Washington’s Missed Opportunities: Cuba Successfully Engaging the World

By: Lauren Foiles, Research Associate at the Council on Hemispheric Affairs

Despite the recent increase in chatter surrounding the Atlantic poll on U.S. public opinion towards Cuba and former Florida Governor Charlie Crist shifting his stance on the half-century old economic embargo, the U.S. has missed out on yet another opportunity to foster meaningful ties with its Caribbean neighbor. On February 10, 2014 European Union foreign policy chief Catherine Ashton chaired a meeting of  EU foreign ministers in Brussels. The meeting concluded with EU officials agreeing to talks with the Cuban government to increase trade, investment and dialogue on human rights and the EU negotiators aim to  pass  the so-called “Political Dialogue and Cooperation Agreement” by the end of 2015. While the accord is largely symbolic and is not likely to lead to any high-yielding change in the near future, it represents the most dramatic shift in diplomatic relations since the EU lifted sanctions against the island in 2008. After the ministers in Brussels agreed to a new round of dialogue with Cuba, Ashton stated, “These negotiations will help consolidate our engagement with Cuba. I hope Cuba will take up this offer.”[1] In fact, Cuba has responded more favorably than they have in the past, paving the way for new, lucrative investment opportunities and diplomatic/cultural exchanges that Washington continues to voluntarily exclude itself from.

The Political Dialogue and Cooperation Agreement

The accord has been in the works since January, 2013 when the head of the European Commission, Jose Manuel Barroso, traveled to Chile to attend the summit of the Community of Latin American and Caribbean States and European Union (CELAC-UE).[2] Gianni Pittella, vice-president of the European Parliament, stated that “the decision to seek negotiations with Cuba had been a long process that gathered pace in Chile. Europe’s strategy is to encourage change.”[3] Change is in fact already occurring on the island as President Raul Castro has launched an organic and important economic and social reform process.  Some of Castro’s reforms include: decentralizing the agricultural sector by offering individuals and cooperatives leases to cultivate state-owned farmland; relaxing restrictions on small businesses and issuing new licenses for service-sector jobs; liberalizing real estate markets allowing Cubans to buy and sell private property; and eliminating once onerous bureaucratic requirements for Cubans to obtain government permission to travel outside the country.[4] As a result of these reforms, it was reported in 2014 that the private sector had expanded to represent about 20 percent of Cuba’s workforce.[5] Additionally, the government aims to slash 20 percent of the state labor force (nearly one million jobs) by 2016.[6] According to EU officials, the proposed accord would give Brussels a bigger role in Havana’s market-oriented reforms, position European companies in an optimal situation to profit from Cuba’s ongoing transition to a more open economy and allow Europe to press for an expansion of political freedoms on the island. [7]

Like the “Common Position” that the EU adopted in 1996 in response to Cuba shooting down two U.S. planes (in which four Cuban dissidents were killed), the new accord will also include language that addresses human rights and pluralist democracy. One EU official was quoted as saying the document contained “our strongest human rights language yet” in EU policy towards Cuba.[8] While Cuba rejects the “Common Position” as intervening in internal affairs, the position will remain in place until the cooperation accord is agreed upon.

Both the EU and Cuba are acting with pragmatism as each party recognizes the colossal economic benefits that increased trade and investment could bring about. “Cuba is becoming more and more realistic in searching for economic partners,” said Carlos Alzugaray, a former Cuban ambassador to the EU.[9] Whether or not  Washington takes a hint from the EU’s warming towards Cuba, recent events paint a picture of missed opportunities for the U.S., making way for scores of other nations to situate themselves favorably in Cuba’s liberalizing markets.

France Taking Advantage of Untapped Markets

The most recent accord is not the only sign of the EU warming up to Cuba, as more than half of the 28 member states have bilateral relations with Havana despite the Common Position. On February 12, Truffle Capital, a French biotechnology investment company, announced the creation of ABIVAX in collaboration with the Cuban Center for Genetic Engineering and Biotechnology (CIGB). ABIVAX specializes in therapeutic vaccines and antivirals, combining the technologies and the product portfolios of three French biotech companies.[10] An exclusive partnership agreement with the CIGB has been approved by the Cuban government and is predicted to further enrich the portfolio.[11] In addition to the creation of a hepatitis B vaccine that could positively impact millions of people worldwide, this is the first ever start-up launched on the basis of a Euro-Cuban R&D collaboration.[12] ABIVAX also signifies the first French company to sign an exclusive partnering agreement with Cuba in healthcare. Philippe Pouletty, president of the Administrative Council of the French firm stated that “Cuba is known for the excellence of its physicians and the quality of its vaccines. This is a project of international importance to put France foremost in this matter.”[13]

Truffle stated in a press release that under the agreement, CIGB will manufacture the hepatitis B vaccine in Cuba, for sale in Europe, Asia and elsewhere, once it receives approval.[14] The licensing agreement will undoubtedly generate massive profits for ABIVAX, but perhaps more importantly, the Paris-based company has stated that the goal of ABIVAX is to become a global leader in therapeutic vaccines and antivirals, with the expectation of many more cooperative efforts involving Cuba in the future.[15]

France, like many other countries, recognizes the significant potential in Cuba’s healthcare system despite ideological differences that the two countries traditionally may have had. With healthcare being one of the top items on the Obama administration’s agenda, one would think that Washington would be more open to working with one of the most distinguished healthcare systems in the world today. Fortunately, for those affected by hepatitis B in the licensed regions of Europe and Asia, France and Cuba were able to set ideological differences aside to produce a medical advancement while forging a landmark partnership in healthcare.

Non-EU Countries Warming to Cuba As Well

Several other countries outside of the EU have also made efforts to engage with Cuba recently. While all the engagements may not have the potential to expand Cuba’s export market to include 500 million European consumers, the interactions still demonstrate the propensity of countries like Canada, several African nations, and China to aggressively seek a warmer stance towards Cuba.

Canada

The “rarest cruise opportunity of 2014” is being offered by a Canadian-based company, Cuba Cruise. The 1,200 passenger cruise ship, LV Louis Cristal, departs Mondays from Havana, Cuba and Fridays from Montego Bay, Jamaica, and completely circumnavigates Cuba in just seven days.[16] The Miami Herald reported in January that several previous attempts to establish Cuba as a regular cruise destination have failed, in large part because of economic sanctions emanating from the United States.[17] Such sanctions forbid U.S. tourism in Cuba and bar any ship that docks at Cuban ports from entering the U.S. for six months thereafter.[18] In 2013 the highest percentage of tourists in Cuba came from Canada, and the creation of Cuba Cruise demonstrates that the trend is likely to continue throughout 2014.

Africa

This past December Cuban Foreign Minister Bruno Rodriguez spent three days in Angola, most notably attending a memorial service in honor of Angola’s first president.  Bruno Rodriguez held official talks with his counterpart Georges Chikoti at the Angolan Foreign Ministry.[19] The visit by Cuba’s top diplomat to Angola was part of a tour that included Ethiopia, Seychelles, South Africa and Zimbabwe. On February 17, Cuban Ambassador to Zimbabwe Elio Savon Oliva attended a business symposium held by the Zimbabwe National Chamber of Commerce. Oliva gave a speech at the symposium going into detail about the Cuban economy and the opportunities for Zimbabwe to invest in the Special Economic Development Zone in Mariel, the first stage of which was recently opened. [20] 

China

In June 2011, then-Chinese Vice-President Xi Jinping made an official visit to Havana and concluded the meeting by signing thirteen new cooperation agreements with President Raul Castro. The agreements included a memorandum of understanding for bilateral economic relations over the next five years and stipulate that China will provide interest free loans, economic aid and equipment to repair irrigation projects. [21] China is one of Cuba’s largest trading partners after Venezuela and over the past decade, bilateral trade increased from $440 million USD in 2001 to $1.83 billion USD in 2010.[22]

Moreover, this past November 2013 marked the 31^st annual Havana International Fair (FIHAV), which is the largest multi-sector trade fair in Cuba and a key venue for new businesses to make their mark in emerging markets.[23] Cuba’s Foreign Trade and Investment Minister, Rodrigo Malmierca, made a special appearance at the Chinese pavilion, which gathered 65 Chinese companies.[24] Furthermore, Malmierca traveled to Beijing this past September to encourage China to invest in Cuba’s new Mariel Special Development Zone. The minister stated that “China is our first leg in international promotion, as Cuba and China boast long-term friendship and good cooperation.”[25] The first phase of the port opened this past January and its regional location could, according to Cuban economist Pedro Monreal,  accommodate Asian vessels where they could transship their goods via smaller ships to their final destination.[26]

The aforementioned examples barely scratch the surface of China’s most recent investment endeavors involving Cuba. As noted above, in 2011 thirteen  Sino-Cuban cooperation agreements were signed, each of which could warrant its own in-depth analysis of potential economic benefits. In addition to interest-free-loans and economic aid, the agreements also cover cooperation in digital television and telecommunications, banking supervision and financing for public health projects, as well as an oil refinery expansion project and a liquefied natural gas project.[27]

China’s recent investments come in the wake of Washington’s vocal economic policy of the “Asian pivot,” all the while it seems that China has been making its own pivot towards Latin American and Caribbean markets.[28] This is exemplified by the creation of a CELAC-China forum at the recent summit of the Community of Latin American and Caribbean States (CELAC) in Havana. The U.S. should be more strategic than to shun the developing economy of its 90-mile-away neighbor to the benefit of its fiercest economic competitor.

Miami Missing out on Millions

The aforementioned initiatives represent just a few of the most recent engagements that countries across the globe have been participating in with Cuba. In other words, the U.S. stands virtually alone in its isolation towards the island with a diminishing sector of the Cuban-American population in Florida (roughly 5 percent) and their allies in Congress holding the archaic, isolationist policies hostage. For more than two years, Cuban exile politics have dogged a major development project that, as it was conceived, could have brought more than half a billion dollars in revenue over the next five decades to the Miami International Airport. [29] The dispute revolves around Odebrecht USA, the Coral Gables-based contractor that was awarded the “Airport City” development project.

What is the hold up on a project that includes a hotel-conference center, shopping center, gas station and pet spa on 33 acres of county-owned land which is expected to bring in nearly $580 million to the airport via Odebrecht USA’s 40-year agreement?[30] Simply speaking, the answer is Cuba. The contractor has indirect ties to Cuba through its Brazilian parent company, which is currently expanding Cuba’s port of Mariel (west of Havana). Commissioner Esteban “Steve” Bovo, a Cuban-American Republican, is petitioning the county to look into other possible contractors with the end-goal of removing Odebrecht USA from the picture. The project has been in limbo for over a year now with Bovo making several attempts to reduce Odebrecht’s role in the development, despite the company winning the bid fair and square after a presentation to the county back in 2000.

Conclusion

Despite the still non-committal handshake between President Obama and Raul Castro at Nelson Mandela’s memorial in South Africa, Washington has yet to show any real progress towards normalizing relations with Cuba. U.S. officials traveled to Havana this past January where they discussed the ongoing implementation of migration accords that were negotiated in the 1990s. While the meeting has been described by both Cuban and U.S. officials as “fruitful” and “respectful,” the State Department released a statement saying “This does not represent any change in policy towards Cuba.”[31]  An article written by Steven Kurlander published in Context Florida argues an  interesting point. Kurlander points to Iran as one of the biggest threats to U.S. national security that mirrors the threat which Cuba and the Soviet Union posed in the 1960s. Kurlander states, however, that “the last few administrations never considered an embargo against a hostile nation that appears to be developing nuclear weapons. Instead, we have imposed lesser sanctions, and then negotiated them away rather easily.”[32]

At the last UN General Assembly vote on the economic embargo, U.S. envoy Ronald Godard stated that “The United States is a deep and abiding friend of the Cuban people.”[33] But the Cuban government estimates that more than fifty years of stringent trade restrictions has resulted in a loss of approximately $1.126 trillion USD.[33] Certainly, Cuba has a ways to go in terms of respect for universal human rights and social justice for political dissidents of the Castro regime. However, it is becoming equally undeniable that the U.S. is carrying out relations in one of the most hypocritical and arcane ways that fails to represent the gradual shift of public opinion in the U.S.  As the Council on Foreign Relation’s director of Latin America studies Julia Sweig states, the foreign investments mentioned above “seize on opportunities that the United States is missing out on.”[34]

By: Lauren Foiles, Research Associate at the Council on Hemispheric Affairs

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