Saturday, June 20, 2015

Door Opens Slightly to Cuba, but Businesses Face Difficulty Getting In

Door Opens Slightly to Cuba, but Businesses Face Difficulty Getting In

MIAMI — Six months after President Obama cracked open a more than
five-decade Cold War stalemate with Cuba, American money, travelers and
business executives are streaming onto the island and a United States
flag is poised to fly over the de facto embassy in Havana any week now.

Tourism-related companies, including hotels and cruise lines, have their
Cuba plans ready. Airbnb is helping travelers find private rooms in Cuba
— a growing cottage industry there. JetBlue is now flying to the island.
And for the first time in a long while, Americans are free to import a
small number of goods from Cuba made by Cuban entrepreneurs.

But for all the early optimism, businesses and advocates for engagement
are increasingly finding that genuine normalization is still more
aspiration than reality. Myriad laws and regulations, most important the
United States trade embargo against Cuba, continue to restrict commerce
between the two countries. Cuba's convoluted legal, tax and commerce
systems are stuck in another era and a different ideology altogether.

The United States government now allows American banks to open accounts
in Cuba, but the Cuban government has not detailed how. American credit
cards are permitted, but no one can use them because Cuba, so far, has
not authorized them and because liability concerns abound. At the same
time, Cuba is banned from using American dollars for international
transactions, which complicates everything.

Netflix is available to everyone, and to no one, because Internet access
on the island is expensive, slow and unavailable in almost all homes.
American companies can now ship goods to private-sector businesses —
shampoo to hair salons or refrigerators to restaurants, for example —
but Cuba will not yet allow its entrepreneurs to receive them.

Ferries got approval from the United States to sail to Cuba this year,
but Cuba has not granted its permission. And under United States rules,
American executives can venture to Cuba to research investment
opportunities, but they are still prohibited from opening a Marriott, a
CVS or any other business there, even under a partnership with the Cuban
government, as some foreign companies have done.

There is enormous enthusiasm among Cubans on the island who are
energized by the possibilities and entrepreneurs in the United States
who are eager to open businesses in Cuba. But many are now tempering the
enthusiasm with recognition of how long the process of normalization may be.

"My new title is manager of expectations," said Ariel Pereda, who, under
a congressional exemption for some food and medical products, has since
2002 legally exported American goods like Hershey chocolates and
Pringles potato chips to Cuba. He also advises business leaders on Cuba.

"For any real investment that has a return, for that to happen, the
embargo has to be lifted," he said.

Removing the embargo requires a vote from Congress, which is highly
unlikely at the moment, analysts said.

Even longtime hard-liners on Cuba, like Carlos M. Gutierrez, a
Cuban-American who was commerce secretary under President George W.
Bush, say there is a sense of inevitability about rebuilding a
relationship with Cuba, a country only 90 miles from Key West.

Travel by Americans jumped rapidly in January. From October through last
month, visits to Cuba increased nearly 17 percent from a year earlier,
according to data from United States Customs and Border Protection. That
number does not include the thousands more who evaded restrictions by
entering through third countries, like Canada and Mexico.

Other sorts of exchanges are also burgeoning. Cubans on the island have
been hired to work for companies in Miami as software programmers and
translators. The work is sent back to the United States via the Internet
or on memory sticks. And delegations of politicians — including Gov.
Andrew M. Cuomo of New York in April — fly to Cuba so often that it is
no longer noteworthy.

Last month, the island was removed from the list of countries that
sponsor terrorism, a step that will significantly help Cuba conduct more
business with other countries.

"What is clearly over is the status quo," said Joe Garcia, a Democrat
and former House member from Miami who has pushed for greater engagement
with Cuba. "And the status quo was hurting the Cuban people and U.S.
foreign policy."

But several high-powered businessmen have recently returned from Havana
saying progress will come slowly.

"We are still far away," said Jorge M. Pérez, a billionaire real estate
developer of Cuban descent and a trustee of the Pérez Art Museum Miami,
who recently attended the Havana Biennial. "There are still barriers in
both countries. People in the Cuban government are probably afraid of
the possibility of an open market. And there are people in our country
that have a vested interest in trade between the two countries not

Even allowing the government-owned carrier Cubana de Aviación to fly to
the United States as part of a reciprocal agreement would be difficult.
Lawyers would all but certainly swarm the plane seeking redress for
clients whose property was expropriated on the island, Cuba analysts said.

Many business leaders and supporters of Cuban engagement are lobbying
Mr. Obama to do more by using his executive authority to further loosen
regulations relating to Cuba, something he can do despite the embargo.
With a presidential election less than 17 months away, one that could
put into office a Republican with far less sympathetic views toward
Cuba, the clock is ticking, the analysts said. All of Mr. Obama's
regulations could be undone with the flourish of a signature.

This month, House Republicans, joined by several Democrats, approved two
separate measures to roll back Mr. Obama's new rules. One measure would
toughen restrictions on Cuba, including flights and sea travel, a blow
to those pushing for more change. The bills are attached to must-pass
appropriations legislation.

John Kavulich, the president of the United States-Cuba Trade and
Economic Council, said any major shift toward Cuba would be highly
unlikely in a Republican Congress and with an election looming.

"Nothing is going to happen in Congress during President Obama's time in
office," Mr. Kavulich said.

This is why some advocates want Mr. Obama to continue to use his
presidential power. Mr. Obama, for example, could allow American
companies to finance the sale of construction material that can now flow
to Cuba. At the moment, the transactions are cash only.

Some argue he has the authority to do considerably more.

"The president has the power tomorrow morning to issue a license to
allow Hilton to operate a hotel in Cuba," said Robert L. Muse, a
Washington lawyer who is an expert on Cuba policy and trade.

But critics in Congress point to the fact that, so far, this has been a
one-sided dance — the United States slowly extends a hand while Cuba
looks on skeptically. The Cuban government is benefiting — more money
from tourists, more access to loans, more foreign investment as
international companies try to lock in deals — but does next to nothing
in return. Dissidents are still rounded up and detained. And Internet
access, while it is expected to improve with the coming introduction of
new Wi-Fi spots and lower fees, is growing only in fits and starts.

"There is a perception, even by some Democrats, that President Obama has
given a lot and not gotten much," Mr. Kavulich said. "People want to see
us get something."

Cuban officials counter that as long as the United States embargo exists
and an American naval base sits at Guantánamo Bay without Cuba's
consent, genuine normalcy will be out of reach.

"I can see their point," Mr. Muse said.

Source: Door Opens Slightly to Cuba, but Businesses Face Difficulty
Getting In - The New York Times -

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