Thursday, September 20, 2012

Cuba’s Post-Castro Future

Cuba's Post-Castro Future
September 19, 2012

Exclusive: With Fidel Castro now 86 and his brother Raul at 81, big
changes appear inevitable in Cuba over the next few years.
Cuban-Americans are ramping up investment plans, assuming the U.S.
government will finally lift the embargo. But the future may not be all
that's expected, reports Don Ediger.

By Don Ediger

For more than 50 years, Cuban-Americans have been looking for ways to
end the Castro regime. Today their plans are being re-shaped in ways
that would have been all but unthinkable only a few years ago – and
these plans will be affected by the outcome of U.S. presidential elections.

Most Cuban-Americans now believe that a transition to democracy may
require a period of many years. In the meantime, a growing number of
them are exploring ways to profit from a country that has been off
limits for most American companies.

Cuban leader Fidel Castro speaking at the Jose Marti Monument in 2003.
(Photo credit: Ricardo Stuckert/ABr.)

The key to this new strategy is an option that until recently wasn't
even open to discussion – ending the U.S. embargo. That's more likely to
happen, Cuba experts say, if Barack Obama is reelected, because
Democrats are traditionally more open to options regarding the embargo.
There's also growing doubt about whether outlawing Cuban imports
actually hurts the regime.

"Personally, I think that the embargo is a completely failed policy,"
says Miami attorney Antonio Zamora, referring to the 50-year-old law
that was imposed after the Castro regime expropriated private property.
In all those years, Zamora points out, only a few property owners have
ever been compensated.

Though largely overlooked by the media, major shifts in Florida
demographics make repeal of the embargo much more likely. Numbering more
than one million, Cuban-Americans have been the largest Hispanic group
in Florida, and for many years they overwhelmingly favored keeping the
embargo in place. To win elections in Florida – the country's largest
swing state – politicians of both parties have traditionally promised to
uphold the embargo for fear of alienating Cuban voters.

Now that's changing. Hispanics from Puerto Rico, the Dominican Republic,
Venezuela, Mexico and other Latin American countries are growing faster
in numbers than those from Cuba. And while Cuban-Americans are mostly
Republicans, others in Florida are heavily Democratic.

Moreover, Cuban-Americans themselves are changing their mind about the
embargo. According to a recent study by the Cuban Research Institute at
Florida International University (FIU), most Cuban-Americans in Miami
would agree with Zamora that the embargo hasn't worked well. In fact, 47
percent would like to see the embargo lifted.

"This is probably the first presidential election in which Cuba is not a
top issue for the Cuban-American community," says Andy Gomez, senior
fellow at the University of Miami's Institute for Cuban and
Cuban-American Studies. A member of Mitt Romney's staff phoned Gomez
last year to get his advice on the topics that Romney should address
when he visits Miami. Gomez's answer wasn't Cuba but jobs and the economy.

It's not that Cuban-Americans are no longer interested in Cuba, Gomez
says, but that they are "tired of the same thing over and over again."

There's a growing consensus among Cuban-Americans that lifting the
embargo won't help the Castros retain power – as some once thought –
because the regime has been thoroughly entrenched for more than five
decades. When Fidel Castro became ill six years ago, some experts
thought the end was near, but today they discuss a variety of scenarios.

As Jose Gabilondo of FIU's Cuban Research Institute explains it: "The
logic of the U.S. embargo is 'Let's create conditions of civil unrest in
Cuba by creating conditions of economic hardship such that there will be
a popular uprising that will lead to a revolution.' I reject that
approach. I don't think it makes sense."

The other approach, Gabilondo says, "is to realize that transition is
already happening in Cuba – slowly, and one deal at a time."

A Vietnam-Style Scenario

The most likely scenario, many experts believe, is for Cuba to follow a
path similar to Vietnam's – continuing as an authoritarian socialist
state but also opening up trade with the United States.

Several Cuban-American groups are already gearing up for this
possibility, which comes with the prospect of huge profits for American
companies once the embargo is lifted. There's also a sentiment in the
community that opening up trade might also provide the Cuban government
with an incentive to be less repressive.

But while Raul Castro – the current leader of Cuba – appears to be more
open than his brother to economic reform, Jorge Duany, director of FIU's
Cuban Research Institute, emphasizes that neither Castro wants more than
one party, free elections or a free-market economy.

A small step in economic reform came two years ago when the Cuban
government authorized 99-year commercial leases, and as of last year,
Cubans could also sell their houses. But private businesses are still
very difficult to start with a two-year backlog of license applications.

Just a few days ago there were signs that the Castro government is
trying to take advantage of the changes in U.S. politics and strategy of
the Cuban-American community:

–The government in Havana reiterated its willingness to negotiate the
release of Alan Gross, an American contractor who has spent more than 2
1/2 years in jail on charges of trying to install Internet technology to
undermine the government.

–The Cuban government has raised its profile as mediator in Colombia's
peace talks with FARC, the communist guerrilla group that Cuba has
supported. If mediation succeeds and FARC becomes a legitimate political
party, the U.S. is likely to remove Cuba from its list of terrorist
nations – a step that makes it easier to lift the embargo.

The embargo forbids American companies from importing goods from Cuba
and from selling anything but agricultural goods to the country.
American firms are currently allowed to export agricultural products to

The embargo doesn't affect the ability of Americans to send up to
$10,000 a day to Cuba, a provision that lets Cuban-Americans help family
members who remain on the island. These remittances total more than $2
billion a year.

Lucrative Market

The stakes are high for post-embargo trade. Cuba has a gross domestic
product (in purchasing power parity) of about $114 billion, putting it
in a league with Ecuador and New Zealand. Companies from dozens of
countries – including Spain, France, Venezuela and Canada – are already
profiting by trade with Cuba.

Miami attorney Zamora, who gives legal advice to companies in the U.S.
and throughout Latin America, said these are some of the major
opportunities for American companies:

–Construction. Many houses, for example, are in need of repair.

–Resorts, including retirement communities, golf courses and other
sports facilities.

–Oil refineries (assuming the success of continued oil exploration).

–Infrastructure, especially highways, ports and power plants. (Earlier
this month, some five million residents of western Cuba were without
electricity after a massive blackout.)

–Biotechnology and health-care facilities.

–Travel to, from and on the island.

Many businesses, especially in Florida, are already preparing for trade
and investment in post-embargo Cuba, and several Cuba trade groups have
started up in Miami and Tampa, among other cities.

Trade advocates point out that if U.S. companies don't start doing
business in Cuba, foreign corporations are almost certain to step up
their activities there. The French, for example, pulled back their
investments when European economies tanked several years ago. They now
hope to increase investment in Cuba from a recent level of 150 million
euros (about $196 million) to 250 million euros (about $327 million) a year.

Business people and the Cuban-American community are well aware,
however, that the transition of power in Cuba may be far from smooth.
Though the odds seem to be against a violent revolution, there are too
many unknowns to rule out any scenario.

That's because Cuba hasn't been a top priority in the U.S. since the
collapse of the Soviet Union, Cuba's powerful ally. The priority is now
even lower since another of Cuba's allies, Venezuelan leader Hugo
Chavez, has been suffering from cancer and may not have long to live.

Gomez, the senior fellow at the Institute for Cuban and Cuban-American
Studies, says when he speaks with intelligence officials in Washington,
he's often amazed at how little they know of secondary players in Cuba.
Over the last few years, in fact, U.S. intelligence agencies have
frequently relied on the Cuban-American community for information.

The Cuban-American community has often been relied upon for information
about conditions in Cuba because Cuban-Americans can travel to Cuba to
visit relatives and, while there, talk with a wide spectrum of the

But little is known for sure about the second tier of Castro bureaucrats
and even less about would-be revolutionaries who would try exerting
power after Fidel and/or Raul is out of the picture. The Cuban military,
experts say, could also play a major role in the transition, and the
Catholic Church is a relatively new wild card in the game.

Since Pope John Paul II visited Cuba in 1998, the church has experienced
a resurgence on the island and could prove to be a behind-the-scenes
force for democracy. On the other hand, the church has tried to stifle
some democratic changes such as a proposal – backed by the daughter of
Raul Castro – to allow same-sex marriage.

Cuba's Future

The mix of political and cultural pressures could create, over the next
five years, a curious blend of business investment and ideological
restrictions. So, in 2017, you might find yourself at an American
airport waiting for a plane to Varadero, a resort area in northern Cuba
where your parents live in a retirement community.

Ironically, the plane will fly over Key West, where you once vacationed
at the cost of nearly three times what you will spend in Cuba.

While waiting for the plane, you mull over the idea of going to Havana
during your upcoming 10 days on the island. You have some contacts there
who might be helpful in setting up a branch of your public relations
firm. The market is growing in Cuba, and start-up costs are low.

You also hope to drive with your parents to the nearby port city of
Mariel, where two famous Parisian chefs recently opened a couple of
restaurants. Prices, you hear, are less than half of what they charge in

There's just enough time to stop by the airport newsstand for a couple
of magazines your parents will enjoy reading. You reach for some
American news magazines but then quickly put them back when you remember
that the Cuban government has banned all U.S. news publications.

Oh, well, you say to yourself, that's part of the price of a new Cuba.

Don Ediger is a veteran journalist who has worked for The Miami Herald,
Associated Press, BusinessWeek and the International Herald Tribune,
among other publications. He is currently a resident of Miami.

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