Bye-bye embargo?
Foreign
investment in Cuba
Getting
ready for a post-Castro bonanza
This
article was taken from The Economist Magazine.
The
American businessman at this month’s international trade fair in
Havana was full of excitement about the communist island’s investment
prospects as its long-serving president ails. “It’s a perfect
storm,” he enthused: “Fidel will soon be gone, and a Democratic
president will be in the White House. Bye-bye embargo!”
Few
of the foreign investors who have spent years struggling to make
money in Cuba, caught between American trade restrictions, communist
bureaucracy and preferential deals for key allies such as China and
Venezuela, see it quite so simply. But even the most jaded are
wondering whether things might be looking up. Hopes have been raised
by news of a huge deal in the making. It could be the shape of things
to come.
After
two years of negotiations, plans are moving forward for Dubai Ports
World, a partly state-owned company in the United Arab Emirates, to
invest $250m in converting the decrepit port in Mariel, just west of
Havana, into a modern container facility. A formal feasibility study
has been commissioned.
Foreign
investment in Cuba Read Spanish Version
Bye-bye embargo?
Getting
ready for a post-Castro bonanza
This
article was taken from The Economist Magazine.
The
American businessman at this month’s international trade fair in
Havana was full of excitement about the communist island’s investment
prospects as its long-serving president ails. “It’s a perfect
storm,” he enthused: “Fidel will soon be gone, and a Democratic
president will be in the White House. Bye-bye embargo!”
Few
of the foreign investors who have spent years struggling to make
money in Cuba, caught between American trade restrictions, communist
bureaucracy and preferential deals for key allies such as China and
Venezuela, see it quite so simply. But even the most jaded are
wondering whether things might be looking up. Hopes have been raised
by news of a huge deal in the making. It could be the shape of things
to come.
After
two years of negotiations, plans are moving forward for Dubai Ports
World, a partly state-owned company in the United Arab Emirates, to
invest $250m in converting the decrepit port in Mariel, just west of
Havana, into a modern container facility. A formal feasibility study
has been commissioned.
The
choice of Mariel, one of the closest points in Cuba to the United
States, is significant. The port is best known as the setting for a
massive boatlift in 1980 when, over a period of six months, 125,000
Cubans set off in flimsy rafts as Fidel Castro turned a temporary
blind eye to those wanting to leave his poor one-party state. They
were picked up and taken to the United States by a flotilla of
American yachts.
Mariel
appeals to international port operators for the same reason — its
proximity to the United States. “This deal isn’t just about getting
goods to Cuba,” said one analyst who had studied the project. “It’s
about getting into the US market.” American ports are close to
capacity, and environmental restrictions make any big expansion of
existing terminals unlikely. In a post-embargo world, Mariel, which
is expected to be open for business by 2012, would be a
well-positioned hub. Goods could be transferred from the big
container ships arriving at the port to smaller vessels which could
then reach dozens of harbors in the southern United States.
Dubai
Ports World refuses to comment on the deal. But there can be little
doubt that the company is eager to gain a foothold, if not actually
in the United States, then as close as possible to it. Last year it
was forced to abandon plans to operate six big ports in the United
States after Congress expressed security concerns. Although the
United Arab Emirates is considered a close American ally, two of the
hijackers involved in the September 11th 2001 terrorist attacks were
UAE nationals.
Does
Cuba’s acceptance of the Mariel project mean that the country’s top
brass is beginning to plan seriously for the day when the American
embargo might end? That might appear premature, given that the Bush
administration has explicitly ruled out unrestricted trading with a
Cuban government under Raul Castro, Fidel’s brother and presumed
successor, and that only one American presidential candidate (Chris
Dodd, a Democratic outsider) has called for a complete end to the
embargo.
All
the same, there is evidence that Cuban officials do believe that the
days of the bloqueo
(as they refer to the embargo) are numbered. The Cuban ministries
that deal with foreign investment, known by their Orwellian
abbreviations of MINVEC and MINFAR, have recently been putting the
word out to foreign investors that tenders are welcome for a raft of
projects. Theme parks, super-yacht marinas, golf courses, even
airlines — all apparently geared to a future American market too —
feature prominently on the list.
An
end to the embargo could provide a bonanza to investors with assets
in Cuba that would appeal to American corporations. The paltry
returns from, say, a share in a Havana hotel would be dwarfed by the
value that could be realised by selling that stake to an American
hotel chain. “That’s the game plan,” admitted one Havana-based
businessman. “But,” he added, “so is patience.”
