Keys to Busi­ness be­tween the United States and Cuba

On Cuba - - CONTENTS - José Jasán Nieves

Be­fore the U.S. Sprint Com­pany signed an agree­ment with the Cuban ETECSA, the cell­phones of its clients who trav­eled to Cuba were only good for tak­ing pic­tures and check­ing the time. But af­ter the joint es­tab­lish­ment of the roam­ing ser­vice, in Novem­ber 2015, a new sym­bolic sit­u­a­tion was es­tab­lished: the sen­sa­tion of iso­la­tion when touch­ing Cuban soil is no longer that big.

The pres­i­dent of Sprint, Bo­li­vian Marcelo Claure, wanted to be the pioneer in the field of joint telecom­mu­ni­ca­tion ven­tures and “rob the take­off,” as is said in ath­let­ics, af­ter Pres­i­dent Obama re­laxed the mea­sures to es­tab­lish busi­ness deals with Cuba.

Min­utes be­fore sign­ing the agree­ment in a crowded and hot room of the Havana In­ter­na­tional Trade Fair, Claure con­fessed to the jour­nal­ists present there that the ne­go­ti­a­tions had taken place “sur­pris­ingly fast.”

“At the be­gin­ning I thought, ‘My God, it’s the Cuban govern­ment, the ne­go­ti­a­tions are go­ing to be slow’…but I was sur­prised and we signed an agree­ment in record time,” he af­firmed.

David Se­leski also likes the adrenalin of races in the world of busi­ness. That’s why he did not doubt in tak­ing risks with his bank (Stonegate Bank) where oth­ers are more cau­tious.

First, it was the only U.S. bank­ing in­sti­tu­tion that ac­cepted tak­ing over the ac­counts of the then still Cuban In­ter­ests Sec­tion in the United States (af­ter 15 months of in­ter­rupted con­sular ser­vices, since no bank wanted to ex­pose it­self to the govern­ment sanc­tions for mov­ing “Cuban money”), and in 2016 it was able to be the first bank au­tho­rized by the Trea­sury Depart­ment’s Of­fice of For­eign As­sets Con­trol (OFAC) to op­er­ate di­rectly with Cuba.

“The process was not dif­fi­cult and the ne­go­ti­a­tions were fair and cor­dial. Things moved rapidly. I’m very sat­is­fied with the re­la­tions, it is a ver­i­ta­ble as­so­ci­a­tion where each party re­spects the per­spec­tive of the other,” Se­leski told OnCuba.

“I think that the big­gest ob­sta­cle we faced were the many points that had to be worked in per­son, which meant a great deal of trips. For­tu­nately, the travel ex­pe­ri­ence will im­prove with the com­mer­cial flights,” he said from his of­fice in Pom­pano Beach, Florida.

Sprint and Stonegate Bank are two of the few U.S. com­pa­nies that have been able to es­tab­lish busi­nesses with Cuba, af­ter more than 50 years of pro­hi­bi­tion and un­der the pres­sure of a com­mer­cial and financial em­bargo against the is­land, which is still in force. In a few months, these “stan­dard bear­ers” have been joined by ma­jor cor­po­ra­tions like Car­ni­val Cruises, AT&T, Ver­i­zon, the Star­wood ho­tel com­pany and the Amer­i­can Air­lines, JetBlue and Delta air­lines, to­gether with other ac­tors of sim­i­lar cal­iber.

The op­por­tu­nity to seal a com­mer­cial agree­ment be­tween ac­tors of the two coun­tries de­pends on a great many fac­tors, but it seems two of them are fun­da­men­tal: the po­lit­i­cal will in the two coun­tries to ac­cept pro­pos­als and the will­ing­ness to be cre­ative, f lex­i­ble and pa­tient to find so­lu­tions.

In 2015 the AirBnB on­line reser­va­tions com­pany was an ex­am­ple of cre­ativ­ity. With a li­cense to fa­cil­i­tate the ac­com­mo­da­tions for U.S. cit­i­zens in pri­vate homes in Cuba, the San Fran­cisco-based com­pany found two so­lu­tions to the big­gest prob­lems to pro­vide an ef­fec­tive ser­vice: the low con­nec­tiv­ity to In­ter­net on the is­land and the dif­fi­cul­ties to make di­rect pay­ments.

The land­lords and land­ladies in Cuba smoothed the way by sub­con­tract­ing a per­son with ac­cess to the In­ter­net to man­age at the same time the reser­va­tions and con­fir­ma­tions of sev­eral hos­tels, while the Cal­i­for­nian com­pany sends the pay­ment to the lessors through a pri­vate re­mit­tance agency from Mi­ami.

The busi­ness has pro­lif­er­ated so much that the num­ber of regis­tra­tions of Cuban hos­tels on the col­lab­o­ra­tive web con­tin­ues grow­ing and the op­er­a­tion li­cense was ex­panded un­til it al­lowed for any trav­eler in the world to be able to re­serve a room in Cuba

through AirBnB. The Cuban govern­ment, mean­while, has not ob­jected to this sys­tem, de­spite the fact that strictly speak­ing it has gaps, ac­cord­ing to the do­mes­tic leg­is­la­tion (es­pe­cially re­gard­ing the pay­ment from the United States). It’s sim­ply a win/ win op­er­a­tion.

BU­REAU­CRACY: A TRUE RISK

Saul Ber­en­thal is Cuban by birth, but to­gether with a part­ner he has pro­posed one of the most fa­vor­able syn­er­gies for com­mer­cial re­la­tions be­tween Cuba and the United States: man­u­fac­tur­ing rel­a­tively cheap trac­tors for farm­ers in Cuba.

The idea was well-re­ceived in Havana, to the point that it has been the first U.S. com­pany to get au­tho­riza­tion to present an in­stal­la­tion dossier in the Mariel Spe­cial De­vel­op­ment Zone, a planned in­dus­trial hub that is barely tak­ing its first steps.

But this hap­pened only af­ter more than a year of ne­go­ti­a­tions with the two gov­ern­ments. Ber­en­thal and his com­pany, Cle­ber LLC, have got­ten a li­cense to ex­port al­ready-as­sem­bled equip­ment to Cuba, and not by pieces to as­sem­ble on the is­land as was his as­pi­ra­tion.

“There’s bu­reau­cracy in the United States as well as in Cuba,” said Ber­en­thal in an in­ter­view for a Span­ish dig­i­tal me­dia, “which is why one must un­der­stand, know how to en­dure and adapt to the Cuban com­mer­cial cul­ture; on the is­land the bu­reau­cracy is more for­mal than in the United States, where it is more used at the ser­vice of busi­ness and of busi­ness­peo­ple; on the is­land, on the other hand, the agen­cies are more di­rected at car­ry­ing out the process and not nec­es­sar­ily to pro­vide ser­vice to the en­tre­pre­neur.”

The Illi­nois-based com­pany had to hire a team of lawyers on the archipelago and an­other in the United States to han­dle the de­tails of the pro­cesses in each place. Ac­cord­ing to Ber­en­thal, the gov­ern­ments of the two coun­tries ap­ply “a very in­tense scru­tiny to the process so that all the de­tails are cor­rectly car­ried out.”

Oth­ers who have had to put on wait their ea­ger­ness are the rep­re­sen­ta­tives of the ferry com­pa­nies that, af­ter the re-launch­ing of re­la­tions on De­cem­ber 17, 2014, had ex­pected to be sail­ing f lu­idly by the close of 2016.

The Of­fice of For­eign As­sets Con­trol (OFAC) has al­ready is­sued six li­censes to U.S. com­pa­nies to op­er­ate port move­ments in the south of the United State to Havana. But, on the Cuban side, the re­sponse has been that the port in­fra­struc­ture is not ready to re­ceive di­rect trips. The founder of one of the au­tho­rized com­pa­nies, United Car­ib­bean Lines, told the press that the Cubans had de­cided on other in­fra­struc­ture projects they had to do first.

Mean­while, Joseph J. Hin­son, man­ag­ing part­ner of an­other of the ship­ping lines with a li­cense (Baja Fer­ries), com­mented that they were ex­pect­ing that at some time in the near fu­ture they will have the op­por­tu­nity of meet­ing with the Cuban au­thor­i­ties to un­der­stand their needs.

Hin­son af­firms that his com­pany has made known to the is­land’s au­thor­i­ties its “sin­cere in­ter­est” in this project. But, as he said, the Cuban au­thor­i­ties are still not ready to hold dis­cus­sions re­gard­ing the pos­si­ble op­por­tu­ni­ties of the ferry ser­vice from the south of Florida to Cuba.

SOME­THING IS ALSO BREW­ING IN OFAC

While some of the principal of­fi­cials of OFAC travel to Havana to trans­mit a new at­ti­tude of the U. S. ad­min­is­tra­tion to­ward the rap­proche­ment, of­fi­cials of the same or­ga­ni­za­tion con­tinue ap­ply­ing sanc­tions against com­pa­nies and in­di­vid­u­als as­so­ci­ated to Cuba.

In early Septem­ber 2016 it was an­nounced that Anthony J. Fox, an ac­tive pro­moter of re­la­tions be­tween the United States and Cuba, had been fined 100,000 USD. The mea­sure, ac­cord­ing to the trial doc­u­ments, was for sup­posed vi­o­la­tions of the travel reg­u­la­tions be­tween 2010 and 2011. For OFAC, Fox did not meet the re­quire­ments about ho­tel reser­va­tions and pay­ments to Cuba.

A few days later it was known that the Span­ish San­tander Bank had re­fused to han­dle the Car­ib­bean na­tion’s financial trans­ac­tions un­der the risk of re­ceiv­ing sanc­tions by the United States.

The bank­ing in­sti­tu­tion thus joined a list of sim­i­lar ac­tions that, ac­cord­ing to the Cuban govern­ment, in­cluded be­tween 2015 and 2016 the So­ci­ety for World­wide In­ter­bank Financial Telecom­mu­ni­ca­tion, the Bank of Ba­hamas, the Royal Bank of Canada, the Mit­sui Su­mit­omo SMBC of Ja­pan and the Span­ish Caixa Bank. A to­tal of al­most 50 fines were im­posed dur­ing Obama’s two terms (2009-2016) for vi­o­lat­ing the reg­u­la­tions against Cuba and other coun­tries, and their ac­cu­mu­lated value amounts to some 15 bil­lion dol­lars.

In all the cases, they are mea­sures ap­plied for “vi­o­la­tions” com­mit­ted be­fore the reestab­lish­ment of diplo­matic re­la­tions,

given that OFAC ad­duces that the faults they sanc­tion are not pre­scribed. It is ev­i­dent that in the world of busi­ness any step taken is thought out cau­tiously or sim­ply prob­lems are avoided by re­fus­ing to deal with Cuba.

Ac­cord­ing to U.S. of­fi­cials, this ex­treme cau­tion (un­nec­es­sary, sup­pos­edly, in view of the Obama ad­min­is­tra­tion’s re­cent re­lax­ing of mea­sures) hap­pens to a great ex­tent be­cause the com­pa­nies from one or the other side are not com­pletely fa­mil­iar­ized with the con­tent of the reg­u­la­tions in force. And al­though the U.S. au­thor­i­ties are in­creas­ingly boost­ing what they call “ed­u­ca­tion ac­tions” and pro­mot­ing the “reg­u­la­tion talks” (to clearly un­der­stand their Cuban govern­ment peers), the per­ma­nence of sanc­tions can put a break to the en­thu­si­asm.

Al­though, of course, the au­da­cious are al­ways the ones who break the in­er­tia.

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