Wednesday, July 01, 2015

In from the cold: the implications of the US's thawing on Cuba

In from the cold: the implications of the US's thawing on Cuba

Michael Deibert | 12/06/2015 9:00 am

Foreign Direct Investment

The relaxing of travel and commercial restrictions between Cuba and the US announced in 2014 has already seen a glut of international companies visiting the island, enthused by the potential of the country. But is the 'new' Cuba all it appears to be? Michael Deibert investigates.

(Read the original article here)

On a recent flight to the Cuban capital of Havana via Grand Cayman, your correspondent observed a plane full of Americans who could not wait to travel to a land that had for years been forbidden to them. High school children, college students, music promoters, entrepreneurs and Cuban émigrés all hummed with excitement as the clouds parted to reveal the blue-green waters of the Caribbean and the island’s tapering coastline below.

Alighting from José Martí International Airport, visitors are greeted with a billboard featuring the face of Mr Martí (Cuba’s independence hero) paired with that of long-time Cuban leader Fidel Castro, while the face of deceased Venezuelan leader Hugo Chávez is paired with Latin American liberation icon Simón Bolívar.
And despite the revolutionary slogans that still adorn many walls and signposts in Cuba, and despite five decades of economic mismanagement and absent democracy, Havana remains one of the world’s most beautiful cities, even in its current dilapidated state.

All change

Since the Cuban Revolution of 1959, which began 56 years of Communist dictatorship that continues to this day, Cuba’s adversarial relationship with the US has been one of the touchstones of regional geopolitics. As guerillas from groups such as the Frente Farabundo Martí para la Liberación Nacional from El Salvador travelled to Havana to train, the US poured money into right-wing governments – many with questionable human rights records – to stave off Communist expansion in the region.

However, with Fidel Castro having effectively ceded power to his more pragmatic – though no less authoritarian – brother Raúl in 2006 (Raúl became president in 2008 after having exercised 'acting' decision-making in the previous two years), the changes in Cuba have been rapid and startling.

Since 2008, ordinary Cubans have been allowed to possess mobile phones and DVD players, possessions that had previously been tightly controlled by the government. Beginning in 2010, the Cuban government started to allow foreign investors to lease government land for up to 99 years and granted individual Cubans more control over the island's agricultural and farming sectors, something that had previously been in the hands of the government. In 2012, a new law eliminated the exit permit that for 50 years Cubans had been required to possess in order to travel abroad. Cuba's October 2014 Law on Foreign Investment allows 100% ownership in certain sectors by foreign investors, a radical departure  from previous practice, as well as providing significant tax incentives and increased guarantees. Some 3000 restaurants and 8000 rental rooms are now in private hands.

Contributing heavily to the sense of rapid change, in December 2014, after nearly two years of negotiations, US president Barack Obama and Raúl Castro simultaneously declared that long-standing travel and commercial restrictions the US had placed on dealing with Cuba would be relaxed, and that soon the countries would resume full diplomatic relations with embassies in Washington and Havana (both countries had previously been represented by Interest Sections, which operated below the level of embassies).

In January, Cuba released 53 political prisoners, though the country's human rights groups say other political prisoners remain in jail. At the Summit of the Americas in Panama in April, Mr Obama met Mr Castro, the first time leaders of the two countries had met face to face in five decades.

Gaining a foothold

In response to these developments, in recent months companies such as Pernod Ricard, Carrefour, Total, Alstom and Orange (all from France), as well as Mazda, Mitsubishi Sumitomo and Toyota (all from Japan) have been visiting Cuba in an aggressive push to get a foothold in its potentially huge market.

“Clearly the potential to work soon with the US market is what it is motivating the flow of foreign companies visiting Cuba and trying to find opportunities there,” says Tom Herzfeld of Herzfeld Advisors, a company the specialises in Caribbean Basin investments. “[And] Raúl Castro knows that the support from Venezuela and Russia – mainly when oil prices are the lowest they have been in decades – [only offers] breathing space and he needs to take Cuba from practically zero economic growth to a level assuring stability and sustainability.”

Despite this rapid pace of change, however, and despite how ineffective US policy towards Cuba has proved in dislodging the Castro regime, there are members of the politically powerful Cuban exile community in South Florida, just a few kilometres across the straits from Havana, who remain unimpressed and unconvinced that the new policy of engagement with the US is sincere.

“The Castros need confrontation with the US,” says Armando Valladares, as he sits in his West Miami office. Mr Valladares spent 22 years in Cuban prisons for, among other offences, refusing to put an 'I’m with Fidel' sign on his desk at the Cuban ministry of communications in 1960. Upon his release in 1982, he became a US ambassador to the UN.

Mr Valladares says he believes there is “a double standard” in the world’s approach to Cuba, given that other dictatorships in Latin America’s history, such as that of Augusto Pinochet in Chile, were met with economic sanctions and official censure.

Finding a balance

What is beyond dispute is that Raúl Castro is walking a very fine line, attempting to open up Cuba just enough to give its people some level of comfort that has previously eluded them, while at the same time maintaining tight control of the political system (Cubans have not directly elected a president since 1948). Many observers believe that the Cuban government is looking towards China and, especially, Vietnam as potential models.

Everywhere in Havana today, from the relatively posh neighbourhood of Miaramar with its newly opened eateries and embassies, to the more gritty suburb of Regla, with its famous shrine dedicated to Nuestra Señora de Regla, a Catholic icon closely identified with the Santeria Orisha of Yemayá, there is a hunger for change and a hope for the future. Despite a steady diet of government-controlled news that highlights violence and upheaval elsewhere in Latin America in contrast to the calm island on which they live, Cubans, particularly the younger generation, through the use of flash drives and increasingly frequently interactions with foreigners, have more and more of a knowledge of the outside world. And they are increasingly demanding the right to be able to engage with it.

Hungry for economic change, it would not seem long before Cuba’s citizens begin to press for increased political freedoms, as well. How Cuba’s leaders chose to reconcile these two tensions will define the life of this extraordinary country for years to come.

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