RICHMOND – Virginia Gov. Terry McAuliffe, determined to make his mark in an office once occupied by Patrick Henry and Thomas Jefferson, heads to Cuba on Sunday, hoping to capitalize on a historic thaw between the United States and the communist island nation.
The timing for McAuliffe (D) is just as momentous.
The three-day trade mission comes as the term-limited governor reaches the midway point of his stint and as Republicans maintain a tight grip on the General Assembly. With the House and Senate firmly dug in against many of his top priorities, McAuliffe is staking his governorship on nonpartisan goals he can pull off largely on his own — chief among them, economic development and foreign trade. He is setting his sights not across Capitol Square as much as across oceans.
“Ninety-five percent of the world’s customers live outside of the United States of America,” McAuliffe said in an interview with The Washington Post. “I’ve got to go where the customers are. . . . For many of these countries, you can’t do it with a phone call.”
Since running for governor in 2013, McAuliffe has stressed the need to expand and diversify the state’s economy, which is highly dependent on military and other federal spending.
That is a goal with bipartisan appeal, but building a legacy around those aspirations is proving to be a tremendous challenge, with McAuliffe up against stiff economic head winds and skeptical Republicans. The governor has turned off some GOP legislators by trying to sell partisan social policies as economic development.
Enhancing gay rights or abortion access? That, the governor contends, would make the state more “open and welcoming” to new businesses. Expanding Medicaid under the Affordable Care Act, McAuliffe argues, would create 30,000 health-care jobs and shore up rural hospitals. So far, Republicans haven’t bought it.
So now, as the governor heads off on his latest international trip, he has an opportunity to delve into economic development work in its purest form, the realm where he is most likely to shine. Away from Richmond, apart from his larger social agenda, McAuliffe will simply be selling Virginia.
“I think where he is most successful and where his legacy is potentially made, if he’s going to have one, is going to be on economic development, and not just on bringing jobs to Virginia, but on transforming the Virginia economy, even just a little bit, from dependency on federal spending,” said Quentin Kidd, a political scientist at Christopher Newport University. “In a funny way, it’s a safe refuge from the fights in the General Assembly that he can’t win.”
But in Cuba, McAuliffe has not chosen an easy course. The small, relatively poor country still labors under most Cold War-era trade restrictions, even after a year of detente. Some of McAuliffe’s GOP foes roll their eyes at the notion that Cuba can boost Virginia’s fortunes.
“It’s probably not where I’d be going,” said House Majority Leader M. Kirkland Cox (R-Colonial Heights).
Del.-elect Jason Miyares, a Virginia Beach Republican who in November became the first Cuban American elected to the General Assembly, was more pointed, calling on the governor to meet with dissidents.
“As Governor McAuliffe decides to ring in the New Year in the only non-democratic nation in the entire Western Hemisphere, perhaps he should keep in mind the thousands of dissidents that are harassed, beaten and imprisoned each day in Cuba simply because they yearn for freedom,” Miyares said in a statement Friday night.
But Del. David B. Albo (R-Fairfax) sees potential in Cuba. His brother and father once held a special State Department license to do telecommunications work on the island.
“My brother says they’ve got beaches that go for miles and miles,” Albo said. “I’m sure there’s money to be made there, and the first person who gets in there wins.”
McAuliffe is not the first Virginia governor to see economic promise in an island that is just a three-day sail from the Port of Virginia. His three immediate predecessors have courted Cuba, starting with now-Sen. Mark R. Warner (D). Warner wanted to lead a Virginia trade mission to the island when he took office in 2002, taking advantage of liberalization that became law when President Bill Clinton signed the Trade Sanctions Reform and Export Enhancement Act. Advisers, worried about the optics of a potential sit-down with Fidel Castro, talked him out of it.
Warner instead sent his commerce and trade secretary, who helped Virginia farmers sell about $800,000 in apples and soybeans to Cuba in 2003 — the first exports from Virginia to Cuba since President John F. Kennedy imposed a trade embargo in 1962.
Virginia has been selling to Cuba ever since. The value of that trade — $25 million in sales in 2014 — is dwarfed by exports to Canada ($3.7 billion) and China ($2 billion), but it could add up, Kidd said.
“Diversifying the economy is about little bits here and little bits there,” he said.
Interest in Cuba has only grown since President Obama moved to normalize relations a year ago, raising hopes that in the not-too-distant future the trade embargo will be fully lifted and the country transformed. McAuliffe will be the fourth sitting U.S. governor to travel there since 2015, behind New York Gov. Andrew M. Cuomo (D), Arkansas Gov. Asa Hutchinson (R) and Texas Gov. Greg Abbott (R). McAuliffe hopes to have a head start because of Virginia’s relationships there.
“As things are changing between us and Cuba, the foresight that four governors have shown – Mark Warner, Tim Kaine, Bob McDonnell and Terry McAuliffe — really does put Virginia in a good position to recapture business and grow business and, as we go beyond agricultural trade, give us the ability to be standing right at the front of the line to talk about the opportunities,” said Todd Haymore, McAuliffe’s secretary of agriculture and forestry.
Even critics concede that McAuliffe has been an ebullient cheerleader for the state, one with an enormous network of national and international contacts amassed over decades in politics and business. A former Democratic National Committee chairman and close friend of Bill and Hillary Clinton, McAuliffe had associates in Kuwait and Oman he could call on during a November trade mission to helped get bans on Virginia poultry lifted.
“Listen — I sat down with the crown prince in Kuwait,” McAuliffe noted. “I said: ‘Your highness, you’re buying food from all over the globe. You’re importing it. Buy your chickens from me.’ It’s not a hard sell. I have relationships with these folks. I’ve known them forever and ever.”
And he does have a record of some success with his strategy. The governor often recites a list of gains over his first two years: New economic development projects worth $9 billion– more than any other governor in Virginia history and double what his past two predecessors achieved at the same point during their terms. And an unemployment rate of 4.2 percent, the lowest since August 2008.
But the picture is not all rosy in a state hit particularly hard by the recession and the automatic federal spending cuts known as sequestration.
Since March 2008, Virginia has lost 293,400 private-sector jobs – each worth an average of $148,000 a year to the state’s economy, said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. So far, it has replaced 224,500 of those — but with positions worth an average of $113,000 a year. Economic growth flatlined in 2014, landing Virginia 49th among 50 states and the District.
“In a sense, McAuliffe is pushing right uphill,” Fuller said. “It isn’t that you can just go out and do a reasonably effective job of raising the profile of the state and attracting investment. The home base is still bleeding. It isn’t all net gain. It’s serious triage which is needed, and I’m not sure that some of the economies can be saved. And you can’t just backfill them with investment from China.”
McAuliffe also has led trade missions to China (twice), Japan, South Korea, Europe, India and the United Arab Emirates. Whenever the governor plays on the international stage, there are always suggestions that he is capitalizing on his connections to the Clintons, a former president and an aspiring one.
“The Cubans understand that Mr. McAuliffe can give them perhaps some insight, a back channel to the Clintons,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. “When they talk to Governor McAuliffe, they can easily — and they should — picture him wearing one of Mrs. Clinton’s pantsuits, because that’s pretty much what’s going to come out of his mouth. He’s going to be the channeler-in-chief.”
The island is not entirely new territory for McAuliffe. After losing the Democratic primary in 2009, he volunteered to sell Virginia apples and wine in Cuba. He came away with nothing but a tongue-lashing from a Cuban official about the perceived injustices of the U.S. trade embargo.
It is not unusual for first-timers to return from Cuba empty-handed, said Kirby Jones, a Cuba trade consultant who accompanied McAuliffe on that April 2010 visit.
“It just didn’t click and pan out at that time,” Jones said. “This trip could be totally different.”
Once McAuliffe won the governorship in 2013, he began cultivating a relationship with Cuba’s top Washington-based diplomat, José R. Cabañas, who was then chief of the Cuban Interests Section. (Cabañas only officially became ambassador as relations were normalized.) McAuliffe has visited Cabañas several times at the Cuban Embassy in Washington and twice entertained him in Richmond.
“You know, I’ve gone up to the embassy. I’ve sat, had a Cuban cigar with him,” McAuliffe said. “I’ve had a glass of rum with him. This is how you build relationships with folks.”
That approach has worked better with foreign leaders at times than with some Richmond Republicans. McAuliffe put out the welcome mat for the GOP in his first session, upgrading the mansion bar at his own expense and inviting legislators over for nightly receptions. Cox and some other Republican leaders continue to scoff at his “cocktail party” outreach.
“Candidly, it’s probably one of the more difficult relationships I think I’ve had with a governor,” Cox said. “His personality — it’s different. It’s very over the top, and in some ways that plays well for him. People like enthusiasm. There’s nothing wrong with that. [But] the constantly claiming credit, the constant ‘I’ and ‘me’ — it’s just something legislators and others are turned off by.”
Cox and other GOP leaders have worked well with McAuliffe on some critical issues, including plugging a projected $2.4 billion budget hole in 2015. And some Republicans have warmed to McAuliffe personally while remaining cool to his more partisan goals. Sen. Thomas A. Garrett Jr. (R-Buckingham), one of the legislature’s most conservative members, joined the governor for a beer at the mansion in December.
“I like him as well as anybody I know that I don’t trust,” Garrett said.
When McAuliffe unveiled his $109 billion spending plan in December, Republican budget leaders had nice things to say about its focus on K-12, higher education and economic development — even as they flatly rejected his latest call for Medicaid expansion. The governor’s office saw that as progress — as well as a good reason to keep hunting for wins overseas.
“The governor has forged great working relationships with many Republicans in the General Assembly, and that has produced real results on key issues,” said his spokesman, Brian Coy. “Those relationships will continue to bear fruit. The governor also recognizes that he has a unique opportunity and a unique skill set when it comes to bringing new jobs to Virginia and finding new markets for Virginia products. And he’s going to pursue that task just as vigorously as he does his legislative agenda.”