U.S. business slow to invest in Cuba; rules still evolving
By Mimi Whitefield The Miami Herald
This article was published today at 2:06 a.m.
MIAMI -- Many barriers remain for U.S. businesses wishing to take
advantage of thawing relations between the United States and Cuba.
With a trade embargo still in effect, businesses are proceeding slowly
when it comes to the limited commercial opening toward Cuba outlined by
President Barack Obama as part of the U.S. rapprochement with Cuba.
Cuba is a new frontier for American business.
Because there hasn't been a semblance of a normal business relationship
in more than half a century, the United States was dealing more with the
theoretical than real-world experience when it wrote its new rules of
business engagement with Cuba earlier this year. Also, the rules were
Roberta Jacobson, assistant secretary of state for Western Hemisphere
affairs, calls the new rules "a work in progress."
"Cubans are getting used to it; our business people are getting used to
it," she said. "We are going to tweak. We may not have written them right."
Among the most visible deals to date are Stonegate Bank's announcement
last week that it had signed a correspondent banking agreement with
Cuba's Banco Internacional de Comercio -- a move that should make it
easier to pay for transactions -- and Airbnb's move into Cuba. It now
offers more than 2,000 listings in private homes that rent rooms to
Yet to materialize are any major deals in agriculture or
telecommunications. U.S. rules announced in January allow American
companies to sell telecommunications and computer equipment and even
work with the Cuban government in ventures to improve access to the
Internet and telecommunications.
Even though Cuba has shortages of many building supplies and the new
U.S. rules allow shipments of construction materials and equipment to
Cuba's budding private sector, there have been no announcements by major
companies that they're shipping cement mix or sending enough supplies to
During a White House briefing last week with business people, academics
and others who have been supportive of the normalization process,
briefers said a revision and clarification of some banking and travel
rules would come out shortly. They also asked business executives to
keep offering feedback on the evolving rules.
Florida-based Stonegate is the first U.S. bank to engage with Cuba under
the regulations that came out in January.
But banks in general are very nervous about Cuba, said Ted Piccone, a
senior fellow at the Brookings Institution. "Part of it is the banking
culture is very conservative, but the banks also have seen that they can
be heavily penalized if they don't abide by the letter of the law."
Meanwhile, as U.S. business pioneers try to strike deals, they must also
contend with a Cuban system that doesn't necessarily mesh with U.S.
business practices, limited Internet service, and a Cuban bureaucracy
that often seems more interested in going slow than expediting business.
Beyond the sluggish bureaucracy, the government is testing the shifting
currents with caution.
Carlos Alzugaray, a retired Cuban diplomat, points out there are reasons
the government wants to go slow and not risk losing political control by
allowing too swift an economic transformation.
Cuban leader Raul Castro, he said, has undertaken three processes of
change at once: economic measures, a new relationship with the United
States, and a generational shift in political power as he retires in 2018.
All carry a degree of risk that could derail the government's goal of
"prosperous and sustainable socialism."
"They want to do things slowly, to keep things under control," said
Piccone. "There's also an ongoing battle between Raulistas [who are more
supportive of economic change] and Fidelistas for control, and that's
another reason that things are so slow."
To help companies try to overcome some of the obstacles in entering the
Cuban market, Burson-Marsteller, a public relations and communications
firm, recently introduced a Cuba consultancy team that will advise
clients on matters such as positioning themselves in the Cuban market,
how they should enter it, how to present their corporate presence in
Cuba and how to effectively communicate to various stakeholders about
their Cuba business.
For companies and industries that consider Cuba a longer-term investment
when the embargo is lifted, Burson-Marsteller will advise them on an
advocacy role to help bring about policy changes, said Ramiro Prudencio,
the company's Latin America president and chief executive.
"I think that for most companies, Cuba needs to be a long-term play --
unless they're in very specific industries," he said. But travel and
tourism will present "almost immediate opportunities."
Companies that want to do business in Cuba, he said, must be cognizant
of whether their venture is in sync with government development plans
and offers social and economic benefits to the Cuban people.
"We want to make sure companies are successful in Cuba," he said. "It's
about having the message right and the right policy. Cuba is not just
any market and it is not just any country."
Business on 07/30/2015
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