Trump vs. Trump — is there another way to think about doing business in Cuba?

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.

U.S.-Cuba Relations

Reports indicate U.S. eager to boost travel to Cuba in 2015

This week, ABC News reported that the Obama administration plans to further ease travel restrictions to Cuba by the end of the year, possibly including new rules to allow U.S. travelers to go to the island individually, rather than having to be part of a group, so long as they abide by regulatory requirements of people-to-people travel.

Labelling the prospective change “tourism,” Rep. Ileana Ros-Lehtinen issued a statement saying “Any effort to increase tourism travel to the island is illegal but the Obama administration, once again, has decided to change the law when it is up to Congress to do so.”

As ABC News and the Wall Street Journal report, however, the administration enjoys the required regulatory authority to allow travel to Cuba for individuals so long as they abide by the requirements that apply to participants in people-to-people programs organized by groups.  The rules are administered at the U.S. Treasury Department’s Office of Foreign Assets Control.

Writing on behalf of the Center for Democracy in the Americas (CDA), Sarah Stephens urged Treasury Secretary Jacob Lew to provide for individual travel saying “This change would expand the flow of U.S. visitors to Cuba, broaden contacts between Cubans and the people of our country, and increase the amount of transactions taking place directly between U.S. visitors and Cuban entrepreneurs.”

CDA publishes the Cuba Central Newsblast.

The Wall Street Journal also reported that the two countries have exchanged proposals for an updated Air Transport Agreement that would enable airlines to reestablish regularly-scheduled commercial flights between U.S. and Cuba by year’s end.  The two countries last inked a pact to facilitate civil aviation in 1953.

As Reuters reported, the State Department indicated there is no official timeline for the resumption of commercial air travel to Cuba, but they “have commenced initial discussions with Cuban counterparts regarding an arrangement on this issue.” In a statement, the State Department explained, “We remain in contact with the Cuban government regarding the establishment of scheduled air service, which U.S. airlines say they are eager to offer to authorized travelers,” as Reuters reported.

Since President Obama entered office, his administration has steadily eased restrictions on travel to Cuba. In 2009, the administration lifted all limits on family visits and remittances.  In 2011, the President restored 12 categories of so-called “purposeful travel,” allowing non-tourist trips for educational, religious, and cultural purposes among others, and increased the number of airports in the U.S. permitted to serve the Cuban market.  Following the diplomatic breakthrough with Cuba last year, the administration began issuing general licenses rather than specific licenses for Americans traveling to Cuba under one of 12 categories.

With U.S. travel to Cuba up 54% from January to July over the same period in 2014, this year, airlines like American Airlines and JetBlue are increasingly interested in the Cuban market. American Airlines, which recently announced its plans to operate a charter flight between Los Angeles and Havana, will launch 1,200 charter flights to Cuba this year. In July, Jet Blue started offering weekly charter service to Cuba from New York’s John F. Kennedy Airport, while CheapAir became the first site to sell tickets to Cuba online.

The ban on travel to Cuba for tourism can only be lifted by an Act of Congress. Bipartisan bills have been offered in the House and Senate to restore the freedom to travel to Cuba, and an amendment to end the travel ban was approved by the Senate Appropriations Committee in July, as we previously reported.

After the Flag-Raising:  A Renewed Focus on Diplomacy, and Cubans Who Could Scarcely Believe their Eyes

Although we provided up-to-the-minute coverage of the flag-raising at the U.S. Embassy in Havana last week, we cover additional reports on the status of U.S.-Cuba diplomacy and the impact of ceremony on people in both countries and world-wide here.

Following the embassy event, Secretary Kerry was joined by Cuba’s Foreign Minister Bruno Rodriguez at the Hotel Nacional where they met with reporters.  In his remarks, Foreign Minister Rodriguez said he “reiterated to Secretary Kerry that our government is willing to normalize relations with the United States on the basis of respect and equality without any prejudice to the independence and sovereignty of Cuba, and without any interference in our internal affairs.”

Kerry announced U.S.-Cuba talks will begin in mid-September to discuss “full normalization” of ties, AP reports. Three areas of focus for these negotiations will be 1) naval cooperation, climate change, and environment, 2) direct airline flights and U.S. telecommunications, 3) embargo, human rights, and political fugitives. Kerry also reiterated that the U.S. does not currently have plans to change U.S. immigration rules, namely the Cuban Adjustment Act of 1966, which forms the basis of the “wet-foot, dry-foot policy,” as we have reported.

In response to Secretary Kerry’s comments earlier in the day, “We remain convinced the people of Cuba would be best served by a genuine democracy,” Mr. Rodriguez told reporters that Cuba has “gender and racial equality, free education and healthcare, and [doesn’t] suffer from the flaws of America’s cash-fueled electoral system,” the Los Angeles Times reported.

He went on to say, “Cuba is not a place where you can see police brutality … We do not practice torture,” a presumed reference to the U.S. military base at Guantanamo, and that “Cuba is proud of its performance on human rights.”

After concluding his appearance with Minister Rodriguez, and taking a walk around Old Havana’s historic Plaza de San Francisco with City Historian Eusebio Leal, Secretary Kerry drove to the residence of U.S. Ambassador Jeffrey DeLaurentis.  There, he gave remarks to an audience that included Cuban-Americans, U.S. and foreign diplomats.

The reception at the Ambassador’s residence was attended by several prominent Cuban dissidents including Jose Daniel Ferrer, Miriam Leiva, and Yoani Sanchez, according to AP.  But, several others turned down their invitations to the private reception where they could have spoken to the Secretary of State, Fox News Latino reports.  In an interview with TV Martí, Berta Soler, leaders of Damas de Blanco (Ladies in White), said “We’re working hard, fighting 17 Sundays of repression and resistance; we don’t have time for ceremonies.”

According to numerous sources, the embassy ceremony had a big impact in Cuba and elsewhere. Reuters reported that some Cubans could scarcely believe that Kerry’s speech with its criticism of Cuba’s government had been carried on state television.

Retired Cuban diplomat Carlos Alzugaray told the Associated Press said Friday’s events “had a great impact on people, who became enthused and started talking much more easily about those themes” of democracy and liberty. The Guardian also reported that “Cubans said they welcomed Kerry’s call, openly discussing their desire for more democracy without the requests for anonymity or slow measuring of words that once were nearly universal.”

After returning to Vermont having witnessed the flag-raising in Havana, Senator Patrick Leahy (VT) told home state reporters, “I’ll admit that I had a couple of tears flowing, after all these years to see this.”

The editorial board of the Wall Street Journal shed no tears, but complained that political control over Cuba by its revolution government hadn’t “changed a whit since President Obama decided to recognize the Cuban regime in December.”  This was too much for Daniel Larison who, writing for The American Conservative, said “There are many bad and weak objections to restoring diplomatic relations with Cuba, but this is one of the silliest.”

Additional medical supplies will soon head to Cuba

Heart to Heart International, a Kansas-based nonprofit group that supplies medical equipment in times of disaster, plans to travel to Cuba soon with a 40-foot-long container full of medical supplies, according to the Kansas City Star.  Pending approval from Cuban authorities, the organization plans to board a ship to Cuba and personally deliver essential medical supplies such as catheters, syringes, rubber gloves, diapers, thermometers, and antibiotics to a pediatric hospital, Hospital Pediátrico William Soler, in Havana.

Heart to Heart’s relationship with Cuba began in 2013 when founder Gary Morsch visited Cuba with the Nazarene Church. Cuba has approximately 69,000 doctors, or 6.7 physicians for every 1,000 citizens according to the World Bank; however, medical supplies are hard to come by, due largely to U.S. laws which sharply restrict the licensing needed for U.S. firms to sell medicines and medical equipment in Cuba.

Robert Prescott, a coordinator for the Nazarene Church, explains that “Cuba has a great shortage of medicine…Even people traveling to Cuba [are] encourage[d] to bring medicines…because they have such a shortage.” Heart to Heart CEO Jim Mitchum notes, “It is an interesting contrast…Cuba is a major medical educator for the entire South American and Central American set of countries. Their medical education is perceived in Latin America as the best.”

Journeys like this have been taking place for nearly twenty-five years; Pastors for Peace, for example, organized its trademarked Cuba Friendship Caravans in 1992, which provided 15 tons of humanitarian aid.  Catholic Relief Services with Caritas Cubana started its relationship with Cuba the following year.

Importantly, this is not a one-way street.  As many physicians in the U.S. have argued, increasing medical cooperation would benefit both Cuba and the U.S. U.S. researchers are interested in Cuban medicines like CimaVax, a vaccine which targets a protein that cancer cells attract and use to multiply. The vaccine has been available in Cuba since 2011. As we previously reported, Roswell Park Cancer Institute in Buffalo signed an agreement with the Center for Molecular Immunology in Havana that will enable clinical trials for Cimavax, a therapy to stop the growth of cancerous tumors, to start in the U.S.

U.S. and Cuban chemists look forward to increased collaboration

This past week, Cuban and American chemists met at the American Chemical Society’s (ACS) 250th conference in Boston. Both Cuban and American chemists are eager for increased scientific collaboration and hope that opportunities to work together will grow as relations between the two countries continue to normalize.

ACS has six members in Cuba, but, as recently as March, its Cuban membership often had trouble getting to international chemistry conferences due to visa issues. Travel restrictions and the U.S. embargo have posed big hurdles for collaboration, according to Brad Miller, ACS’s chief international officer. Miller explains that there are more than 230 research centers in Cuba, and in the past 30 years more than 160,000 Cubans have received Chemistry degrees.

Daniel García Rivera, a chemistry professor at the University of Havana, Cuba’s only university with a doctoral program in Chemistry, suggested that U.S. and Cuban scientists could benefit from collaboration in areas like chemical ecology, catalysis and chemical education. Cuban and U.S. researchers in fields as diverse as medicine and botany are already successfully pursuing closer collaborations, as we previously reported.

International cooperation was responsible for 75 percent of chemistry publications emerging from the University of Havana this past year, leading Rivera and his American colleagues to confirm that international exchanges could be beneficial for both communities.

In Cuba

Number of Cubans traveling abroad rises

Cubans’ trips abroad rose 23.7% over the previous year, reported Cuba’s state media and Fox News Latino. Cubans made over 355,000 trips in 2014; a year after President Raúl Castro made migration reforms that eliminated the need for exit permits and “letter[s] of invitation” in an effort to “modernize” the island’s policies. While Cuba’s government also increased the length of time Cubans can spend abroad from 11 months to 24 months, travel is still limited for certain groups of professionals and athletes considered ‘vital’ to the country’s interests.

Tagged Mako Shark Connects to Cuban and U.S. Scientists by Satellite

Forty years after Jaws, when a man-eating mechanical shark made millions of moviegoers think twice about getting back into the water, at least one Mako shark is using satellite technology to ping Cuban and U.S. researchers who are tracking its movements for science.

“The shark was tagged on February 14 offshore of Cojimar in northern Cuba,” Science Daily reported and, in just five months swam nearly 5,500 miles, on a journey that passed by Florida and the Bahamas, Mexico’s Yucatan Peninsula, and the coasts of New Jersey and Virginia near Washington, D.C.

Understanding the “maximum likelihood track” of sharks is interesting to marine researchers who work on shark conservation.  According to Dr. Robert Hueter, Director of the Center for Shark Research at Mote, “There is a ton known about shortfin makos and almost nothing known about the longfin, which wasn’t described until 1966 by the Cuban ichthyologist Dr. Dario Guitart Manday.”

The experiment worked according to plan; in July, Science Daily said, “the long-fin mako’s tag separated from its tether to the shark, as it was programmed to do, floated to the surface and began sending its archived data to Mote scientists via satellite.”

The project brought together marine research experts from Cuba and the U.S. including the Center for Shark Research at Mote Marine Laboratory (located in Sarasota, Florida), Cuba’s Center for Coastal Ecosystems Research, the University of Havana, and other Cuban institutions.  The Environmental Defense Fund, which has worked with Cuban counterparts, on shark conservation since 2010.

The satellite tagging project was the subject of an hour-long documentary presented by the Discovery Channel, the Japan Times reported.

Scientists are debating whether the locations, the length and depth of the shark’s swim, were indicative of feeding, mating, or “just passing through.”

But, as one researcher said somewhat ominously, “Clearly there’s something in that location [referring to the Chesapeake Bay area near Washington, D.C.] that’s attracting mature males in the summer.”

How will tourism impact Cuba’s environment?

Cuba’s marine environment is renowned for its pristine beds of sea grass, mangrove forests, and coral reef with precious Elkhorn coral. While reestablished U.S.-Cuba relations is allowing critical coral reef restoration partnerships and  new research collaboration as we’ve previously reported, some observers worry about the effect of increased tourism on the environment, the Orlando Sentinel reports.

“Most Cubans I know want to be more like a Costa Rica than a Cancun,” explains Dan Whittle, Environmental Defense Fund’s director of marine and coastal conservation. While Cuba already has environmental protection laws and preservation areas, extensive testing and funding are concerns moving forward. The question of how fully the country will pursue development will likely be a topic at the seventh Congress of the Cuban Communist Party in 2016, Dan Whittle told the NYT.

Update: Drought conditions in Cuba

As we reported last week, Cuba is currently experiencing a year-long drought.  Paired with record heat and water leakages, the drought is having a significant impact on Cubans and the island’s economy.

Reuters reports that the drought is damaging crops – “From Cuba’s famous cigars to sugar, vegetables, rice, coffee and beans” – which poses risks to Cubans’ food security, setbacks for its ability to earn foreign exchange through exports, and its plan for reducing the costs of importing food to feed the country, a fundamental problem for the national economy.

As the BBC reported, “The drought started two years ago, and reservoirs are now down to a fifth of their normal levels.”  One in ten residents is currently relying on government tank trucks for water, Reuters said.

On Tuesday, the Cuban News Agency said 242 dams operated by Cuba’s National Water Institute were at 35% of their total capacity, rainfall for July was down by one-third, and Cuban provinces from Granma and Santiago de Cuba to the East to Pinar Del Rio in the West were acutely feeling the effects of the drought.

On Monday, Cuba put its civil defense system on alert, according to Reuters.

Cuba’s Foreign Relations

Presidents of Cuba and Venezuela meet on the day Secretary Kerry visits Cuba

Secretary Kerry’s visit to Cuba coincided with a meeting between Cuba’s President Raúl Castro and the President of the Bolivarian Republic of Venezuela, Nicolás Maduro,Granma, the state newspaper, reports. Venezuela’s First Lady, Cilia Flores, referred to “by the more ideologically resonant title ‘first combatant,'” and Cuba’s Foreign Minister, Bruno Rodríguez also attended the meeting.

Two days earlier, Secretary Kerry told Andres Oppenheimer, a columnist for the Miami Herald, that the United States and Cuba have discussed Venezuela’s political and economic crisis during U.S.-Cuba talks to normalize ties. “We talked very specifically about America’s desire to have a relationship with the Venezuelan people that raises the ability of the people of Venezuela to be able to be protected, respected, represented and actually see their lives improve,” he said, clarifying that “they (the Cubans) did not make any promises. But, hopefully, they will represent (to Venezuela) that what we are doing with them now is beneficial, so why shouldn’t Venezuela also go the same road?”

Recommended Reading

The Meaning of a U.S. Embassy in Havana, Yoani Sanchez, The Atlantic

Cuban blogger Yoani Sanchez writes about a conflict of eras unfolding in Cuba, where the U.S. is no longer “enemy,” and “the beginning of the stage of absorbing who we are, and recognizing why we have only made it this far.”

What they’re saying about the U.S. Embassy in Havana, David Gomez, #CubaNow

#CubaNow compiled the most comprehensive summary of reactions of Cubans and Cuban-Americans to newspaper editorials to Members of Congress.

What you might not know about the Cuban economy, Jorge Dominguez, Harvard Business Review

Harvard University’s Professor Dominguez writes, “Cuba has a really, really well-educated and cheap workforce, as well as substantial evidence of entrepreneurial potential. If its political leaders can manage to lift constraints on investment, create the right incentives, and reform its tax code, the country could really boom. But that’s a lot of change to expect for the insular government of an island nation that’s otherwise stuck in time.”

Stop punishing Cuba’s people, William LeoGrande, Newsday

William LeoGrande makes the case for ending the U.S. embargo on Cuba, citing the practical and moral dimensions of its punitive consequences for the Cuban people.

Even After the Cuba Deal, Latin America Is Still Leery of Obama, Rohan Chatterjee, Upside Down World 

Castro, Cuba and Catholicism: A tangled trinity, Michelle Gonzalez, Al Jazeera

As the papal visit in September 2015 approaches, this article outlines the history of Cuba’s relationship with the Catholic Church.

Afro-Cuban Twin Sisters Talk About Race Through A New Cigar Line, Carmen Sesin, NBC News

Two Afro-Cuban sisters who grew up in Miami are Cigar entrepreneurs. They discuss race and identity.

Cuba: We Never Left, Esther Allen, NYRDaily

Esther Allen confronts the two versions of our simplified understanding of the Republic of Cuba.

Relevant reads: Three novels about Cuba, Kerri Miller, MPR News

To cap off your summer reading, we recommend:

Everyone Leaves, Wendy Guerra

Havana Nocturne, T.J. English

Days of Awe, Achy Obejas

Waiting for Snow in Havana, Carlos Eire

Recommended Viewing

Secy. Gutierrez: Cuba is changing, Andrea Mitchell, MSNBC

Former Commerce Secretary under George W. Bush, Carlos Gutierrez, returns to Cuba after fleeing with family in 1960 and describes his emotional homecoming.

U.S. Raises Flag in Cuba After 54 Years, Prisoner Exchanges and “Stork Diplomacy”; Embargo Remains, Juan González, Democracy Now!

Former Cuban diplomat Carlos Alzugaray and U.S. Cuba expert Peter Kornbluh discuss the developments that led up to the diplomatic breakthrough between the U.S. and Cuba on the day the flag was raised at the U.S. Embassy in Havana.

Travel to Cuba Takes Flight: The Top Reasons to Visit, Scarlet Fu and Betty Liu, Bloomberg Business

Cheapair.com CEO Jeff Klee discusses his predictions for Cuban air travel and tourism

Photographer Roberto Salas Had ‘Privileged’ Access to Fidel Castro, Lester Holt, NBC News

Photographer Roberto Salas chronicled the life of Fidel Castro in pictures, beginning in 1955.

Looking Into the Eyes of Cuba’s Elderly, on the Verge of Change, Alexa Keefe, National Geographic

Israeli photographer Oded Wagenstein documents his experiences with Cuba’s elderly over the course of several visits to the island.

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