Cuba In The News
In USA Today, Monday, November 2, 2015, there is a full page article on this week’s business fair in Havana, the first such fair held since re-establishing ties with Cuba. The newspaper title reads: AMERICAN BUSINESSES FLOOD CUBAN TRADE FAIR.
The first paragraph of the piece written by Alan Gomez reads:
HAVANA: It was an unusual sight in this communist island that for
decades was barred from importing most U.S. goods: an American
owned, American-made tractor, ready for sale.
Those of us who were just in Cuba for 8-days on the NPCA tour, traveling through four provinces, and as many towns, and across farmland, from east to west, north to south, will quickly and truthfully say: just in time.
The farm tractor was built by Alabama-based Cleber and what Cleber is proposing is not to sell the American-made tractors to Cubans, but to shift construction from Paint Rock, Alabama to the island, using Cuban workers and Cuban materials, within five years. (I’m not sure Donald Trump is going to like that idea.)
This week in Cuba not only is Cleber LLC at the fair, but also such companies as Caterpillar and smaller outfits including the Oregon-based Ninkai Brewery seeking to sell beer to the island. More than 70 countries are represented at the Trade Fair, and dozens of U.S. companies are displaying their wares, from rice to building materials to tractors.
As we know, the U.S. has a tight economic embargo on Cuba that only Congress can change, and most of what is happening today in the way of friendly commerce is because Obama is using presidential executive authority to expand trade options.
There are other basic problems in trying to do business with Cuba. In this article Alex Procopio, a San Diego-based businessman who has sold food products to Cuba for more than a decade, said he had lined up eight U.S. companies to travel with him to the trade fair.
However, after these business executives struggled to book flights through a complicated charter process and reserve hotel rooms in a country that doesn’t accept U.S.-issued credit cards, seven companies dropped out.
“Cuba is still the forbidden fruit, it’s still that hard-to-get-to-island,” Procopio commented. “That’s part of its charm.” (Well, it is also part of the problem.) As I said before, Cuba is not ready for prime time.
However, changes are in the air.
Since Raul Castro took over from Fidel, he had allowed Cubans to own and sell their homes and cars for the first time, approved the sale of computers and cellphones, and created a class of nearly 500,000 private entrepreneurs who are learning to run their own businesses.
Cuban business people, according to Scott Gilbert, who advises companies about dealing with Cuba, are quick to point out that “They [Cubans] don’t want to just be a satellite economy of the United States. They’re very much aware of the inequalities here, how a small fraction of the population owns most of the wealth and earns most of the income. They want everybody to count, and they don’t want the marginalization of large portions of their society.”
Today the island is indeed marginalized in one important way. The Internet. There are now about 35 WiFi hotspots in parks, plazas, and at some schools. People can go to these public spots with their laptops and cellphones, and pay $2 per hour to access the Internet. (The price just went down from $4.50 an hour.) But $2 – about 10 percent of the average Cuban’s monthly income – still makes it prohibitively expensive for most Cubans.
On Monday, the opening day of the Trade Fair, Sprint signed a landmark deal with the Cuban government. Sprint became the first U.S. carrier to strike an agreement, according to an article by Alan Gomez, with the Cuba’s government-run telecommunications company to provide direct roaming services for its customers on the island. The deal means more Americans visiting Cuba will be able to use their cellphones for something other than taking pictures of cars and cigars.
According to Myron Brilliant, executive director of the U.S. Chamber of Commerce, as quoted in the USA Today on Tuesday, November 3rd, “I’m a big believer that eventually Cuba will open up, and once Cuba opens up, this will be the hottest place in the world. And every single American is going to want to see Cuba.”
The U.S. Treasury and Commerce department, according to the USA Today article, has published regulations expanding how U.S. businesses can sell food and medicine to Cuba, as well as equipment to improve the agricultural, medical, construction and telecommunications industries on the island.
Also, for the first time, this week the U.S. Chamber of Commerce will host a board meeting of its U.S.-Cuba Business Council near the trade fair.
According to Jodi Bond, the chamber’s vice president of the Americas, changes have to take place within Cuba to make it possible for international companies to operate successfully. Among them is getting rid of the dual-currency system and change foreign investment laws.
What also needs to happen, according to Bond, is that companies must offer training for Cuba’s emerging entrepreneurial class. Today, 98% of the population is educated, but few have received formal business training.
That all said, what is most important is the American business community needs to learn how to get to Cuba easily.
The National Peace Corps Association has done it successfully with their recent trip to Cuba and the NPCA has scheduled another trip for RPCVs the spring. Maybe the Peace Corps needs to work on getting PCVs or Response Volunteers to the island. Cuba could use PCVs working in schools, agriculture and business. Maybe someone from the agency should walk down L Street and knock on the NPCA office door and ask Glenn Blumhorst how the agency could get to Cuba. That would be a better way of doing business with the RPCV community than having a dinner meeting about the ‘future’ of the Peace Corps and not invite the President and CEO of the only International Returned Peace Corps organization.
3 CommentsLeave a comment
It was a terrific trip. Glenn is doing a great job.
If American companies want some of the profit from their investments in Cuba to trickle down to the actual workers, they should negotiate to hire and pay their workers directly, rather than the current system, which funnels all foreign investment through the Cuban military. Workers are chosen for regime loyalty and given paltry payments in local currency, while the top leadership and the military retain and control the vast majority of investment income. Since Cuba does not have a market economy, the leadership sets the exchange rate between dollars and local currency so that it takes a lot of local currency to buy a dollar, hence average salaries of around $20 per month. Then high prices are charged for necessities in government dollar stores. This means that Cubans increasingly depend on their relatives in the US to send them money to survive and there are stores in Miami devoted to supplying goods for visitors to take to Cuba (where they pay duty bringing them into the airport–no source of revenue is left untouched). China and Vietnam, though one-party states, do allow direct payment to workers.
According to The Washington Post, in 2013 alone, American travelers took assets worth 3.5 billion dollars to the island, while Cuban-Americans sent 3.1 billion dollars to the country in money wires. And this is in spite of the embargo, which still allows Havana to buy food and medicines directly from American companies
(though the Cuban government has drastically reduced US imports lately to put pressure on Congress to completely lift the embargo).
I have it on good authority that ordinary Cubans who wanted entrance to the Trade Fair were not allowed to see it. Certainly, that fair was not intended for them. I don’t know if it’s still the case, but when I was regularly visiting Cuba in the 1990’s, guards at tourist hotels and beaches kept locals out. Hotels had outside phones where Cubans could call guests inside to come out to meet them.