Cubaverdad

Posted on Sunday, 08.30.09Cuba might stay cloistered even if embargo vanishedBY FRANCES ROBLESfrobles@MiamiHerald.com

Golden arches across the malecón glistening under a hot Havana sun. Long lines at Home Depot as a crush of Cuban Americans with deep pockets and dollar signs in their eyes sip cafecitos at a Starbucks in Old Havana.

They are among the images evoked of a post-embargo Cuba, where speculators would rush for a free-for-all on a newly opened market of 11.2 million people largely deprived of consumer goods for decades.

“One of the greatest myths is that the day the embargo is lifted, it's Burger King time in Havana,'' said Washington, D.C., attorney Robert Muse, who represents European companies that do business in Cuba. “That's just silly. You will not see much that is highly public or highly visible.''

Few times since John F. Kennedy was in the White House has there been as much buzz about the embargo. Even though Barack Obama, since announcing for president, has publicly supported the trade sanctions and has done little toward chipping away at the embargo since his election, for a time this year anti-embargo activists felt the momentum was never better to have it repealed.

But if trade sanctions first implemented by President Dwight Eisenhower 49 years ago were lifted today, experts say the results would be barely visible for the cash-strapped nation. If Cuba wanted franchise restaurants and chain stores, they would have them already from European firms.

So while companies and entrepreneurs across America hatch post-embargo business plans in the hyped expectation that change could come soon, a reality check is in order. If the embargo were lifted with Rául Castro still in power, the Cubans would tightly control all transactions, and it would take years before necessary legal and trade systems were in place to make business there feasible.

Even if swarms of American tourists dash for Cuba's shores, the government would be hard at work tightening a short leash on what could lead to an explosion of social and political instability, while it sought the big-ticket infrastructure items it sorely needs and can hardly afford. Cuba, embargo specialists say, is more interested in Otis elevators than Nike sneakers.

Cuban stores are already filled with flat-screen TVs and Ray Ban sunglasses. What Cuba doesn't have — and people hope a lifting of the embargo would bring — is the infusion of cash to kick-start the economy.

Like many others in Havana, Yenny, a 36-year-old janitor from Holguín, cannot think of anything that the embargo has deprived her of having. What she wants from a post-embargo Cuba is money to afford such items.

“You see very rich people around here — people with cars, cell phones and gold necklaces. But I can't afford that,'' she said. “Do you know how much gold costs? That's a lot of money.''

The embargo began in 1960 after a series of tit-for-tats between Washington and Havana. U.S. oil companies refused to refine Soviet oil, so Cuba expropriated Texaco, Esso and Shell refineries. Eisenhower first halted imports of Cuban sugar, and eventually stopped all exports to the island.

The embargo was made law in 1961, and was broadened by Kennedy several times in the following years. In 1963, Kennedy outlawed travel to Cuba, too. Lifting it would require several key moves by Cuba such as elections and the release of political prisoners.

For the first time, entities such as the Greater Miami Chamber of Commerce have produced reports acknowledging that the embargo could conceivably be lifted — with the Castro regime still in power.

The post-embargo scenarios in Cuba vary wildly depending on who is running the island. If it happens under a communist state, tightly controlled trade would begin, with Cuba calling the shots. Should it be lifted under a capitalistic democratic government, experts fear a wild-West economic free-for-all and corruption.

But experts agree that despite Cuba's constant rhetoric on the topic, its leaders are fine with the status quo.

“If President Obama tomorrow were to say `I am going to lift the embargo,' Fidel would sink an American ship or shoot down a plane, or do whatever he could to stop it,'' said Pedro Freyre, an attorney who represents companies with licenses to do business in Cuba. “His linchpin is to have American confrontation.''

Any goods Cuba really needs, it can purchase elsewhere.

So if Congress repealed the embargo or Obama issued so many sales licenses to make it meaningless — which he has the authority to do — what would happen?

• Tourism. Experts say the first and strongest change for Cuba would come in the form of American travelers. Americans who have been shut out of Cuba would rush to the island, dollars in hand. But Cuba's limited hotel space would be unable to accommodate them, so prices would spike as Canadians and other tourists were squeezed out.

“That would be so good for our economy,'' said Juan L., a taxi driver who shuttles tourists from Havana's international airport.

Unlike some Europeans, who he says try to short-change him, visitors from the United States tip. He has heard that an end to the embargo could lure up to two million visitors a year.

“If the Americans started showing up at the airport,'' he said, “I tell you the Spaniards and Italians would never be able to catch a cab.''

• Credit. Cuba is starved for cash and experiencing its worst recession since the collapse of the Soviet Union. If the embargo were lifted, there would be nothing to stop U.S. companies from making sales to Cuba on credit.

“They'd buy more food, they'd get a few consumer goods, infrastructure, cars, buses and other things, but it would be a shell game,'' said Miami businessman Carlos Saladrigas, who chairs the Cuba Study Group. “They buy from country X. When country X doesn't get paid, it doesn't sell more. Then Cuba goes to country Y and builds up more debt. The Cuban regime has been playing this game for years, and we don't want to fall into that.''

• Infrastructure. Cuba's buildings and roads are dilapidated, and were dealt a $10 billion blow by three hurricanes last summer.

“If Cuba were able to get Haliburton to go in and build an airport and roads and do it on credit, they'd like that,'' Freyre said.

• Food exports. Cuba would be eager to export winter vegetables, while lawsuits would stall the exportation of highly sought products such as rum and cigars.

“They can be harvesting tomatoes and have them at the farmers market in Pompano Beach less than 24 hours later,'' said William Messina, an expert in Cuban agriculture at the University of Florida. “That's a pretty huge incentive.''

Jorge Piñon, a business consultant and energy fellow at the University of Miami's Center for Hemispheric Policy, said changes in a post-embargo Cuba would arrive in stages.

Some companies and entrepreneurs would move in fast, selling inventory to distributors — investing no capital and taking no risks. Investments by, say, major soft drink or hardware brands to set up shop in Cuba would take longer, and experts warn that they'd have to cut deals with the government, which could want to stifle U.S. brand presence.

Progress could be stalled in Cuba for lack of what Piñon calls “yellow pages'' — mid-sized businesses that do the lion's share of a company's work.

“Where's the guy with the port-a-potties? The pickup truck? The back hoe and wheelbarrow?'' Piñon said. “Small and medium investment will happen overnight. Where will the techs be coming from? They'll be coming from Miami.''

If there was a boom in Home Depot, experts say, it would probably be in Hialeah, as more recent immigrants bought supplies to take back to Cuba to sell or help relatives.

But current Cuban law does not allow individual investors to go to Cuba and do business. Even if those laws are repealed, Cuba's legal system would have a long way to go before investors felt safe.

“Common people believe there will be a free-for-all to go down there and make money,'' said Charles A. Serrano, a Chicago-based consultant for companies that seek business in Cuba. “There are no laws in Cuba to facilitate that process.''

Muse, the Washington attorney, says South Floridians with dreams of striking it rich in Cuba should take Cuban leader Raúl Castro at his word. During a recent speech, Castro made it clear that he “wasn't elected president to make Cuba capitalist.''

“Companies all over the world would be investing in Cuba if the environment was worth investing in,'' said Gary Maybarduk, a former State Department official who was an economic counselor at the U.S. Interests Section in Havana in the 1990s “Lifting the embargo would generate lots of excitement, but in the end, without fundamental changes in the way the Cuban economy is organized, the impact will be limited.''

But he can still dream.

“I'd like to have the first barge with 4-year-old Ford Tauruses and pickups,'' Maybarduk said. “I think the first person in will probably make a lot of money doing that. I would like to open a Home Depot in Havana, or just a hardware store.

“Give me the right to put up a True Value.''

A Miami Herald staff writer contributed to this report from Havana. The name of the reporter and the last names of the people interviewed in Cuba were withheld, because the journalist lacked the visa required by the Cuban government to report from the island.

Cuba might stay cloistered even if embargo vanished – Issues & Ideas – MiamiHerald.com (29 August 2009)http://www.miamiherald.com/news/issues_ideas/v-fullstory/story/1207388.html