President Obama’s planned trip to Cuba in March may be a political breakthrough, but American business leaders are still waiting for a breakthrough on the economic front.
Eager to invest in the island nation, representatives of more than 300 companies have visited since Obama pledged to normalize U.S. relations with the island nation 14 months ago.
Some firms have made progress. Last September, Verizon became the first U.S. company to offer roaming wireless cellphone service in Cuba. On Tuesday, the United States and Cuba signed a deal that will open the door to dozens of daily commercial flights between the countries for the first time in more than five decades.
But in general, sealing deals in Cuba has proven difficult for American businesses. Most U.S. trade and financial restrictions are still in place. Moreover, the Cuban government has been bureaucratic and its leaders seem to be ambivalent about the wave of investment poised to crash onto its shores — and how that might affect its tightly controlled political system there.
“They’re wondering what the U.S. intentions are and whether U.S. policy is designed to help the Cuban people or whether it is something more like a Trojan horse,” said Cuban-born Carlos M. Gutierrez, co-chair of the business consulting firm Albright Stonebridge Group, who served as commerce secretary under President George W. Bush.
Now, U.S. companies are hoping that Obama can pry open the door a little wider — and help lift some of the restrictions that are still in place.
Obama doesn’t need to make a direct appeal to Cuban leaders to ease the path for American companies. His presence will be enough.
“The president is the chief marketing officer of the United States,” said John S. Kavulich, president of the U.S.-Cuba Trade and Economic Council. “If he gets nothing more than time in front of the Cuban people, sample some food at a private restaurant, takes a walk, has meetings and leaves, that’s acceptable.”
Kavulich said, however, that the administration is looking for deals or preliminary agreements that can be announced while the president is there.
“It is working on behalf of U.S. companies to try to get some visible projects announced,” he said.
One of the companies knocking on Havana’s door is Florida Produce of Hillsborough County, which has proposed setting up a warehouse in Cuba to sell U.S. agricultural products there. But the company has been stuck in talks with the Cuban government, which wants to set up a joint venture.
Several major U.S. hotel chains have been trying to win contracts to open up in Cuba, including Marriott, whose chief executive Arne Sorenson wrote in July last year that his company was “ready to get started right now.”
But a host of obstacles remain.
In Cuba, the government maintains a dual exchange rate, wants foreign companies to hire employees through state-owned entities and limits property ownership and Internet access. And the lack of progress on human rights makes it unlikely that Congress will move to lift U.S. restrictions that limit transactions with state-owned enterprises and require that many transactions take place in cash.
Some companies are managing to navigate across the divide. Alabama-based Cleber, which has proposed to assemble tractors in Cuba in the Mariel Special Development Zone. The Cuban government has approved it and last week Treasury said the transaction could go ahead. Further talks are in progress, according to Kavulich.
But as long as Congress fails to lift restrictions on doing business in dollars and or to further ease travel restrictions, U.S. firms will be at a disadvantage to rivals in Europe, Sorenson wrote.
Ordinary Americans aren’t waiting. Airbnb began supporting listings in Cuba last year, and the number of listings there grew more than 150 percent in the first few months, according to Nick Pappas, a spokesman for Airbnb. To date, there have been more than 3,000 listings. Half of them are located in Havana, but they also come from more than 40 different cities and towns in Cuba. The average Airbnb host there is making more than $250 per booking.