Back in 1996, Pamela Falk gave us a glimpse of Donald Trump’s vision of doing business with Cuba:
“The people of Cuba are the greatest in the world. I’d like to help them rebuild the country and return it to its original splendor. And as soon as the law changes, I am ready to build the Taj Mahal in Havana.”
Just three years later, in his op-ed published by the Miami Herald, Trump swore he’d rather lose millions than lose his self-respect doing business with a country he called “a maximum security prison.”
Was Trump against the embargo before he was for it? Apparently. But, in assuming polar opposite positions — crusading capitalist at one moment, self-sacrificing human rights advocate the next — he was also ahead of his time.
In 2015, we can wake up and read an urgent summons like “Travel to Cuba Now Before it Becomes a Tourist Trap.” Or, hear commentators cited in Esther Allen’s essay for the New York Review of Books, “joyfully predicting that the re-inauguration of the U.S. Embassy will unleash an invasion of tourists and business dollars, bringing badly needed capitalism to a place they view as backward and isolated.”
It all boils down, as Ms. Allen says, to the quintessentially American argument that only we in the United States can save Cuba, “or that, by our very presence, we will inevitably destroy all the things that make it appealing to us.”
Thankfully, what is coming next in Cuba is not preordained, it cannot be known, and the choices are not just black or white. It’s complicated.
But, first let’s be clear: This cat has scampered out of the bag. The U.S. policy transition to a post-embargo world is underway, and the forces to make the new policy irreversible are getting stronger.
Years ago, the U.S. business community — with some exceptions — opted out of the debate on ending trade sanctions, leaving farmers and other agriculture interests to fight with Congress and the Bush Administration over their desire to sell food to the Cuban people. After the December 17th breakthrough, President Obama awakened the slumbering giant.
The President’s travel, trade, and financial reforms set off a race among U.S. corporations to see who among their domestic competitors could make it through the door first and make their case to customers in Cuba’s government. That race has become all the more urgent, as Forbes explained, with “exporters in Latin America, the EU, Russia and East Asia…descending on Cuba and making deals left and right.”
Business is also more confident. It helps them a lot that people like former Commerce Secretary Carlos Gutierrez, a Cuban American who served in the Bush Administration and worked for tighter sanctions to bring down the Cuban government, are accompanying U.S. businesses on this journey.
The business awakening set off a political awakening in the U.S. Congress among centrists of both parties who now understand that “the embargo is slowing Cuba’s transition to a freer, more open economy,” as Bill LeoGrande wrote recently. Legislation like the Cuba Trade Act of 2015 — introduced in the House and Senate by Republican and Democratic members working together — reflects their growing realization that the old policy and the humanitarian interests of the Cuban people are simply incompatible.
This does not mean that full-on capitalism is right around the corner. To anyone expecting that a Trump Tower will soon replace the Russian Federation’s Embassy as the ugliest building in Havana, or that Starbucks and McDonalds are about to mar the Malecón’s milieu, we can only say: neither the U.S. nor Cuba is ready for that to happen.
Our sanctions are still an impediment. Yes, dozens of U.S. firms are hopping planes to come to Cuba. But, if they operate in sectors outside agriculture, health, or telecommunications they can only explore. Even if Cuba wants to do business with them, and many will go home empty handed, they cannot do a deal without a license from U.S. Treasury or Commerce making an exception to the embargo. Some will be granted, but ultimately companies that want to move faster will have to turn up the pressure on Congress to end the embargo (we urge them to do so).
Yes, some quick buck artists are flying in and out of Cuba, but many others are companies with long records of doing business in Latin America including joint ventures with state and corporate counterparts. To strike a meaningful relationship in Cuba that will ultimately produce profits and real gains for both sides will require them to adopt a long time horizon.
There are also structural brakes to prevent foreign investment from spinning out of control in Cuba. In his compelling article, What You Might Not Know about the Cuban Economy, Professor Jorge Dominguez lays out Cuba’s multiple challenges – its demographic problems, limited employment options for Cubans, and more – militating against a sudden shift to Cancun capitalism.
Although he praises Cuba’s “really, really well-educated and cheap workforce, as well as substantial evidence of entrepreneurial potential,” Dominguez says U.S. restrictions on investment and the complicated context facing the island’s political leaders are the biggest barriers to Cuba’s potential to boom.
How complicated? Michael Bustamante writes in Foreign Affairs about opponents within the Cuban state standing against Google’s offer to install a national mobile WIFI network on the island. He quotes Second Vice President José Ramón Machado Ventura who said, “There are some people who want to give [the Internet] to us for free…to penetrate us and do ideological work for a new conquest.”
Bustamante points out the irony that revolutionary loyalists in Havana are actually in alignment with “anti-Cuban government holdouts in Miami,” as opponents to closer commercial relations between Cuba and the United States. Although we suspect that irony will be lost on the fellow whose essay “When Helping ‘the Cuban people’ Means Bankrolling the Castros” graced the pages of the Wall Street Journal in June.
Cuba and the U.S. are two countries with extremely different systems of government that suffer from the same dilemma. No one has designed a political system that can settle these problems without disorder and delay. The business of reconciling a relationship broken for five decades is really complicated.
Even Trump admits that. After President Obama announced the breakthrough with Cuba last December, Trump didn’t oppose it. He just said he would’ve gotten a better deal. Read the rest of this entry »