America in Cuba: Investments on Sight
America in Cuba: Investments on Sight
Barack Obama is in Cuba. After nearly 90 years without a US President visiting the island nation, the first African-American that takes office at the White House arrives in the Caribbean land to mark a “definitive” turn in the neighbor policy between both countries. Cuba has organized such a welcome deploy that hasn’t seen in years, although the Cuban authorities have underscored that Obama will be given the respect and attention that deserves any Head of State. One of the main questions on this matter refers to what comes after this historic meeting, its impact on the daily life, especially in the reduced and ailing economy of the island, the decisions related to agreements signed by the politic superstructure. Special emphasis is placed on the ground and fertilizers that could be found by the seeds of US investment. Nevertheless, before talking about investment, it would be good to auscultate the context in which those projects would be developed…
Cuba is in fashion. Such boldface names as French President François Hollande, celebrities Beyoncé or Mick Jagger, religious leaders like Pope Francisco and Patriarch Kirill, walk throughout the island, make significant decisions, take souvenir pictures so everybody knows there were there, on the emblematic portion of Caribbean land, in the days of “rebirth”. Many people believe that the most explicit triggers of that effervescence were the announcements issued on December 17, 2014 (or D 17, as it has been baptized) by both the Cuban and US presidents, on the reestablishment of diplomatic relations and the beginning of the “normalization” of a bilateral bond after half a century of hostility. Ever since that moment, the Obama administration has implemented four groups of measures aimed at the relaxation of the economic blockade of his government against the largest island in the Antilles; and the Caribbean nation has also eased the belligerent conceptions related to everything that comes from the giant of the North.
The latest of these modification packages, as explained by the US Treasury Department in an official document, “will significantly increase the capability of US citizens within the 12 trip categories that are legally authorized to travel directly to Cuba (…). Moreover, these regulations enhance the access of Cuba and Cuban citizens to U.S. financial institutions and the American dollar in Cuba, as well as the possibility for Cuban people that are legally established in the United States to earn stipends and wages beyond subsistence expenses”.
These transformations, according to U.S. Trade Secretary Penny Pritzker —a member of Obama’s presidential delegation on the island—, increase “the opportunities to develop economic associations between the Cuban people and the American business community”. Where would that business community focus its eyes? Which would be the risks and opportunities?
INVEST & GROW
Young Cuban economist and professor Fernando Martinez Marti thinks that “there is a group of sectors that have already been identified as key areas to develop the exchange and foster investment. The biotechnological industry stands out among these areas, where several connections have been established, as far as the Blockade policy allows”. It’s important to keep in mind, Martinez Marti points out, that in this field Cuba has shown internationally acclaimed results and the U.S. companies are aware of these achievements.
“Agriculture is another sector in which U.S. entrepreneurs could develop fruitful investments, with the first license given to a tractor-manufacturing company at Mariel Special Development Zone (ZEDM is the Spanish acronym)”, the economist underlines. This first license was granted by the Office of Foreign Assets Control (OFAC) to U.S. Cleber LLC, owned by Horace Clemmons and Saul Berental, which is interested in manufacturing and inserting Oggun (iron horse) tractors in the Cuban market, as reported by the press. Over 95 percent of tractors in Cuba “have been exploited for more than three decades,” Granma newspaper showed in a recent article.
Besides these possible investment areas, Martinez Marti points at the travel industry, other industries and services of high value added, generated by the Cuban nation through the education of the people. This area would include the possible actions of bilateral bonds that were described by investors Carlos Gutierrez Jr. and Faquiry Diaz Cala in a recent article published by El País. Cuba’s “knowledge economy” —they wrote— “provides a fertile field to develop the U.S. – Cuba cooperation and initiatives.” They mentioned information and communication technologies as an example. “Such outstanding U.S. technology companies as Google and other smaller factors have shown their interest,” the investors referred. What obstacles could be faced by those potential investments?
WALLS AND STRATEGIES
The main obstacle, Martinez Marti underlines, is the U.S. blockade against the island nation. However, several analysts believe that this policy won’t be eliminated all of the sudden, but as the Obama Administration has done it, by means of successive and gradual packages of measures. In a recent interview given to the CNN, the U.S. president said that "the embargo will be derogated in any moment of the next presidential term". And to do so, according to Carlos Gutierrez, chairman of the Cuba-U.S. Business Council, “the more companies get interested in Cuba, the more influence they’ll have on the U.S Congress” in an effort to remove the blockade. But the largest island in the Caribbean is also to give some steps in order to foster those investments. Master of Civil Law Lenia Madera Paez, thinks that it would be important to reduce the expensive and complex procedures for a foreign company, from the United States in this case, to register and operate in Cuba.
It would be convenient, the jurist expresses, “to have only one State-run organism in charge of registering those entities and managing the whole process. That would entail the elimination of the ‘shunting around’ that is presently carried out, so entrepreneur or their representatives have part of the registration process in one place, other part in another place and so on. The second step is to reduce the fees and taxes to be paid, as well as the division of the profits.”
The Trade Secretary, Penny Pritzker, aired interesting data during the visit to Cuba: “in 2015 the U.S. Trade Department issued 490 authorizations to do business with Cuba, thus totaling 4.3 billion dollars. In 2016, 28 authorizations for 300 million dollars have been granted to date”.
when Barack Obama and Raul Castro shake hands in Havana, when their respective Trade officials, Pritzker and Rodrigo Malmierca, exchange portfolios; when both high-level delegations smile for the picture and numberless people in the homeland of Lincoln and in Marti’s pay attention to this development with plenty of hope, perhaps we’ll be witnessing the opening of a new chapter for the prosperity of U.S. investments in Cuba.
By Jesús Arencibia Lorenzo / PanamericanWorld - Havana