Bloomberg Businessweek (North America) - - Opening Remarks -

U.S. air­lines don’t have reg­u­larly sched­uled flights to Cuba—and prob­a­bly won’t any­time soon. A civil avi­a­tion agree­ment in Fe­bru­ary has al­ready stum­bled over rec­i­proc­ity: Al­low­ing Cuba’s ag­ing, un­safe air­lin­ers into U.S. air­ports is prob­lem­atic, es­pe­cially since many are flown by Cuban air force pi­lots. And that li­censed, au­tho­rized, widely re­ported done deal for a ferry to the is­land from Key West? Not hap­pen­ing. Car­ni­val Cruise Line signed a mem­o­ran­dum with Cuba, out­fit­ted and staffed a 704-pas­sen­ger ship, and hinted that it could make Cuba the cen­ter of its en­tire Caribbean op­er­a­tions. The Cubans have stalled by not form­ing a cor­po­rate part­ner, have de­manded from Car­ni­val mas­sive in­vest­ments in their ports, and let dead­lines for the first sail­ings float away.

From the Oba­mas’ ar­rival to the Stones’ de­par­ture, the cap­i­tal­ist in­va­sion will likely pro­duce a raft of new deals, signed dec­la­ra­tions, and prom­ises. Noth­ing will move quickly, how­ever. “They’re drag­ging their feet partly be­cause they feel it’s putting pres­sureureure on the U. S. to lift the em­bargo,” says ays Ti­mothyt Ashby, an at­tor­ney and for­mer­rme deputy as­sis­tant sec­re­tary of hemi­spher­icmis affairs who’s ne­go­ti­ated with the Cubans re­cently for sev­eral U. S. cor­po­ra­tions.

But the Cubans will come around at the last minute, Ashby be­lieves, be­cause the best part­ner they could ask for is leav­ing of­fice in 10 months. “What Cuba wants is large-scale di­rect in­vest­ment,” he says. They need bil­lions of dol­lars just to re­build the port of Ha­vana and want ac­cess to the World Bank for ma­jor in­fra­struc­ture projects across the is­land. They want big Amer­i­can ho­tel com­pa­nies to op­er­ate and in­vest in Cuba. “They’re keen on branded,” Ashby says. “They want Mar­riott and Amer­i­can Air­lines.”

The Cuban lead­er­ship, un­der Raúl Cas­tro’s di­rec­tion, ap­pears to be look­ing for a way it can at­tract U. S. and for­eign in­vest­ment and still keep its brand of so­cial­ism—prob­a­bly bor­row­ing Viet­namese-style pri­vate cap­i­tal­ism and strict political con­trol. Kavulich says Raúl will sur­ren­der as lit­tle as pos­si­ble but will ul­ti­mately have to change the coun­try to sur­vive.

For now, eco­nomic re­forms on the is­land al­low small busi­nesses—re­pair­men and restau­rants, for ex­am­ple—to ex­ist. That’s not go­ing to be enough to help the mil­lions of Cubans who re­main es­sen­tially un­em­ployed. Cuban Amer­i­cans have been pour­ing money into the is­land, in­vest­ing in their cousins, and Kavulich es­ti­mates that Raúl will push the ma­jor­ity of work­ers into the pri­vate sec­tor within a few years. That tran­si­tion will be more ef­fi­ciently done with Amer­i­can busi­ness in­volve­ment than with­out.

Nor­mal­iz­ing re­la­tions with Cuba was never pred­i­cated on “we do X, you do Y,” says Ben Rhodes, the deputy na­tional se­cu­rity ad­viser who led the Amer­i­cans in the se­cret talks that re­sulted first in re­open­ing em­bassies, then to changes in parts of the U.S. trade em­bargo, and now to the chance for a pres­i­den­tial drop-by at the leg­endary El Floridita bar for a daiquiri. In an in­ter­view mark­ing the De­cem­ber an­niver­sary of Obama’s an­nounce­ment, Rhodes spelled out the pres­i­dent’s pol­icy in greater de­tail. The Amer­i­can goal is to ef­fect “greater en­gage­ment be­tween the Cuban peo­ple, the U.S., and the rest of the world, greater com­mer­cial ac­tiv­ity that im­proves lives, em­pow­ered by more in­for­ma­tion. By def­i­ni­tion, over time that is go­ing to have an ef­fect in terms of the state of democ­racy in Cuba.”

As the Cas­tro regime tries to fig­ure out the spe speed and depth of re­form and en­gageme en­gage­ment with its huge cap­i­tal­ist neigh­bor, t the U. S. govern­ment can do lit­tle thingsthin­g to en­cour­age trade, such as ap­prove im­ports of Cuban cigars, cofff­fee, coffee, trop trop­i­cal fruits, and agri­cul­tural prod­ucts. S So far, lit­tle of that has been done. “Nor “Nor­mal­iza­tion con­notes bi­lat­eral trade,”trade,” says Robert Muse, an at­tor­ney who’s lob­bied for Cuban brands. “Where are the U. S. rule changes to per­mit im­ports from Cuba?” There may be one har­bin­ger: the sur­prise de­ci­sion by th the Trea­sury Depart­ment to grant a li­cens li­cense to im­port Ha­vana Club rum, which my re­search has af­firmed to be of peer peer­less qual­ity.

Un Un­til Congress lifts the en­tire emba em­bargo, mod­est com­mer­cial steps may be theth most ef­fec­tive way that trade can hel help bring about change in Cuba. Fidel Ca Cas­tro fa­mously said that his­tory will ab ab­solve him; if given the chance, capit tal­ism may dis­solve him. A Cuban loy­al­ist and for­mer revo­lu­tion­ary fighter told me back in 1991, “The day the em­bargo ends, we are done for.” <BW>

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