Americans see Cuba as un­pre­dictable in­vest­ment

Financial Mirror (Cyprus) - - FRONT PAGE -

Amer­ica isn’t famed for its for­giv­ing for­eign pol­icy: the global su­per­power can af­ford to pick its friends and sanc­tion its en­e­mies. Yet, they say that all things in life must at some stage come to an end.

Since 1961, Cuba has been closed off to the Amer­i­can mar­ket, but now, for the first time in half a cen­tury of po­lit­i­cal ten­sions, their pres­i­dents have an­nounced plans to re­store ties. As trade and travel be­tween the coun­tries be­comes fea­si­ble, an­a­lysts are torn about the po­ten­tial im­pact of this op­por­tu­nity on Amer­i­can busi­nesses and the Cuban econ­omy.

On De­cem­ber 17, US Pres­i­dent Barack Obama and Cuban Pres­i­dent Raul Castro an­nounced a new era in re­la­tions be­tween the two coun­tries. For the first time in decades, Wash­ing­ton and Ha­vana seemed to be on the same page. The lead­ers pub­li­cised the ex­change of cap­tive Amer­i­can Alan Gross for the re­main­ing im­pris­oned mem­bers of the Cuban Five. They de­clared that em­bassies would open once again and travel re­stric­tions would be eased. On Jan­uary 15, Amer­ica fol­lowed through with its pledge. Although di­rect trade is still limited, the Trea­sury and Com­merce De­part­ments is­sued a new set of guide­lines that will per­mit US com­pa­nies to ex­port telecom­mu­ni­ca­tions, con­struc­tion and agri­cul­tural equip­ment to Cuba, and will loosen in part the travel and bank­ing re­stric­tions.

As can only be ex­pected in pol­i­tics, the move has at­tracted its fair share of crit­i­cism.

Hard­lin­ers in Congress ar­gue that the Castro regime hasn’t changed and that its fi­nan­cial gain from U.S. business and tourism will be used to fur­ther the re­pres­sion of the Cuban peo­ple. They are blunt about the re­al­ity that as long as the Repub­li­cans con­trol the Se­nate, Obama’s pow­ers only ex­tend so far. Team Obama, how­ever, is cel­e­brat­ing the first steps to­wards diplo­matic nor­mal­i­sa­tion. His al­lies point to the lack of change un­til now as a key rea­son why con­tin­ued sanc­tions would be fu­tile. They ar­gue that bet­ter eco­nomic ties will serve Amer­i­can business in­ter­ests across Latin Amer­ica and could in the long-term im­prove the qual­ity of life for the av­er­age Cuban.

Cur­rently the is­land of 11 mil­lion peo­ple has lit­tle dis­pos­able in­come. Yet, there is ar­guably large po­ten­tial in the mar­ket if bet­ter in­fras­truc­tures and com­mu­ni­ca­tions are able pave the way for re­form. Ac­cord­ing to the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics, if the full em­bargo was lifted, Amer­i­can mer­chan­dise ex­ports to Cuba could amount to $4.3 bln an­nu­ally.

It will cer­tainly be in­ter­est­ing to see how busi­nesses re­spond to the new de­vel­op­ments. Many Americans will likely still see Cuba as an un­pre­dictable in­vest­ment en­vi­ron­ment, and many may be re­luc­tant to make the first move, but it will only need a few to be tempted by the op­por­tu­nity to make a his­tor­i­cal dif­fer­ence. In Florida, cer­tainly, the ge­o­graph­i­cal close­ness could sway com­mu­ni­ca­tions and agri­cul­tural firms into tak­ing the bold step across the wa­ter.

There is cer­tainly a sig­nif­i­cant way to go be­fore Cubans and Americans could be reap­ing the ben­e­fits of th­ese re­forms, and ques­tions about the poli­cies of the Castro regime are still le­git­i­mate.

Yet Obama was voted into power with the prom­ise of change and change al­ways has to start some­where. Many prob­a­bly never ex­pected to see the day we’d even be dis­cussing the pos­si­bil­ity of US-Cuban re­la­tions; the po­lit­i­cal and his­toric im­pli­ca­tions here could prove to be a whole lot larger than the deal it­self.

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