Foreign investments in Cuba are a reality

By Elsa Claro

HAVANA – Early this leap-year February, Repsol-YPF began its first perforations for oil in the deep Gulf waters 50 kilometers from the Cuban coastline. Repsol, Norway’s Statoil and India’s Oil and Natural Gas Corp. are three of six companies participating in the same objective.

A couple of weeks earlier, the long-awaited semi-submersible platform Scarabeo 9 moved past Havana’s Morro during the visit by Dilma Rousseff. The links between the South American giant and the island were not a matter of protocol but of strategy, the president said, displaying much pragmatism by being accompanied in the trip by Brazilian businessmen.

Work proceeds on several economic scenarios in Cuba, including the containers terminal at the Port of Mariel. Rousseff visited the terminal and learned about the concession given to the Brazilian conglomerate Odebrecht to manage a sugar mill in the province of Cienfuegos.

Odebrecht will be the first Brazilian company to exercise full management over an installation of that kind. Odebrecht has had much experience in the processing of sugar and the production of ethanol, not to mention its experience in major works of engineering and infrastructure.

Because almost everything that’s said in Cuba is questioned, some people have questioned the decision to open Cuba to foreign capital, which for a long time was the island’s main source of revenue. The fact is that Cuba’s willingness to accept it is not only announced but does exist, although judicious, serious offers are required to accept that investment.

Also in early February, official sources indicated that the priorities of the government led by Raúl Castro Ruz regarding foreign investment focus on oil exploration and mining. Several nations are already working (and some are interested) in the search for precious metals and base metals like copper, lead, zinc, etc. The government has not ruled out similar activities in tourism and real estate, pharmaceutics, service systems, medical testing and biotechnology.

These actions are not new. They originated in the 1990s, when Cuba abruptly lost its main suppliers/buyers and had to substantially reform its economy, establishing associations with foreign capital (Law 50) and reorganizing its structures in foreign trade and domestic development.

The first of the joint enterprises was the Sol Palmeras Hotel, built in Varadero in 1988 with the experienced Meliá company of Spain. Meliá was a leader in the so-called smokeless industry, tourism, which later increased in collaboration with Cuban and other societies.

Between 1988 and 1993, almost all joint ventures were small or medium in size. In summer of 1993, the efforts increased and by the end of 1994, the number and quality of Cuba’s joint enterprises had broadened, especially in services, telecommunications, and real estate construction. Most importantly, the limitations on foreign investment in productive industries were lifted. In other words, such transactions were extended to the industrial sector, which had been affected by the decapitalization provoked by the crisis.

Little, almost nothing is said about a 100-percent foreign company in Cuba. It is a Panamanian firm that built a power plant in the Isle of Youth with modern and efficient technology. The Panamanians operate that plant and will eventually turn it over to Cuba, at an agreed-upon time.

Direct investments in Cuba are either questioned or obstructed through multiple actions by the U.S. administrations. One such action is the Helms-Burton Law, one of whose objectives was to hinder the increase in such investments, through the freezing of funds and financial interference in third countries, all in an effort to break down the Cuban process. I won’t go into other tactics it utilized.

Those tactics hurt Cuba and discouraged some investors but couldn’t prevent Spain, Canada, Italy, France, Holland, the United Kingdom, China, Australia and other nations from investing in the island. Through a new formula of regional integration (ALBA, Petrocaribe), Cuba broadens its commercial options, investments and exports under principles of mutual solidarity among the countries that form ALBA – and some nonmembers. The basis for their interest is the ease of exchange and economic-financial modalities within the trade zone.

The size of the works, such as the Cienfuegos refinery, which distributes hydrocarbons to several Caribbean nations, or the Mariel “pole,” which will turn Cuba into a center for the reception and distribution of merchandise and a home for diverse industries, indicates that the project to perfect the Cuban economy is not just on paper or in the minds of the island’s leaders. It is something that advances with firm steps, even though some touching up is needed (and expected) to make future possibilities more attractive.

A long time ago, before the traumatic events that made the world unipolar, I spoke with a Canadian businessman during one of those anti-Cuban offensives that have always occurred. He told me that his company and his government trusted the decorum shown by the Cuban authorities, who have always honored their commitments.

I recently spoke with another representative of foreign capital. I don’t know if he wanted to sweeten me up or if he was sincere, but, while expressing satisfaction at the way his company’s bills are paid, he told me something similar to the Canadian’s comments.

Not everyone is so trusting, of course, and the present economic situation worldwide leads many to be suspicious, especially because of the blockade against the island and the existing tax structures. But the growing number of investors – not only in nickel, gas, oil but also in agriculture (sugar cane processing) and the free zones – indicates that there is more pro than con.

On the other hand – and this is important – in a kind of rear defense, Cuba is exploring its own possibilities overseas. It participates in more than 100 joint ventures in Latin America, through ALBA, Africa and Asia, in the form of entities in association with the host governments or as branches of Cuban companies in the lending of specialized services, especially medicine. There are also international networks devoted to the raising and exportation of seafood, tobacco and systems of clinical research with native technology.

This rough review of the recent past and the busy today indicates that neither men nor nations should be measured only by their physical size but by their works and ability to create while resisting strong attacks.

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