their model had been that you’re 100% with them or you’re against them. Our position was going to be that we weren’t against or for — we were exactly in the middle.
Having said that, over the past six years the business community has shifted rather dramatically. It used to be that businesses were criticized for simply demonstrating an interest toward Cuba.
Part of the fault for that criticism was the business community because the business leaders wouldn’t say anything other than, there are 11 million people down there and that’s of interest to us.
The criticism came, why aren’t you saying anything about workers’ rights, about being agents of change?
Over the past three years there has been more of a dramatic change where, rightly or wrongly — by companies engaging Cuba, seeking information and having their people visit — they’ve developed a requirement for somewhat more transparency and additionally somewhat more accountability. In the commercial, economic and political model that Cuba has, transparency and accountability aren’t two functions that it deals well with.
What we’ve seen are more companies demonstrating an interest in conducting transactions where they’re specifically permitted to do so by law. They seek to develop that second and third layer, inviting people to the US where possible, then having people go down to Cuba where possible.
There have been some good results, primarily because companies have become more educated about Cuba. With that education has come more accountability — the Cuban government has had to respond to these companies because the companies have become more educated.
In a large measure that has to do with the fact that journalists are far less concerned today about not getting a visa to get into Cuba so they may, let’s say, pull their punches. The journalistic activities are becoming much better.
In addition, Cuba in some respects is looking at the US business community not as it did four or five years ago, when it was seen as a way to maintain relevance in the media and also as leverage, where the Cuban government and the various government-operated companies and ministries could say to such-and-such company in France or Germany, the Americans are here, so you’d better come in before they get in.
That’s now shifted because other countries have more or less determined whether or not they’re going to conduct transactions with Cuba. They also now recognize what the restrictions are with US companies.
The food issue is probably going to be a defining moment in the relationship between Cuba and the business community of the US. Now that this new law takes effect 120 days from the time regulations are written, it is unlikely there will be a constituency in the US to lobby for additional changes — i.e. for allowing private-sector financing, that would be the major one — unless the Cuban government shows that it’s willing to buy products under existing conditions. That’s a message they’ve clearly heard.
We at the council pay far less attention to what people say than to what they do. Although the Cuban government has been rather emphatic that they have no intention of purchasing any agricultural commodities under the new law, we believe they will. And they will because they need to reward those companies and trade organizations that have been lobbying. They also need to reward those members of Congress that have been lobbying.
In addition, a defining moment is going to be the fact that during the past year US business executives have begun to be critical about Cuba, whereas before they never were.
Ironically, the gentleman that has been most identified with wanting to do business with Cuba, Dwayne Andreas from Archer-Daniels-Midland, a year ago wrote an article in Cigar Aficionado in which he said that if the US were to make substantial changes toward Cuba, the Cuban government would either have to accept them or create new and transparent obstacles.
That has been followed up most recently by Tom Donahue, president of the US Chamber of Commerce, who a couple of months ago in Washington said that he’d just gotten back from Cuba and had spent seven hours with Fidel Castro. He said that at the end of the seven hours he had to remind himself that this guy was a gangster. Then he said, and by the way, Raul makes Fidel look like Mary Poppins.
This is the same chamber of commerce that has had representative travel to Cuba and is now seeking to bring a group of Cuban nationals to the US to attend some training seminars. They’ve had very rough going, because the Cuban government has not agreed with the chamber as far as who the chamber wants to bring. But they’re still negotiating.
So I think that those who criticize the business community for not verbally stating that they’re expecting to be agents of change, as opposed to agents of status quo, are mistaken. What we continue to find is a business community that has made a decision, rightly or wrongly, that by not engaging where permitted to do so, the result may be a marginalization, to the point of having no effect whatsoever.
With that, it’s important to note that the Cuban government doesn’t always talk about prosperity. They talk about survival. So those who wait for this particular moment where there’s going to be change are going to be waiting for an awfully long time.
This is all about incremental steps. I began my work career in the USSR. I’ve seen this before. There will not be one defining moment. There are going to be a series of moments.
Rightly or wrongly, the business community has taken advantage of the Clinton administration’s implementation in January 1999 of the expanded people-to-people contacts. There has been criticism from some that the administration is maybe being too generous in terms of who they’re defining as fitting into the people-to-people contacts. But I can tell you this, it’s creating a substantial and a continuing amount of anxiety from the top levels of the Cuban government to the bottom levels.
Most of the Americans who are going there under license from the Treasury see themselves in many respects as citizen diplomats. The state department cringes when they hear the words "citizen diplomats" because they’re completely uncontrollable.
There’s no idea what they’re going to say and do. But the people-to-people has had some impact. Companies have been bringing some of these folks up here from the second, third and fourth tiers. It’s not generating change overnight. But I don’t think any us of are naive enough to think that will happen.
Q: Aren’t there a number of American businesses that have direct as well as indirect commercial relationships with Cuba today?
A: As a matter of fact, some of the companies that have a Miami presence either have licenses or indirect investment in third-country companies.
If anyone takes the position that he wants nothing to do with any US company that does anything with Cuba, his list is going to include General Electric, American Airlines, Delta, United, Continental, American Express, Western Union, Gulfstream International Airlines, JP Morgan, Goldman Sachs — almost all of the major investment houses have in some way or another been involved with the transaction for a company that has something to do in Cuba.
This isn’t to say that these companies are engaged in all of these relationships specifically of the Cuban component, but because of globalization a lot of companies find themselves in these situations.
US companies are permitted to have non-controlling investments in third-country companies that do business in Cuba, provided that they don’t control the third-country company in fact and that the majority of the revenues of the third-country company doesn’t come from its operations in Cuba. There are many US companies that have used that ruling from the Treasury Department