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TRUMP’S CUBA POLICY: WHAT IT MEANS FOR BUSINESS<br />
The Magazine for Trade & Investment in Cuba<br />
<strong>June</strong>/July 2017<br />
THE PROMISE OF ZED MARIEL<br />
Cuba’s special industrial zone<br />
THE NEW STAR OF HAVANA<br />
Kempinski’s grand opening<br />
BOOSTING NESTLE’S CUBA BRAND<br />
The Swiss firm doubles down<br />
TOBACCO COUNTRY<br />
Tourism transforms Viñales<br />
HOUSTON<br />
OUT<br />
FRONT<br />
A special report on the<br />
Texas metropolis and its<br />
outreach to Cuba<br />
Houston Mayor Sylvester Turner
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Arkansas: Outfront on Cuba Trade<br />
Arkansas is leading the U.S. in economic and agricultural collaboration with Cuba. And because<br />
Arkansas is the nation’s number one producer of rice as well as a national leader in poultry, we’re<br />
a natural for sprinting to the front of the pack when it comes to food-source trade with Cuba.<br />
In Arkansas, we’re proud to help our neighbors to the south by sharing our resources and our<br />
expertise — which in the end will help both economies to grow and prosper.<br />
Arkansas’<br />
Business<br />
Climate is Like<br />
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With a booming economy that includes<br />
six homegrown Fortune 500 companies<br />
and a growing number of global<br />
business success stories, there’s more<br />
to Arkansas than meets the eye. Visit<br />
ArkansasEDC.com to learn how your<br />
business can become part of the scenery.<br />
ArkansasEDC.com | 1-800-ARKANSAS
content 06/2017<br />
UP FRONT<br />
24 WASHINGTON REPORT<br />
In a sign of pragmatism, Trump’s<br />
fiscal 2018 budget cuts funds for the<br />
USAID democracy program for Cuba<br />
26 TRANSITIONS<br />
Russia’s rekindled interest in Cuba<br />
raises questions about the Kremlin's<br />
geopolitical ambitions<br />
12 PANORAMA<br />
Deals, events and transactions of note<br />
for trade and investment in Cuba<br />
16 INDEX<br />
With the advent of a private sector in<br />
Cuba, internal tourism has soared in<br />
the past decade<br />
28 SCIENCE<br />
Researchers think corals from Cuba<br />
might help reefs in the Florida Keys<br />
survive climate change<br />
36 LOGISTICS<br />
It’s not just U.S. cruise lines eyeing<br />
Cuba these days. U.S cruise suppliers<br />
also want in, and an Italian logistics<br />
company is opening that market<br />
38 ENTREPRENEURS<br />
From self-employed in Cuba to franchisor<br />
in the United States, Riudisver<br />
Pérez has a brand to push<br />
40 INVESTMENT<br />
The recent SAHIC conference was a<br />
who’s who of U.S. hoteliers looking for<br />
opportunities in Cuba. Will business<br />
follow?<br />
LIFESTYLE<br />
18 IDEAS + INNOVATION<br />
Baby boosts, baseball for the blind,<br />
and mechanical wizards<br />
DEPARTMENTS<br />
20 POLITICS<br />
President Trump finally announces<br />
his Cuban policy. Cuba Trade's take<br />
on the winners and losers.<br />
22 OPINION<br />
Trump's new Cuba policy is smaller<br />
than advertised, argues Cuban political<br />
analyst Arturo Lopez-Levy 34 TECH<br />
30 TRANSPORTATION<br />
One of the added expenses for U.S.<br />
commercial airlines serving Cuba is<br />
the necessity of bringing a mechanic<br />
onboard<br />
32 TOURISM<br />
Different polls suggest that interest<br />
in Cuba as a tourism destination is<br />
waning. Far from it, says the Boston<br />
Consulting Group<br />
NinjaCuba is the latest app in the<br />
country’s burgeoning private software<br />
industry<br />
92 REPORTERS NOTEBOOK<br />
A visit to the valley of Viñales is a<br />
great escape from the urban density of<br />
Havana<br />
FINAL WORD<br />
96 IN CLOSING<br />
The argument for Congress to open<br />
agricultural trade with Cuba now<br />
6 CUBATRADE JUNE/JULY 2017
features<br />
44<br />
Tours and Travel<br />
44 KEMPINSKI DEBUTS IN HAVANA<br />
Cuba’s first major luxury hotel opens its doors. Is it<br />
a sign of the times?<br />
49 THE HOUSTON REPORT<br />
How the Texas capital of energy, transportation,<br />
and medicine is positioning itself to be the gateway<br />
for trade and investment with Cuba<br />
49<br />
Your Cuba Travel Specialist<br />
69 THE NESTLÉ NICHE<br />
How the Swiss multinational has thrived in Cuba<br />
while protecting itself against the entry of U.S. products<br />
74 THE PROMISE OF MARIEL<br />
Cuba’s play to develop the next great shipping hub<br />
is an ambitious call to foreign investors. It has<br />
momentum, but still needs more capital<br />
82 THE CUBA ADVISORS<br />
Cuba Trade’s annual list of the leading legal and<br />
consulting firms for doing business in Cuba<br />
ON THE COVER<br />
Houston Mayor Sylvester Turner<br />
Photo by Richard J. Carson<br />
8 CUBATRADE JUNE/JULY 2017<br />
74<br />
82<br />
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editors note<br />
Trump's Policy Blunder<br />
The wrong response, based on bad information<br />
I was in Havana on the Friday President Donald Trump<br />
announced his policy changes for Cuba. I was there to talk to<br />
Cuban citizens, and to gauge their reaction to the speech.<br />
Their typical reaction: Disbelief. Their typical concern: The<br />
reduced flow of U.S. travelers.<br />
“Does he think he will change our government by limiting<br />
the number of tourists?” asked one woman who worked in a<br />
cigar shop. “The government won’t change. But we will have less<br />
business. So why is he doing this? He’s crazy.”<br />
And so the reaction went, from street vendors to waiters to<br />
cab drivers, an across-the-board incomprehension.<br />
“To me it’s unnecessary,” said one cab driver. “We don’t have<br />
terrorists here. We don’t have nuclear weapons here. In fact, this<br />
is probably the safest place anywhere for tourists from the United<br />
States. Is it safer in Colombia? Or Brazil? Yes, this is the safest. So<br />
why stop them from coming? For me it just means less money.”<br />
On the one hand, we can be thankful Trump’s bark was<br />
worse than his bite. While telling a cheering audience in Miami<br />
that he was canceling all of Obama’s policies, he is in fact pulling<br />
back in just a few areas (see story page 20).<br />
But even with these policy changes, he is missing the mark.<br />
If his intention is to promote the private sector in Cuba, and<br />
choke the flow of cash to the government, his declaration of no<br />
business with any company linked to the Cuban military makes<br />
sense. But his decision to make it very hard for individual U.S.<br />
travelers to go to Cuba—leaving such travel instead to tour<br />
groups—makes no sense.<br />
Most tour groups book with large hotels, typically owned by<br />
the government, and military-controlled companies in particular.<br />
Individual travelers, on the other hand, are more likely to book<br />
with individual B&B’s, typically owned by private individuals.<br />
The genesis of this restriction is bad information. During<br />
his signing ceremony, Trump was surrounded by lawmakers with<br />
little firsthand knowledge of Cuba. None of the elected officials<br />
had ever visited the island. As Houston Mayor Sylvester Turner<br />
told me, the hardliners in his delegation to Cuba softened their<br />
stance once they saw what was really happening: The emergence<br />
of a private sector fueled by U.S. visitors.<br />
The best reaction to Trump’s policies came late Friday, when<br />
I was listening to a Cuban band playing traditional music in The<br />
Tavern in Old Havana. At one point the band leader asked a<br />
couple of girls in the audience where they were from.<br />
“California,” they said.<br />
“Oh,” he said. “We love your President Obama. He has done<br />
so much for us Cubans.” Then he stopped and looked around.<br />
“No, wait a minute. He’s not your president anymore! Ay no!” He<br />
then laughed and started the band up again.<br />
J.P. Faber. Editor-in-Chief<br />
Publisher<br />
Richard Roffman<br />
Art Director<br />
Jon Braeley<br />
Senior Writer<br />
Doreen Hemlock<br />
Copy Editor<br />
Larry Luxner<br />
Vice President Sales<br />
Sherry Adams<br />
Moore & Company, P.A.<br />
Editor-in-Chief<br />
J.P.Faber<br />
Chairman<br />
Todd W. Hoffman<br />
Director of Operations<br />
Monica Del Carpio-Raucci<br />
Production Manager<br />
Toni Kirkland<br />
Managing Editor<br />
Julienne Gage<br />
Associate Editor<br />
Nick Swyter<br />
Writers<br />
Suzette Laboy<br />
Arturo Lopez-Levy<br />
Victoria Mckenzie<br />
Emilio Morales<br />
Ana Radelat<br />
Ariana H. Reguant<br />
Mimi Whitefield<br />
Photographers<br />
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David Ramos Casin<br />
Matias J. Ocner<br />
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Thos Robinson<br />
Manager, New Business<br />
Development<br />
Magguie Marina<br />
Aviation Consultant<br />
Lauren Stover<br />
Maritime • Art • Aviation Law<br />
Cuba Trade Magazine (ISSN 2573-332X) is published each month by Third Circle<br />
Publishing, LLC, at 2 S. Biscayne Blvd., Suite 2450, Miami, FL USA 33131.<br />
Telephone: (786) 206.8254. Copyright 2017 by Third Circle Publishing LLC. All<br />
rights reserved. Reproduction in whole or part of any text, photograph or illustration<br />
without prior written permission from the publisher is strictly prohibited.<br />
10 CUBATRADE JUNE/JULY 2017<br />
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panorama<br />
Deals, events<br />
and transactions<br />
of note for trade<br />
and investment<br />
in Cuba<br />
President Donald Trump signs a Cuba policy directive in Miami<br />
A Cuba crackdown<br />
Following a speech that blasted the Castro<br />
regime, President Donald Trump signed a<br />
policy directive to tighten restrictions on<br />
traveling to Cuba and bar U.S. business<br />
transactions with companies linked to<br />
the military. The policy keeps most of the<br />
Obama administration’s Cuba opening<br />
intact. Commercial flights and cruise<br />
ships can still serve Cuba. Remittance polices<br />
are unchanged. And Trump did not<br />
reinstate the “wet foot, dry foot” policy<br />
that gave Cubans who arrived on U.S. soil<br />
a pathway to permanent residency. More<br />
than 20 bilateral agreements that deal<br />
with topics such as scientific collaboration,<br />
oil spill cleanups, and human trafficking<br />
are still in place.<br />
Cuba responds to crackdown<br />
Granma, the official newspaper of the<br />
Cuban Communist Party, responded to<br />
Trump’s Miami speech by characterizing<br />
it as “hostile rhetoric” and a return to “the<br />
coercive methods of the past.” The newspaper<br />
suggested Trump was influenced by<br />
a handful of Cuban-American hardliners<br />
instead of the majority of Americans who<br />
support normalization. Despite the tough<br />
talk, the newspaper said the Cuban government<br />
is willing to maintain a “respectful<br />
dialogue” with the U.S.<br />
Trading jabs<br />
In a move that infuriated Havana weeks<br />
before his policy announcement, Trump<br />
12 CUBATRADE JUNE/JULY 2017<br />
issued a statement on May 20 to mark the<br />
115th anniversary of the Cuban Republic.<br />
Part of the statement said, “cruel<br />
despotism cannot extinguish the flame<br />
of freedom in the hearts of Cubans, and<br />
that unjust persecution cannot tamper<br />
Cubans’ dreams for their children to live<br />
free from oppression.” Havana responded<br />
by reading a statement on Cuban state<br />
TV calling Trump “ill-advised,” and<br />
described his message as “controversial”<br />
and “ridiculous.”<br />
Senate makes a push to loosen embargo<br />
The Senate will consider two bipartisan<br />
bills aimed at loosening the trade embargo.<br />
On May 25, Sens. Jeff Flake (R-Ariz.)<br />
and Patrick Leahy (D-Vt.) reintroduced<br />
a bill with 55 co-sponsors to end travel<br />
restrictions on Cuba. One day later, Sens.<br />
Mike Enzi (R-Wyo.), Amy Klobuchar<br />
(D-Minn.), Flake and Leahy reintroduced<br />
a bill with 13 co-sponsors to eliminate<br />
export restrictions on Cuba. The<br />
2015 versions of the bills never reached<br />
the Senate floor for a vote. It’s doubtful<br />
the Senate’s Republican leaders will allow<br />
the latest versions to come to a vote.<br />
An answer to the stolen property problem?<br />
As part of proposed legislation, Rep. Rick<br />
Crawford (R-Ark.) is considering a 2 percent<br />
seller’s fee on agriculture exports to<br />
Cuba, which will be used to compensate<br />
people with certified claims of property<br />
seized by the Cuban government. Crawford<br />
reintroduced a bill to eliminate restrictions<br />
on financing agriculture exports<br />
to Cuba earlier this year, but it does not<br />
include the proposed 2 percent fee. Rep.<br />
Carlos Curbelo (R-Fla.), a Cuban-American,<br />
said he backs the proposal.<br />
Communist Party roadmap approved<br />
Cuba’s parliament unanimously approved<br />
documents that reaffirm the one-party<br />
political system and state domination of<br />
the socialist economy. The documents<br />
also contain the first government recognition<br />
of private businesses. Even though<br />
Cuba has allowed a “self-employed”<br />
sector to exist for years, the documents<br />
reinforce the legality of small- and<br />
medium-sized businesses. While the<br />
documents were drafted before Trump’s<br />
election, they send a message that the<br />
country won’t make concessions to the<br />
White House.<br />
A comrade comes to the rescue<br />
A tanker carrying 250,000 barrels<br />
of Russian oil arrived in Matanzas
in May. The move was vital to offset<br />
slashed oil deliveries from Venezuela,<br />
which have forced Cuba to ration<br />
electricity and fuel. Russian state-owned<br />
oil company Rosneft announced May<br />
3 that it will deliver 250,000 tons of oil<br />
and diesel to Cuba as part of a contract<br />
with state entity Cubametals. Little is<br />
known about the terms of the contract,<br />
but some experts estimate it to be worth<br />
$100 million.<br />
authorities even though the deadline for<br />
a response has passed, putting its legal<br />
status in limbo.<br />
Airbnb’s giant impact<br />
Cuban Airbnb hosts have been paid more<br />
than $40 million since the home-sharing<br />
platform launched its services on<br />
the island in April 2015, according to a<br />
new report. The company also said it has<br />
about 22,000 listings and that Cuban<br />
hosts have received about 560,000 guest<br />
arrivals.<br />
first term, according to a report by the<br />
anti-embargo Engage Cuba lobby. The<br />
report says the travel, tourism, farming,<br />
manufacturing, and shipping industries<br />
would be hit the hardest, and that U.S.<br />
cruise operators and airlines stand to lose<br />
around $712 million in annual revenues.<br />
NEW DESTINATION<br />
From Russia, with love<br />
Russia will help Cuba restore the<br />
gold-plated dome of Havana’s El Capitolio,<br />
according to Russian news agency<br />
Sputnik. A Russian state-owned company<br />
announced it is accepting proposals<br />
for the project, which will be funded by<br />
Russia’s federal budget. State-owned<br />
Russian Railways also said it may sign<br />
a $2 billion contract to upgrade Cuba’s<br />
railroad system by the end of this year.<br />
The company said it is currently negotiating<br />
the terms of financing.<br />
Venezuela’s crisis is hurting Cuba<br />
A UN report says Cuban exports of refined<br />
oil products fell a whopping 97 percent<br />
from 2013 to 2016. The drop happened<br />
largely because Venezuela slashed its crude<br />
oil deliveries to the island. The same report<br />
says Cuban service exports plummeted in<br />
2015, helping to push the Cuban economy<br />
into a recession in 2016.<br />
Cuba’s first private business group<br />
A group of Havana entrepreneurs has<br />
started Cuba’s first small business association<br />
to provide help, advice, training,<br />
and representation to members of Cuba’s<br />
burgeoning private sector. The group<br />
applied for government recognition in<br />
February. It has not yet heard back from<br />
14 CUBATRADE JUNE/JULY 2017<br />
Joining the fight for Havana flights<br />
United Airlines announced it is applying<br />
for six additional Houston-Havana<br />
daily flights, up from one weekly service<br />
now. FedEx is also seeking authorization<br />
for Monday-Friday all-cargo service<br />
between Miami and Havana. The<br />
moves come shortly after three airlines<br />
announced their plans to drop Cuba.<br />
American, Delta, JetBlue and Southwest<br />
have also applied for additional routes to<br />
Havana.<br />
Manufacturers send a message<br />
National Association of Manufacturers<br />
President Jay Timmons said Cuba<br />
could become a valuable export market<br />
if trade restrictions are lifted. He made<br />
the comments shortly after a NAM<br />
delegation visited the island to meet with<br />
government officials. He added that the<br />
Cuban government should make it easier<br />
for U.S. companies to trade directly with<br />
the country’s private sector.<br />
The cost of cutting ties to Cuba<br />
Completely rolling back the Obama<br />
administration’s Cuba opening would<br />
cost the U.S. economy $6.6 billion and<br />
affect 12,295 U.S. jobs through Trump’s<br />
Cuban tech experts in the spotlight<br />
A trio of Cuban entrepreneurs spoke to<br />
a crowd at Tech Crunch Disrupt in New<br />
York about how they are building businesses<br />
on the island. They said Cuba has<br />
excellent talent, but limited wifi connectivity<br />
continues to be an issue. The entrepreneurs<br />
encouraged U.S. internet companies<br />
to work closely with Cuban tech startups.<br />
A bookings boost<br />
Online travel services company Expedia<br />
has begun offering online bookings for<br />
hotels in Cuba. The company says it’ll<br />
book American guests who can certify<br />
that their trip falls under one of the 12<br />
categories of authorized travel to Cuba.<br />
Even more cruises<br />
Carnival Corp.’s Holland America Line<br />
and Victory Cruise Line received approval<br />
to begin sailing to Cuba. Holland<br />
America’s MS Veendam has several<br />
seven-day and 12-day itineraries that<br />
include stops in Havana and Cienfuegos.<br />
Victory Cruise Line President and CEO<br />
Bruce Nierenberg said he expects the<br />
company to call at Cienfuegos, Trinidad,<br />
Santiago de Cuba, and María La Gorda.<br />
Samsung sets up shop<br />
South Korea’s Samsung Electronics has<br />
opened a brand shop in Havana, selling<br />
TVs, refrigerators, washing machines,<br />
and smartphones. Samsung products<br />
have typically been sold in Cuba through<br />
local retailers. Samsung claims it’s the<br />
first global IT company to open a brand<br />
store in Cuba.H<br />
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INDEX<br />
Cuba’s Internal Tourism Boom<br />
With the advent of a private sector<br />
in Cuba, internal tourism has soared<br />
in the past decade<br />
By Emilio Morales<br />
Figure 1. National tourism hosted in hotels, 2010-2016<br />
Figure 1. Domestic tourists hosted in hotels, 2010-2016<br />
“One of the greatest impediments to doing business in Cuba<br />
has been the lack of thorough, objective and un-politicized<br />
market intelligence. The THCG Business Report changes<br />
that and provides investors and exporters with the<br />
crucial first blush of data and insight that they need.”<br />
John Price<br />
Managing Director at America’s Market Intelligence<br />
Much of the recent focus in tourism in<br />
Cuba has been about the increasing number<br />
of U.S. visitors. Less noticed has been<br />
the meteoric growth of national tourism<br />
within Cuba over the last decade.<br />
In 2016, more than 991,122 Cubans<br />
stayed in hotels on the island, a record for<br />
the country’s tourism industry. Less than<br />
a decade ago, in 2008, that number was a<br />
mere 61,508.<br />
This new growth in the number of<br />
internal tourists—now second only to<br />
Canadian tourists, at 1.2 million last<br />
year—is remarkable for several reasons.<br />
First, the increase has taken place despite<br />
hefty hotel price hikes brought about by<br />
the avalanche of North American tourists.<br />
Second, the hotels where Cuban tourists<br />
are staying are destined for international<br />
tourists, so they are paying the same prices<br />
as visitors from abroad, and competing for<br />
available rooms.<br />
Much of the costs for these hotel<br />
visits are paid by Cuban-Americans visiting<br />
relatives. It is currently estimated that<br />
about 45 percent of Cuban-Americans<br />
who travel to the island stay in a hotel<br />
with their relatives on the island for two<br />
or three days.<br />
Perhaps more importantly, the growth<br />
of Cuba’s private sector employment has<br />
also increased the purchasing power of<br />
hundreds of thousands of Cubans, reflecting<br />
just how much the new Cuban middle<br />
class has grown in recent years. H<br />
Source: Havana Consulting Group based on statistic published by the Oficina Nacional de Estadísticas e<br />
Figure 2. Domestic Información tourists who (ONEI). stayed in hotel chains, 2016<br />
Figure 2. Number of national tourists who stayed in hotel chains, 2016<br />
Source: Havana Consulting Source: Havana Group Consulting based statistic Group based published on statistic by the published Oficina Nacional by the de Estadísticas e<br />
Source: Havana Consulting Oficina Group Nacional based de Información on Estadísticas statistic published (ONEI). e Información by the Oficina (ONEI). Nacional de Estadísticas e<br />
Información (ONEI).<br />
Figure 3. Average nightly room rate in Cuba hotel chains, 2016<br />
Figure 3. Average annual price per room per night in Cuba hotels chains. 2016<br />
Figure 3. Average annual price per room per night in Cuba hotels chains. 2016<br />
“The Havana Consulting Group Business Report is the most in-depth business<br />
and legal analysis for planning market entry into Cuba I have ever seen. The research<br />
is detailed, analytical and directional, with interesting background and<br />
future projections data.”<br />
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Strategic Research Initiative LLC, Queen Creek, AZ<br />
“…THCG BUSINESS REPORT, is a full information report on<br />
Cuba. Frank, clear, and independent analysis and opinions<br />
based on the most recent information available. Anyone investing<br />
in Cuba must read it. Knowledge is the key. ”<br />
Hugo Cuevas-Mohr<br />
President and CEO of Mohr World Consulting<br />
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To place your order please contact Monica Raucci at 786-206-8254. Ext 410 or email mraucci@cubatrademag.com<br />
Economist Emilio Morales is CEO of the Miami-based<br />
Havana Consulting Group<br />
16 CUBATRADE JUNE/JULY 2017<br />
Source: Havana Consulting Group<br />
Source: Havana Consulting Group<br />
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IDEAS + INNOVATION<br />
Photo by Jon Braeley<br />
BABY BOOSTS<br />
Like many advanced nations, Cuba is suffering a decline<br />
in birthrates due to women waiting until later in life. According<br />
to the CIA’s World Factbook, Cuba ranks 183<br />
out of 226 nations in terms of births per 1,000 inhabitants—putting<br />
it on par with countries like Switzerland,<br />
Russia, Denmark, Canada, and the Netherlands. Concerned<br />
with projections that 30 percent of the Cuban<br />
population will be 60 and over by 2030—up from 19.6<br />
percent in 2016—Cuba's Ministry of Labor and Social<br />
Security now grants maternity leave six weeks before<br />
and 12 weeks after birth. Parents or grandparents who<br />
are state workers and who become the primary caregiver<br />
can receive 60 percent of their salary for the first year<br />
of the baby’s life. And, for couples in their late 30s who<br />
are having difficulty conceiving, the state now operates<br />
four regional fertility clinics where in vitro fertilization<br />
is offered free of charge.<br />
Strategic Planning / Public Affairs Consulting<br />
BASEBALL FOR THE BLIND<br />
Baseball has long been a national passion for Cuba, but that passion<br />
has been off limits for the visually impaired. Now a program that<br />
was originally developed in Italy in the 1990s has spread across the<br />
island, according to a report by Reuters. The system works by using<br />
a baseball that has bells inside, so fielders can hear the ball when<br />
it lands. First base has a beeper, while teammates clap paddles at<br />
MECHANICAL WIZARDS<br />
“When it comes to the ratio of modified to stock cars, and<br />
the sheer resourcefulness and ingenuity of car owners and<br />
their mechanics, the number one place in the world for<br />
modified cars is Cuba.” So begins the narration for the<br />
half-hour documentary The Cars of Cuba, filmed by Australia's<br />
popular “Mighty Car Mods” program and available<br />
on YouTube. “Cuba’s car culture is a fascinating blend of<br />
crazy 1950s American excess and 1970s Soviet utilitarianism,<br />
colored by the locals' ‘can-do’ attitude to keep their<br />
aging cars on the road,” says the program. Calling them the<br />
“most resourceful modifiers of cars on the planet,” the documentary<br />
shows how Cuban mechanics refit their old cars<br />
with Kia and Hyundai diesel engines, Toyota truck engines,<br />
tractor engines, or even converted stationary pump<br />
engines, as they proudly pass their heirlooms down to the<br />
next generation.<br />
18 CUBATRADE JUNE/JULY 2017<br />
the other bases to orient runners. Players wear colorful blindfolds<br />
when playing; sighted people can join in if they also wear one. For<br />
obvious reasons, there is no pitcher. Batters toss the ball in the air<br />
and hit it, and fly balls are not permitted. Cuban coaches and players<br />
are now hoping that blind baseball will be included in the 2020<br />
Paralympics—so they can bring the medals home.<br />
https://www.youtube.com/watch?v=ZJPqe1baowA<br />
ANTILLES STRATEGY GROUP: Strategic planners, public affairs experts, and facilitators.<br />
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POLITICS<br />
The Winners<br />
and Losers of<br />
Trump's Cuba<br />
Policy<br />
By Nick Swyter<br />
Following a <strong>June</strong> 16 speech in Miami<br />
that blasted Cuba for its human<br />
rights violations, President Donald<br />
Trump signed a policy directive to tighten<br />
restrictions on traveling to the island and<br />
conducting business transactions with<br />
companies tied to the military.<br />
The White House says the policy will<br />
empower the private sector while restricting<br />
the flow of money to the Castro<br />
government.<br />
However, while the speech itself was<br />
a fierce denunciation of Cuba’s government,<br />
the new policy leaves much of the<br />
Obama administration’s Cuba opening<br />
intact. Embassies in both Havana and<br />
Washington will remain open. Commercial<br />
flights and cruises are still in place.<br />
Trump did not reinstate the “wet foot, dry<br />
foot” policy that gave Cubans who arrived<br />
on U.S. soil a pathway to permanent<br />
residency. Cuba is still off of the State<br />
Department's sponsors of terrorism list.<br />
And, more than 20 bilateral agreements<br />
signed in the last two years, including<br />
ones on drug trafficking and oil spill<br />
cleanups, were left untouched.<br />
WINNERS<br />
President Trump<br />
Trump is following through on a promise<br />
he made to anti-Castro Cuban-Americans.<br />
Even though the president said he<br />
was “fine” with the Obama administration’s<br />
Cuba opening early in his campaign,<br />
he told a Miami crowd in September<br />
Pen mightier than sword? President Donald Trump signs a policy directive on Cuba in Miami.<br />
2016 he would reverse the policies unless<br />
the Castro government gave political and<br />
religious freedoms to its citizens.<br />
Friday’s announcement is by no means<br />
the full reversal Trump promoted, but it<br />
has the stamp of approval from South<br />
Florida anti-Castro lawmakers Sen. Marco<br />
Rubio and Rep. Mario Díaz-Balart.<br />
Trump’s allies appear to know the<br />
timing is not right for a complete reversal<br />
of the U.S.-Cuba rapprochement. Raúl<br />
Castro is expected to leave the presidency<br />
in February, and even though he will likely<br />
continue to be the most influential figure<br />
in government, next year may be the first<br />
time since 1959 that a veteran of the Revolution<br />
will not officially lead the country.<br />
Trump’s speech also slammed Cuba<br />
for its human rights abuses. Trump now<br />
has the chance to use his tough talk on<br />
Castro to deflect accusations of being soft<br />
on authoritarians such as Russian President<br />
Vladimir Putin, Filipino President<br />
Rodrigo Duterte and Turkish President<br />
Recep Tayyip Erdoğan.<br />
Sen. Rubio and Rep. Díaz-Balart<br />
Rubio and Díaz-Balart were among the<br />
most vocal opponents of the Obama<br />
administration’s Cuba opening, and they<br />
had significant roles in crafting Trump’s<br />
policy. In doing so, they earned roles in the<br />
spotlight and appealed to their loyal base<br />
of anti-Castro Cuban-Americans.<br />
The two lawmakers also got an edge<br />
by keeping policy deliberations private.<br />
Advocacy organizations, lawmakers and<br />
business leaders supporting the Obama<br />
administration’s Cuba policy were playing<br />
catch-up by the time news reports of a<br />
Miami announcement were made public.<br />
“Engagement”<br />
Hardliners are unlikely to admit it, but<br />
the Trump administration’s policy largely<br />
resembles the Obama approach that emphasized<br />
support for the private sector and<br />
keeping diplomatic channels open.<br />
The Cuba Study Group think tank put<br />
it best: “In statements defending the new<br />
policy, they adopted pro-normalization positions<br />
they once scorned: the importance<br />
of continued diplomatic engagement and<br />
of supporting Cuba’s private sector.”<br />
Photo by Evan Vucci/AP Photo<br />
Travel agencies and cruise lines<br />
The administration wants to make sure<br />
U.S. citizens don’t go to Cuba as tourists<br />
by tightening enforcement on the 12<br />
authorized categories of travel to Cuba.<br />
The Office of Foreign Assets Control says<br />
individual “people-to-people” trips, which<br />
give travelers the ability to set their own<br />
itineraries, will end. The administration<br />
will instead push group “people-to-people”<br />
trips, which typically have a schedule of<br />
activities and a company guide.<br />
Though it might dampen travel demand,<br />
this move plays well for tour companies<br />
and cruise lines, which specialize in<br />
giving travelers arranged activities.<br />
“If you are a cruise line, I think you<br />
are up and running, because cruise lines<br />
definitely fall under the rubric of group<br />
travel,” said Richard Feinberg, author of<br />
Open for Business: Building the New Cuban<br />
Economy. "But we do have to wait to see<br />
what the curtailed regulations look like."<br />
Cigar and rum enthusiasts<br />
For now, there are no changes to rules<br />
allowing U.S. travelers to bring back<br />
Cuban cigars and rum. That move seems<br />
odd, considering those products are largely<br />
controlled by state-run enterprises.<br />
LOSERS<br />
GAESA<br />
GAESA, Cuba’s massive military-run<br />
business conglomerate, is now in the spotlight<br />
for all the wrong reasons. The Trump<br />
administration’s ban on U.S. business<br />
transactions with military-run organizations<br />
will undoubtedly reduce the flow of<br />
money to GAESA companies.<br />
Perhaps more importantly, an administration<br />
review of GAESA will reveal<br />
more information about the conglomerate,<br />
whose holdings include hotels, retail<br />
chains, banks and remittance services,<br />
construction companies, import and export<br />
companies, tourist bus fleets, marinas,<br />
and more. An extensive report on GAE-<br />
SA could inform the Cuban public of the<br />
military’s participation in their economy.<br />
Cuban entrepreneurs<br />
Even though the Trump administration<br />
insists its policy helps Cuba’s private<br />
sector, the dampened travel demand likely<br />
to result will hurt entrepreneurs. Private<br />
restaurants, accommodations, taxi drivers,<br />
and souvenir shops are already competitive<br />
against their larger state-run counterparts.<br />
A steady stream of individual visitors<br />
helps entrepreneurs more than a U.S. ban<br />
on using the government competition.<br />
“There’s going to be less money to<br />
the state, but there’s also going to be less<br />
money to the private sector,” said Ted<br />
Henken, a Baruch College professor and<br />
author of Entrepreneurial Cuba.<br />
Additionally, by pushing U.S. travelers<br />
Obama Policies<br />
Comparing Trump’s Policy Changes in 14 Categories<br />
Renew diplomatic relations<br />
Reopen US Embassy<br />
Rescinded “wet foot dry foot”<br />
Opened U.S. travel to Cuba<br />
Allowed more leeway for U.S.<br />
companies to invest and operate<br />
Restored regular commercial flights<br />
Authorized cruise ship visits<br />
Remittances from Cuban-Americans<br />
Resumed direct mail service<br />
Allowed some imports to U.S. from<br />
private sector companies<br />
Allowed U.S. citizens to bring back<br />
Cuban rum and cigars<br />
Removed Cuba from list of state<br />
sponsors of terrorism<br />
Bilateral agreements for scientific<br />
research, protection of coastal waters,<br />
and police cooperation<br />
Expanded cultural, athletic, and<br />
educational exchanges<br />
to go on group tours, the administration<br />
may inadvertently funnel visitors to staterun<br />
businesses specializing in handing<br />
tour groups. “When you go on a tour,<br />
those big groups are almost always linked<br />
in business with the Cuban government,”<br />
Henken added.<br />
U.S. travelers<br />
U.S. citizens seeking to visit Cuba under<br />
the “people-to-people” and “education”<br />
categories will need to work harder to<br />
convince authorities they are not tourists.<br />
That convincing may involve keeping<br />
records of itineraries or going on group<br />
travel packages. For many potential travelers,<br />
those tasks will make a trip to Cuba<br />
less attractive.<br />
Starwood<br />
It’s not clear what impact Trump’s<br />
announcement will have on Starwood,<br />
a Marriott subsidiary that has managed<br />
the Four Points by Sheraton in Havana<br />
since 2016. The lone U.S. hotel in Cuba is<br />
Trump Policies<br />
Will continue<br />
Will stay open<br />
Will not reinstate<br />
Stops individual people-to-people travel<br />
Bars most business with companies<br />
controlled by the Cuban military<br />
Will continue<br />
Will continue<br />
Will continue<br />
Will continue<br />
Not addressed, but wants<br />
to support the private sector<br />
Not addressed<br />
Not addressed<br />
Not addressed<br />
Not addressed<br />
owned by Gaviota, a tourism group that<br />
belongs to the military’s GAESA conglomerate.<br />
Starwood also has two other<br />
hotels in Cuba in the pipeline.<br />
“It would be exceedingly disappointing<br />
to see the progress that has been made<br />
in the last two years halted and reversed,”<br />
Marriott CEO Arne Sorenson wrote in<br />
an email. White House officials say the<br />
Treasury and Commerce departments will<br />
create regulations to determine Starwood’s<br />
future, but their intent “is not to disrupt<br />
existing transactions that have occurred.”<br />
The Congressional Push<br />
Several weeks before Trump’s announcement,<br />
a bipartisan group of 55 senators<br />
introduced a bill to end the ban on travel<br />
to Cuba. Another bipartisan group of 13<br />
senators introduced a bill to lift export<br />
restrictions. The new policy slows any<br />
momentum those bills had. The best shot<br />
at loosening the embargo may now rest<br />
with bills to lift restrictions on financing<br />
agriculture exports to the island. H<br />
20 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
21
OPINION<br />
Trump's New<br />
Cuba Policy is<br />
Smaller Than<br />
Advertised<br />
By Arturo Lopez Levy<br />
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“Those days are over. Now we hold the<br />
cards,” U.S. President Donald Trump<br />
proclaimed to the approval of a crowd of<br />
hardline Cuban exiles Friday in Miami as<br />
he signed a new directive aimed at rolling<br />
back Obama-era Cuba policies. And yet,<br />
there appears to be little bite in his bark.<br />
There are really just three changes:<br />
1) There will be more travel restrictions<br />
for U.S. Citizens without family in<br />
Cuba hoping to visit the island outside<br />
of a group people-to-people trip. 2)<br />
Trump returned to a short version of the<br />
Helms-Burton law’s prerequisites for normalization<br />
between Cuba and the United<br />
States. 3) U.S. citizens and companies are<br />
now barred from engaging in financial<br />
transactions with Cuban companies run<br />
by the country’s military.<br />
But the Trump administration has<br />
had to swallow a lot of other Obama-era<br />
achievements because reversing those<br />
advances could harm U.S. national<br />
interests and create tension with its allies,<br />
all of which reject American isolation of<br />
Cuba. The U.S. Embassy in Havana and<br />
the Cuban Embassy in Washington will<br />
remain open. Cuba will not go back on<br />
the U.S. State Department’s State Sponsors<br />
of Terrorism list. A memorandum of<br />
understanding to deepen law enforcement<br />
cooperation and information sharing is<br />
still intact. There will be no rollback of<br />
the precarious wet-foot, dry-foot immigration<br />
policy that gave all Cubans who<br />
reached U.S. soil a pathway to permanent<br />
residency.<br />
Trump’s new directive pauses, but<br />
does not end business and travel exchange<br />
opportunities with Cuba. His laundry<br />
list of pre-normalization prerequisites for<br />
22 CUBATRADE JUNE/JULY 2017<br />
the current and future Cuban leaders –<br />
including calling multiparty elections and<br />
releasing political prisoners- is the same<br />
tattered one used by administrations over<br />
the past five decades. It has never proven<br />
successful, and Cuba continues to refuse<br />
it. Perhaps Cuba could release those prisoners<br />
as a show of goodwill. But with the<br />
U.S. embargo in place, calling for multiparty<br />
elections under international scrutiny<br />
in the next six months is putting the<br />
cart before the horse. It would amount to<br />
political suicide for the Cuban Communist<br />
Party. Besides, modern global history<br />
has shown that while multiparty elections<br />
are the end goal of democratic transition,<br />
there are lots of earlier economic and<br />
political advances required to open and<br />
stabilize a nation.<br />
And then there’s the irony of the<br />
travel ban for Americans wishing to<br />
visit to Cuba on their own. Conservative<br />
Cuban-American congressmen like Sen.<br />
Marco Rubio (R-Fla.) and Rep. Mario<br />
Diaz-Balart (R-Fla.), who pushed Trump<br />
to crack down on Obama’s policies, understood<br />
that limiting Cuban-American<br />
travel and remittances to the island could<br />
only bring them trouble. As such, that<br />
ban only pertains to Americans outside of<br />
those politicians’ own jurisdictions.<br />
But not all is lost for those Americans<br />
who weren’t blessed with being<br />
born in Cuba – or to Cuban families.<br />
Cuba, travel agencies, and airlines can<br />
still promote forms of travel that comply<br />
with new regulations. It might take<br />
some creative planning on the part of the<br />
travel industry and interested American<br />
citizens, but the massive influx of American<br />
travelers (540 000 in 2016) to Cuba<br />
suggests the interest is certainly there.<br />
Finally, prohibiting business transactions<br />
with companies owned by Cuba’s<br />
military is more of a gesture to Trump’s<br />
Miami cronies than a game changer for<br />
Cuba’s political structure. The Cuban<br />
armed forces will be a key player in the<br />
transition of power when current President<br />
Raul Castro steps down in 2018,<br />
so attempting to punish them will only<br />
provide a political opportunity for Cuba<br />
to denounce U.S. interference in Cuban<br />
affairs and unify the Castro bases with<br />
the armed forces.<br />
Limiting U.S. travel and business<br />
to Cuba is merely the first in a series of<br />
efforts Cuban-American hardliners will<br />
take to continue squeezing Cuba. With<br />
so much renewed American interest in<br />
Cuban business and travel, as well as a<br />
greater awareness of the ways U.S. policy<br />
inconsistently applies isolationist strategies<br />
in the name of international human<br />
rights and democracy, it’s hard to imagine<br />
they’ll have much success in reversing all<br />
of Obama’s achievements. As new electoral<br />
cycles approach, pro-Cuba engagement<br />
lobbyists in the business, humanitarian,<br />
and diplomacy sectors will need<br />
to work together to encourage a logical,<br />
moral strategy that truly supports greater<br />
prosperity and national security on both<br />
sides of the Straits of Florida.<br />
Dr. Arturo Lopez Levy is an author and<br />
lecturer of Latin American politics at the<br />
University of Texas-Rio Grande Valley. He<br />
worked as a political analyst for the Cuban<br />
government from 1992 to 1994.<br />
Foreign Corrupt Practices Act (FCPA) counsel. Over 25 years’ experience<br />
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In a sign of pragmatism, Trump’s fiscal 2018 budget cuts<br />
funds for the USAID democracy program for Cuba<br />
Missing from the Trump administration’s<br />
proposed State Department budget for<br />
fiscal 2018 is funding for the U.S. Agency<br />
for International Development’s controversial<br />
Cuba democracy programs. Cuban<br />
officials have long accused such programs of<br />
attempting to destabilize their government.<br />
Under the Obama administration,<br />
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By Mimi Whitefield<br />
fying the proposed cuts, Secretary of State<br />
Rex Tillerson said that “U.S. diplomacy<br />
engagement and aid programs must be<br />
more efficient and more effective, and that<br />
advancing our national security, our economic<br />
interests, and our values will remain<br />
our primary mission.”<br />
Asked about the cut in Cuba funds,<br />
a USAID spokesperson said they resulted<br />
from a need to prioritize efforts to “allow<br />
us to advance our most important policy<br />
goals of protecting America and creating<br />
American jobs.”<br />
Despite the proposed cuts in 2018<br />
USAID funding for Cuba (as well as<br />
Ecuador and Venezuela), the programs can<br />
still be restored as the budget makes its way<br />
through Congress. South Florida Republican<br />
Rep. Ileana Ros-Lehtinen has already<br />
vowed to work toward that. “The White<br />
House is obligated to provide Congress its<br />
budget request but Congress ultimately has<br />
the power of the purse,” she said.<br />
Calling the lack of funding for<br />
democracy building programs in the three<br />
countries “greatly troubling,” Ros-Lehtinen<br />
pledged to work with fellow lawmakers<br />
“in a bipartisan manner to ensure that we<br />
rectify this problem.”<br />
Funding for “dissident assistance”<br />
programs appears to be intact, however.<br />
A USAID spokesperson said these<br />
humanitarian assistance programs were<br />
fully funded with prior-year allocations.<br />
USAID recently advertised $6 million in<br />
three-year grants to groups that “provide<br />
Continued on page 42<br />
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TRANSITIONS<br />
From Russia.<br />
With Love?<br />
Russia’s rekindled interest in<br />
Cuba raises questions about the<br />
Kremlin's geopolitical ambitions<br />
Your Personal Concierge<br />
Service in Cuba<br />
By Nick Swyter<br />
Photo by Matias J. Ocner<br />
Golden Dome: A Russian state enterprise is accepting bids to restore the dome on Havana's Capitolio<br />
Russia threw a lifeline to Cuba on May<br />
10 by sending an oil tanker with nearly<br />
250,000 barrels of refined products to<br />
the island. The move was vital to offset<br />
slashed oil deliveries from Venezuela,<br />
which have forced Cuba to ration electricity<br />
and fuel.<br />
The May delivery is expected to be<br />
the first of many from Russia. Rosneft,<br />
a Russian state-owned oil company, announced<br />
May 3 that it will deliver 250,000<br />
tons of oil and diesel to Cuba as part of a<br />
contract with state enterprise Cubametals.<br />
Little is known about the terms of the<br />
contract, but some experts estimate it to<br />
be worth $100 million.<br />
The heavily sanctioned Russian<br />
economy, which contracted by 0.6 percent<br />
in 2016, is in no shape to offer Cuba<br />
energy deals that are as favorable as the<br />
oil deliveries from Venezuela. Russia also<br />
appears to be skeptical of Cuba’s ability to<br />
fund continued oil deliveries. “If financial<br />
resources are found, the companies will<br />
deliver. It’s not charity,” Russian Energy<br />
Minister Alexander Novak told the staterun<br />
TASS news agency.<br />
The shipments are, however, just one<br />
of several indicators that Russia is keen on<br />
expanding ties with its Cold War ally.<br />
State-owned Russian Railroads announced<br />
it may sign a $2 billion contract<br />
to upgrade more than 1,000 kilometers of<br />
Cuban rail tracks by the end of the year.<br />
A Russian state-owned enterprise is also<br />
accepting bids to restore the gold dome of<br />
Havana’s El Capitolio—a project that will<br />
take at most $354,000 out of Russia’s federal<br />
budget. But perhaps most importantly,<br />
Russia agreed in 2014 to waive a whopping<br />
90 percent of Cuba’s outstanding $32<br />
billion in Soviet-era debt.<br />
Russia’s renewed interest in Cuba has<br />
raised questions, but few answers, about<br />
what exactly the Kremlin hopes to gain<br />
from engaging the cash-strapped island.<br />
“I think Russia’s overtures, and more<br />
importantly the press coverage, is timed to<br />
coincide with the White House’s anticipated<br />
reversal of the Obama administration’s<br />
rapprochement efforts,” said Brian<br />
Fonseca, director of Florida International<br />
University’s Jack D. Gordon Institute for<br />
Public Policy. “Russia’s contemporary engagement<br />
in Latin America appears to be<br />
very opportunistic and it is likely attempting<br />
to capitalize on any adverse sentiment<br />
towards the U.S. in the aftermath of policy<br />
changes toward Cuba.”<br />
On the security front, Russia signed<br />
a deal in December to modernize Cuba’s<br />
defense industry through 2020. Russian<br />
Deputy Defense Minister Nikolai Pankov<br />
also spoke to the national parliament last<br />
year about plans to reopen a military base<br />
in Cuba that Moscow closed in 2002.<br />
While Russia’s exact motivations for<br />
expanding ties with the Cuban military<br />
are unclear, it has led to concerns in<br />
Washington.<br />
In April, two dozen retired U.S.<br />
military officials sent a letter to the<br />
White House urging it to continue the<br />
Obama administration’s Cuba opening<br />
for national security reasons. “The Cold<br />
War might not be back,” part of the letter<br />
said, “but Cuba has returned as a national<br />
security battleground as Russia and China<br />
increasingly engage with Havana and seek<br />
influence on an island less than 100 miles<br />
from the U.S. mainland.” H<br />
A dedicated service guaranteed to make your travel to Cuba effortless<br />
whether for business or pleasure, Bespoke has been in the travel business<br />
solely to Cuba for 10 years.<br />
We make sure our clients have:<br />
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26 CUBATRADE JUNE/JULY 2017<br />
41 Union Square West #725 • New York, NY 10003
SCIENCE<br />
Cracking the<br />
Coral Code<br />
Researchers think coral from Cuba might help<br />
reefs in the Florida Keys survive climate change<br />
H<br />
Key West<br />
H<br />
Miami<br />
By Nick Swyter<br />
Guanahacabibes<br />
peninsula<br />
H<br />
Photo by Nick Swyter<br />
Undersea Solution: Marine biologist Andrew Baker inspects coral at the University of Miami<br />
Marine biologists from Miami will travel<br />
to Cuba this summer to learn whether<br />
corals from the island can help the Florida<br />
Keys adapt to warmer waters brought by<br />
climate change.<br />
As part of an investigation of corals<br />
around the Caribbean, Andrew Baker<br />
of the University of Miami’s Rosenstiel<br />
School of Marine and Atmospheric<br />
Science will join a research expedition to<br />
collect and research samples in western<br />
Cuba’s Guanahacabibes region. Their<br />
research is important because some Cuban<br />
waters are about 2 degrees Celsius (3.5 degrees<br />
Fahrenheit) warmer than the Keys.<br />
“Corals in Florida are going to need<br />
to be able to adapt or acclimatize by about<br />
this amount over the course of this century,”<br />
Baker said. “So corals from Cuba may<br />
be able to help Florida’s corals achieve<br />
this.”<br />
Cuba’s corals have the added advantage<br />
of genetic similarity to those in the<br />
Keys. Baker wants to use DNA samples<br />
from the Guanahacabibes corals to<br />
investigate genetic links and see if they<br />
are sending their larvae downstream to<br />
the Keys. Showing a connection between<br />
the two systems would reduce the risk of<br />
introducing other non-native organisms<br />
into the Keys’ coastal ecosystem. “The goal<br />
is to accelerate the pace at which Cuba’s<br />
corals might help Florida’s reefs respond<br />
to climate change. To do this, it’s best to<br />
use our next door neighbors, not different<br />
coral species from faraway locations like<br />
the Red Sea or Australia,” Baker said.<br />
Once scientists learn how resistant<br />
Cuban corals are to the effects of climate<br />
change, it might then be possible to investigate<br />
the risks and benefits of cross-breed-<br />
Researchers at the University of Miami<br />
prepare coral for testing<br />
Photo by Nick Swyter<br />
ing Cuban and Floridian corals, and assess<br />
whether introducing these corals to the<br />
Keys might help its reefs survive. “There is<br />
a need to accelerate the natural connectivity<br />
between these ecosystems, because they<br />
are fast running out of time as the oceans<br />
continue to warm,” Baker said.<br />
Adding to the sense of urgency,<br />
last year Baker’s UM colleagues found<br />
that ocean acidification will likely accelerate<br />
the predicted deterioration of the<br />
Keys’ reefs. That’s bad news for the local<br />
economy, because UM estimates the<br />
region’s reefs generate $7.6 billion annually<br />
from the tourism and seafood industries.<br />
Depleted coral also makes Florida more<br />
vulnerable to hurricanes, since reefs protect<br />
some coastlines from storm surges.<br />
While normalized U.S.-Cuba<br />
relations have helped advance scientific<br />
exchanges, Baker admits his Cuban<br />
expedition has not been easy to arrange.<br />
Original plans were set for last December,<br />
but were pushed back to summer. “It takes<br />
time to build relationships that will last,<br />
and governments don’t always work as fast<br />
as individuals do,” he said.<br />
There is a need [for] connectivity between these<br />
ecosystems, because they are running out of time<br />
Andrew Baker, UM's Rosentiel School of Marine and Atmospheric Science<br />
Beyond earning U.S. and Cuban<br />
government approval, conducting research<br />
on the island is itself challenging.<br />
Fernando Bretos, a Cuban-American<br />
marine biologist who will join Baker on<br />
the expedition, has conducted research<br />
in Cuba since 1999. He says he still faces<br />
challenges in communications, funding,<br />
transportation, and the scarcity of<br />
high-quality research vessels. “That’s the<br />
hardest part,” said Bretos. “There just aren’t<br />
that many boats you can use.”<br />
The upside of doing research on the<br />
island is collaboration with the Cuban scientific<br />
community, which Bretos says is resourceful,<br />
diligent, and can follow through<br />
on projects American scientists help devise.<br />
“We can go in and plan projects, and the<br />
Cubans can do a lot of that science at a<br />
very high-quality level,” Bretos said.<br />
Both scientists are optimistic about<br />
the future of these scientific exchanges,<br />
with Cuba. Baker says American scientists<br />
benefit from the experience of<br />
their Cuban counterparts and the ability<br />
to study Cuba’s relatively healthy reefs.<br />
Cuban scientists, in exchange, learn how<br />
to use new tools such as modeling and<br />
genomics to better understand how their<br />
reefs are connected.<br />
To really advance bilateral marine<br />
biology research, says Baker, some Cuban<br />
marine biology students should earn their<br />
PhDs at UM. That would allow Cubans<br />
to learn new methods and technologies.<br />
“That way they can take the lead<br />
in applying them to understanding and<br />
protecting their reefs, and be vested in<br />
the management of these valuable marine<br />
resources,” he says. H<br />
28 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
29
TRANSPORTATION<br />
Having Trouble Finding<br />
a Hotel In Havana?<br />
Bring your own<br />
Technicians<br />
One of the added expenses for U.S. commercial<br />
airlines serving Cuba is the necessity of bringing<br />
a mechanic onboard<br />
By Nick Swyter<br />
Photo by Jon Braeley<br />
Why Not See It Like a Native?<br />
Our apartments are in the Old Plaza (La Plaza<br />
Vieja) in the heart of Old Havana. Here, visitors can<br />
discover and get to know Cuba by walking the<br />
streets of its centuries-old capital—and feeling at<br />
home being taken care of by a friendly Cuban host.<br />
Among the many hurdles U.S. commercial<br />
airlines must navigate to serve Cuba,<br />
their planes must fly with maintenance<br />
technicians certified by the Federal Aviation<br />
Administration (FAA) on board.<br />
The airlines can’t use Cuban technicians,<br />
because Cuba doesn’t have any with the<br />
proper certifications.<br />
“Currently, Cuba does not have any<br />
FAA-certified maintenance technicians,”<br />
wrote Southwest Airlines spokesperson<br />
Casey Dunn. “It is common practice for<br />
U.S.-based airlines to have an FAA-certified<br />
aircraft maintenance technician on<br />
board most flights to Cuba. This gives the<br />
airline the ability to quickly address any<br />
mechanical issues should they occur while<br />
in Cuba.”<br />
The island’s lack of FAA-certified<br />
mechanics appears to be unique for the<br />
Americas. Dunn says among all the<br />
destinations where Southwest flies in the<br />
Caribbean and South America, Cuba is<br />
the only country without them.<br />
Airlines were reassured they could<br />
fly with technicians on board without<br />
30 CUBATRADE JUNE/JULY 2017<br />
Safe Landings: An American Airlines flight touches down at the Holguín airport in eastern Cuba<br />
violating the U.S. embargo, thanks to an<br />
October 2016 Obama administration decision.<br />
At the time, the Treasury Department’s<br />
Office of Foreign Assets Control<br />
wrote it would allow “persons subject to<br />
U.S. jurisdiction to provide civil aviation<br />
safety-related services to Cuba and Cuban<br />
nationals aimed at promoting safety in<br />
civil aviation and the safe operation of<br />
commercial aircraft.”<br />
Currently, Cuba does not<br />
have any FAA-certified<br />
maintenance technicians<br />
Casey Dunn, Southwest Airlines<br />
U.S. commercial airlines will likely be<br />
keeping technicians on their flights for a<br />
while; the FAA doesn’t appear to be interested<br />
in certifying a repair station in Cuba.<br />
The only other way around that is for both<br />
countries to sign a bilateral aviation safety<br />
accord, said Christian Klein, an attorney<br />
with law firm Obadal Filler MacLeod &<br />
Klein, and executive vice-president of the<br />
Aeronautical Repair Station Association.<br />
Even though onboard technicians<br />
make flights safer, the practice has a few<br />
downsides. Technicians take seats away<br />
from potential customers, they get paid<br />
even when not working—and some tasks<br />
require transporting two maintenance<br />
workers. “The aviation maintenance industry<br />
is hurting for workers, so it presents its<br />
own challenges,” Klein said.<br />
Despite Cuba’s strategic location in the<br />
Caribbean, there also doesn’t appear to be<br />
any push from the U.S. maintenance, repair<br />
and operations (MRO) industry to provide<br />
services there for now. One reason? Most<br />
U.S. MRO service providers don’t work on<br />
Russian planes, notes Jim Sokol, president<br />
of MRO service provider HAECO Americas—and<br />
Cuba’s state-owned Cubana de<br />
Aviación operates an all-Russian fleet.<br />
“As things start to open up,” Sokol<br />
said, “we want to be a part of solutions.”<br />
For now, that means keeping U.S. airlines<br />
safe and sound. H<br />
• Accommodations for two, four or six people.<br />
• Reasonable rates. Breakfast included.<br />
Contact Maylu Hernandez at<br />
maylu21@hotmail.com for availability and rates.
TOURISM<br />
TRAVEL TO CUBA FROM 2014 TO 2016<br />
(number of visitors in thousands)<br />
And the Survey Says…<br />
US Citizens<br />
Cuban Americans<br />
Canadians<br />
Other<br />
Total<br />
3,525<br />
4,035<br />
Different polls—and different<br />
headlines—suggest that<br />
interest in Cuba as a tourism<br />
destination is waning.<br />
Far from it, says the Boston<br />
Consulting Group<br />
2,532<br />
2,716<br />
2,839 2,853<br />
3,003<br />
1,901<br />
By J.P. Faber<br />
1,148<br />
945<br />
375<br />
63<br />
398<br />
74<br />
1,243 1,285 1,281<br />
1,002<br />
1,072<br />
1,106<br />
384<br />
98<br />
373<br />
92<br />
1,375<br />
1,175<br />
361<br />
91<br />
161 391 1,300<br />
1,673<br />
419<br />
285<br />
1,430<br />
2010<br />
2011 2012 2013 2014 2015 2016<br />
Source: Boston Consulting Group<br />
What, exactly, do Americans think<br />
about traveling to Cuba? That question is<br />
suddenly in the forefront, with the Trump<br />
administration's changes to U.S. policies<br />
making it harder to travel to the island by<br />
U.S. citizens.<br />
The answer, it turns out, depends on<br />
which poll numbers you trust—and how<br />
those number are spun by the media.<br />
When U.S. commercial airlines began<br />
reducing their scheduled flights to Cuba<br />
in March and April, the press had a field<br />
day with reports of a travel ‘bust.’ One<br />
survey by Allianz Global Assistance in<br />
May reported that 60 percent of Americans<br />
“would not like to travel to Cuba,”<br />
two points more than the previous year.<br />
Demand for visiting Cuba had obviously<br />
been greatly exaggerated, many news<br />
outlets reported.<br />
Not quite, says the Boston Consulting<br />
Group. According to a survey also<br />
released in May by the prestigious research<br />
organization, reports of the demise of<br />
U.S. demand for travel to Cuba have been<br />
32 CUBATRADE JUNE/JULY 2017<br />
greatly exaggerated.<br />
“As we looked into the data the<br />
idea of a ‘bust’ did not make sense,” said<br />
Marguerite Fitzgerald, author of the BCG<br />
study entitled Taking the Long View on<br />
Cuba’s Tourism Opportunity. “Our research<br />
confirms that there is strong and growing<br />
interest among U.S. travelers. We project<br />
compound annual growth rates of 20 percent<br />
to 50 percent in the number of U.S.<br />
visitors to Cuba through 2020.”<br />
Eight years from now, according to<br />
the study, the number of U.S. tourists to<br />
the island could crest 2 million, representing<br />
“a huge growth opportunity” for U.S.<br />
hospitality firms.<br />
A big reason for the perception that<br />
interest in visiting Cuba has declined was<br />
the roller coaster ride of U.S. commercial<br />
flights to the island—an initial burst of<br />
routes followed by a cut back. Rather than<br />
a response to waning interest, that was<br />
simply a matter of oversupply, Fitzgerald<br />
told Cuba Trade. U.S. airlines initially<br />
scheduled approximately 2 million annual<br />
seats for roundtrip flights to Cuba. Since<br />
then they have adjusted the supply to meet<br />
the demand, at approximately one million<br />
annual seats.<br />
The other problem with the polls is<br />
how they are conducted, and how they are<br />
spun by the press. The BCG study, for example,<br />
took the pulse of 500 U.S. ‘regular<br />
vacationers,’ defined as people who take<br />
vacations at least once every two years.<br />
The Allianz Global study took the pulse of<br />
1,514 people from the general population.<br />
As far as spin goes, Fitzgerald says the<br />
BCG study was “surprised that it was that<br />
many” when 30 percent of travelers said<br />
they were “definitely or probably” considering<br />
a Cuba trip in the next five years.<br />
Meanwhile, Daniel Durazo, director<br />
of communications at Allianz Global<br />
Assistance USA, said in a press release<br />
that, “Our survey found that merely two<br />
percent of Americans think they will go to<br />
Cuba in the next six months.”<br />
Merely? That would be 6.4 million<br />
American tourists.H
TECH<br />
A Network of Cuban<br />
Professionals<br />
NinjaCuba is the latest app in the<br />
country’s burgeoning private software<br />
industry<br />
Story and photo by Victoria Mckenzie<br />
Departures from Miami, Tampa and Key West.<br />
Operated by<br />
Programming on the Fly: Victor Moratón and Fabian Ruíz Estevéz in the La Timba neighborhood, Havana<br />
It’s a hot afternoon as we climb the<br />
steps of a walkup in Havana's La Timba<br />
neighborhood, where Victor Moratón<br />
runs NinjaCuba from the living room of<br />
an apartment he shares with his mother<br />
and grandmother.<br />
The two women ply us with smiles,<br />
cool drinks and strong coffee as Cuba<br />
Trade sits down to listen to a NinjaCuba<br />
strategy meeting. A minute later, partner<br />
Fabián Ruíz Estevez appears in the doorway,<br />
laptop in hand.<br />
“We are just trying, in our modest<br />
way, to use our knowledge to benefit society,”<br />
says Moratón, a young software developer<br />
and 2015 graduate of the Antonio<br />
Echeverría Higher Politechnic Institute of<br />
Havana (CUJAE).<br />
The NinjaCuba platform is Cuba’s<br />
first app to connect Cuban professionals<br />
with job opportunities and scholarships.<br />
It's aimed especially at skilled entrepreneurs<br />
leaving school who have been<br />
groomed for high-tech positions that don’t<br />
always exist in the state sector. Usually, its<br />
founders explain, computer science and<br />
engineering graduates end up working in<br />
other fields to support themselves.<br />
“On the one hand, there are not<br />
enough employment opportunities that<br />
match the qualifications of our university<br />
graduates, and on the other hand the salaries<br />
they earn are very low,” says Moratón.<br />
“So, professionals prefer to do contract<br />
work as freelancers, or work in other professions<br />
even if it isn’t what they studied,<br />
where they can earn more money.”<br />
NinjaCuba was a winner of 10x10K,<br />
a competition by the Cuba Emprende<br />
Foundation and #Cubanow that brought<br />
a group of 10 startups to the U.S. for twoweek<br />
accelerator programs in March.<br />
“Our visit to Stanford University and<br />
to the technology companies allowed us<br />
to see two things," Moratón said. "First,<br />
that we’ve already been using many of the<br />
same methods of work and organization<br />
used in Silicon Valley. And second, that<br />
the quality of Cuban professionals is on<br />
par with any professional around the<br />
world—and we know it, because there are<br />
many Cubans working at companies like<br />
Google, Facebook, Twitter, and Uber.”<br />
Ruíz Estevez, a 2010 graduate of<br />
Havana's Instituto Superior de Diseño<br />
(Advanced Institute for Design), says his<br />
job was to make the site clean, functional,<br />
and user-friendly, so that the platform<br />
meets global industry standards but<br />
remains pragmatic for Cuba’s internet<br />
limitations.<br />
“We take into account the particularities<br />
of our country—a slow connection,<br />
low connectivity, inconvenient internet<br />
access sites—in order to offer a service<br />
that is truly useful for the Cuban public,”<br />
he says. For now, the pair still must go to a<br />
public wifi hotspot to connect to the internet<br />
at $1.50 CUC per hour.<br />
Limitations notwithstanding, the demand<br />
for their service is apparent. Nearly<br />
400 Cuban freelancers have already<br />
joined NinjaCuba and created professional<br />
profiles, while 66 employers have<br />
begun posting jobs. The service is free<br />
for jobseekers and currently provides free<br />
information about employment opportunities,<br />
scholarships, and courses. To make<br />
it sustainable, Moratón and Ruiz Estevez<br />
plan to offer paid services to companies<br />
and employers. H<br />
Phone: 305-615-4151<br />
34 CUBATRADE JUNE/JULY 2017
LOGISTICS<br />
Feeding the<br />
Cruise Lines<br />
With U.S. cruise lines expanding their itineraries<br />
to Cuba, the need for re-supply presents<br />
opportunities for land-based companies<br />
By Doreen Hemlock<br />
Photo by Matias J. Ocner<br />
Putting Stock in the Future: John Paul Brigneti in the Miami warehouse of Savino del Bene<br />
It’s not just U.S. cruise lines eyeing Cuba<br />
these days. U.S cruise suppliers also want<br />
in, and an Italian logistics company is<br />
opening that market, thanks to a new U.S.<br />
license—a cruise industry first.<br />
In late February, Savino del Bene, a century-old<br />
company from Florence that has<br />
become a global competitor with roughly<br />
$1 billion in annual revenues, completed its<br />
first trial run to deliver U.S. food products<br />
directly to a cruise ship in Cuba. The food<br />
traveled by container from Florida’s Port<br />
Everglades to Cuba’s Mariel seaport and<br />
was then transported to the ship in Havana—all<br />
within days, an executive said.<br />
“We’re expecting, hopefully, at least<br />
six containers a week” of fruit, vegetables,<br />
cheese, and other U.S. perishables sent from<br />
the U.S. to supply an initial two cruises<br />
in Cuba, said John Paul Brigneti, Savino<br />
del Bene’s Miami-based vice-president<br />
of global logistics for cruise and marine<br />
solutions. Those cruise ships now purchase<br />
their supplies from Mexico, Brazil and other<br />
nations outside the United States.<br />
Brigneti worked for more than two<br />
years to make the trial run happen. A<br />
veteran of the cruise industry, he joined<br />
Savino del Bene in 2013 to develop its<br />
cruise supply business and quickly saw<br />
opportunity in Cuba, the Caribbean’s<br />
largest island.<br />
From Europe, Savino del Bene<br />
already had been arranging deliveries of<br />
food, medicine, and other goods to Cuba<br />
for its customers since 2009—“a couple<br />
thousand containers a year,” he estimated.<br />
So, he sought to build on the company’s<br />
existing relationships in Cuba to start new<br />
U.S. operations.<br />
The problem, of course, was Washington’s<br />
half-century-old embargo on<br />
trade with the island. While an exemption<br />
allowed U.S. agricultural exports to Cuba,<br />
no U.S. cruises to Cuba were authorized<br />
back then.<br />
In 2015, as U.S-Cuba relations<br />
thawed, Brigneti visited Cuba to check<br />
out the market. He saw plans posted to<br />
develop the Havana waterfront for cruises,<br />
and soon began talks with Cuba’s government<br />
for a license to supply U.S. products<br />
to cruises on the island.<br />
That permission came within months,<br />
and approval by the U.S. Commerce<br />
Department’s Bureau of Industry and<br />
Security followed in <strong>June</strong> 2016—a first<br />
for a U.S. outfit to supply cruises in Cuba.<br />
That license remains valid under Trump's<br />
new Cuba policy.<br />
Now, Brigneti is working out pricing<br />
and other details to make sure the deliveries<br />
make financial sense for cruises based in<br />
Cuba. Ships that leave from U.S. ports generally<br />
stock up in the U.S. and would provision<br />
in Cuba only for emergency needs, he said.<br />
If all goes as planned, an extra<br />
half-dozen containers a week would be<br />
a notable bump in U.S.-Cuba container<br />
trade. Savino del Bene is working with<br />
Florida-based shipping line Crowley<br />
Maritime Corp., which now sends 40 to<br />
45 containers most weeks from Port Everglades<br />
to Mariel on the busiest scheduled<br />
U.S.-Cuba route, confirmed Jay Brickman,<br />
the Crowley vice-president handling Cuba.<br />
Brigneti sees supplying cruises as<br />
a foot in the Cuba door for Savino del<br />
Bene’s Miami unit, which now employs 25<br />
people and operates a 60,000-square-foot<br />
warehouse that offers foreign trade zone<br />
status. He hopes Savino del Bene’s other<br />
U.S. units can build on his relations in<br />
Cuba to start new ones later. H<br />
36 CUBATRADE JUNE/JULY 2017
ENTREPRENEURS<br />
A Cuban Franchise...<br />
In the Other Direction<br />
From self-employed in Cuba to<br />
franchisor in the United States,<br />
Riudi Pérez has a brand to push<br />
By Emilio Morales<br />
Photos by Matias J. Ocner<br />
Making the Cut: Riudisver Pérez with the tools of his trade<br />
The Franchise Model: Pérez styles hair at a Ruidi Peluqueros salon near Miami International Airport<br />
Cuba’s private sector got one of its<br />
biggest boosts in 2010, when the government’s<br />
reform process expanded the categories<br />
of licenses for private employment<br />
and made them dramatically easier to<br />
obtain. In one year, the number of licenses<br />
authorizing cuentapropistas—the Cuban<br />
term meaning ‘self-employed’—jumped<br />
from 150,000 to 392,000. Today there are<br />
well over a half million.<br />
One area that boomed was beauty<br />
salons, rising from 11,125 licenses for specialties<br />
related to aesthetic salon services<br />
in 2010 to 17,837 by the end of 2015. Not<br />
only are more individuals pursuing the<br />
trade privately; the legalization of the previously<br />
prohibited practices of advertising<br />
and hiring employees has spawned over<br />
100 beauty salon brands since 2010, with<br />
entrepreneurs creating new shops with<br />
novel designs and increasingly specialized<br />
services.<br />
One of these brands, Riudi Peluqueros,<br />
has now made the jump from Cuba<br />
to the United States, where it’s expanding<br />
as a franchise—something it can’t<br />
do at home under existing regulations<br />
that make it hard to concentrate private<br />
wealth. In addition to its Havana flagship<br />
outlet, Riudi Peluqueros is now in Las<br />
Vegas and Miami, with plans to expand<br />
nationwide.<br />
A BOOTSTRAPPING TALE<br />
As a teenager, Riudisver Pérez knew the<br />
art of cutting hair. In Guaos, a small town<br />
just east of Cienfuegos, his uncle showed<br />
him how to use a comb and scissors, practicing<br />
on the heads of cousins and friends.<br />
He got additional tips from a local barber,<br />
his hairdresser aunt, and a hair stylist in<br />
his village. “The first techniques I learned<br />
by observing,” he said.<br />
From there, Pérez—popularly known<br />
as Riudi—began visiting Havana, where<br />
he had a sister who was married to a<br />
hairdresser. Eventually, he stayed on and<br />
took training courses in the capital. There,<br />
in 2006, he got a contract as a hairdresser<br />
on an Italian cruise ship. “Working on the<br />
cruise ship changed my life,” said Pérez.<br />
“From then on, my destiny changed.”<br />
He spent two years at sea, traveling<br />
first to the Mediterranean and then along<br />
South America’s east coast, seeing Brazil,<br />
Uruguay and Argentina. “I was exposed<br />
to different cultures, I learned about the<br />
world, how a beauty salon works, the<br />
meaning of competition,” said Pérez. “It<br />
was like being reborn, as if I had been<br />
blind and suddenly was able to see.”<br />
He added: “It was a great school for<br />
my future project. I learned something<br />
more than good haircutting techniques:<br />
how to operate a beauty salon, how to<br />
handle sales, marketing, how to deal with<br />
clients, how to manage a workforce. I also<br />
learned how to create attractive glamour<br />
and how to make money.”<br />
FROM BARBER TO BUSINESSMAN<br />
When he returned to Havana in 2008,<br />
Pérez opened his first salon, cutting hair<br />
in a room of his sister’s apartment in Old<br />
Havana, furnished with two used office<br />
chairs and an old shampoo bowl. He<br />
hired an assistant who helped him with<br />
the business end of the salon. Today, that<br />
assistant is his wife and partner.<br />
At the time, almost everything was<br />
clandestine. Although Pérez had a license<br />
to offer his services, he couldn’t advertise—not<br />
even hang a sign outside. It was<br />
all word of mouth. Not until Raúl Castro’s<br />
reforms of 2010 was Pérez able to expand<br />
by hiring employees and making use of<br />
advertising. The new laws also permitted<br />
Cuban citizens to own private property.<br />
By 2012, with his small shop running out<br />
of room, Pérez bought a house with part<br />
of his savings and created his first professional<br />
salon.<br />
Without knowing it, he had created<br />
a company. The problem now was how to<br />
manage it—how to deal with employees,<br />
organize customer appointments, ensure<br />
product supplies, and train the workforce<br />
on new techniques matching the style of<br />
Riudi Peluqueros, the brand name he gave<br />
his business.<br />
Pérez soon hired an accountant and<br />
a manager to run the salon so it could<br />
operate without his presence. This allowed<br />
him to open a second location in Vedado,<br />
one of Havana’s most prestigious areas.<br />
Under Cuban law, an individual may run<br />
only one company at a time, so the second<br />
location was put in his wife’s name. Today<br />
the Vedado location has eight hairdressers,<br />
two masseuses, two assistants, and one<br />
person in charge of maintenance.<br />
With two salons in Havana, one<br />
day Pérez asked his wife, ‘Why don’t we<br />
open a salon in the United States?’ That<br />
became his next objective, leading him to<br />
enroll in a course offered by Cuba Emprende,<br />
a nonprofit service administered<br />
by the Catholic Church to teach Cuban<br />
entrepreneurs how to open and run a<br />
business.<br />
MIAMI, BIRTH OF A FRANCHISE<br />
Despite his spectacular success in Cuba,<br />
starting from scratch in a different country<br />
was a new challenge that required a process<br />
of assimilation. In 2014, Pérez began<br />
working at a hair salon in the Miami<br />
suburb of Coral Gables, and after learning<br />
the ropes, he opened a shop just west of<br />
Miami International Airport.<br />
Within six months, Pérez doubled his<br />
staff from four to eight hairdressers, adding<br />
an accountant and manager. Learning<br />
from his word-of-mouth success in Cuba,<br />
Pérez used social media platforms like<br />
Facebook to spread the word, and was<br />
soon attracting customers from as far away<br />
as Orlando and Las Vegas. That led Riudi<br />
Peluqueros to open an outlet in Vegas<br />
that’s already doubling in size.<br />
With both the Miami and Vegas<br />
locations doing so well, Pérez has<br />
transformed his salons into an integrated<br />
franchise system. An expanded online<br />
platform has standardized offerings<br />
and prices, and Pérez is now developing<br />
a training and certifying course for<br />
hairdressers, manicurists, masseuses, and<br />
salon managers. The next steps are to<br />
open three to five more salons in Miami<br />
and then search for investors to expand<br />
to New York, Chicago and Los Angeles.<br />
“The secret is passion, believing in<br />
what you do, persevering, not giving in to<br />
difficulties, offering good service, inviting<br />
the client to become part of the family,”<br />
Pérez said proudly. “These are the values <br />
I have always believed in and bet on. The<br />
result comes on its own.” H<br />
38 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
39
INVESTMENT<br />
TESTING THE<br />
HOTEL WATERS<br />
The recent SAHIC conference was a who’s who of U.S. hoteliers<br />
looking for opportunities in Cuba. Will business follow?<br />
By Doreen Hemlock<br />
Photos by Antonio Osa Ramirez/<br />
SAHIC Cuba<br />
Photos by Antonio Osa Ramirez/SAHIC Cuba<br />
Leaders of the Pack: SAHIC<br />
founder Arturo Garcia Rosa<br />
(left) with David Scowsill (right),<br />
president and CEO of the World<br />
Travel & Tourism Council<br />
Just two years ago, it would have been<br />
unthinkable: a world-class hotel investment<br />
conference in Havana attended by top U.S.<br />
chains including Marriott, Hilton, Wyndham<br />
and Hyatt; leading hospitality consultants<br />
including EY and JLL; and major U.S.<br />
law firms including Greenberg Traurig.<br />
But with thawing U.S.-Cuba relations,<br />
Four Points by Sheraton already<br />
managing one hotel in Havana, and Cuba<br />
more aggressively seeking foreign partners,<br />
U.S. hospitality brass turned out in<br />
hefty numbers mid-May at the first Cuba<br />
edition of the respected Latin American<br />
Hotels and Tourism Investment Conferences,<br />
entitled SAHIC Cuba 2017.<br />
Cuba’s government went all out to<br />
impress the 200-plus attendees at the twoday<br />
event, even featuring legendary singer<br />
Omara Portuondo of Buena Vista Social<br />
Club fame at a reception at the Hotel<br />
Nacional. Officials offered detailed presentations<br />
for investors, with specifics on<br />
projects seeking overseas partners mainly<br />
though management contracts or joint<br />
Future Prospects: Cuban tourism officials on a conference panel at SAHIC Cuba 2017<br />
And sooner rather than the later, the embargo will be lifted, unleashing<br />
U.S. tourism to world heritage sites and pristine beaches<br />
ventures. Many Cubans were frank about<br />
problems, including the need to speed up<br />
approvals, improve airport service, and add<br />
cruise capacity.<br />
SAHIC founder Arturo Garcia<br />
Rosa said he organized the conference<br />
convinced that Cuba will emerge as the<br />
second largest travel destination in Latin<br />
America after Mexico. He sees Cuba hosting<br />
some 12 million international visitors<br />
by the 2030s, both at hotels and on cruises,<br />
up from four million last year. “And<br />
sooner rather than the later, the embargo<br />
will be lifted,” unleashing U.S. tourism to<br />
world heritage sites and pristine beaches,<br />
said Garcia Rosa.<br />
Executives from various U.S. hotel<br />
chains told Cuba Trade they were attending<br />
the conference to learn more about<br />
Arturo Garcia Rosa, SAHIC founder<br />
Cuba opportunities, meet Cuban officials<br />
and foreign hoteliers on the island, and as<br />
Wyndham’s regional vice president Luis<br />
Mirabelli put it, “understand all the complexities<br />
here.” But with the U.S. embargo<br />
still restricting U.S. tourism to Cuba, and<br />
new U.S. rules prohibiting deals with<br />
hotels owned by the military, “the opportunities<br />
are much more limited” for U.S.<br />
business short term, said David J. Tarr,<br />
Hyatt’s senior vice president for real estate<br />
and development.<br />
Yet Wyndham’s Mirabelli, at least,<br />
is preparing for a more open future now.<br />
“We’re looking into working through third<br />
parties—clients or partners elsewhere who<br />
are not banned from business in Cuba—<br />
and that could be a way to enter,” said the<br />
Argentina-based executive.<br />
JUNE/JULY 2017<br />
CUBATRADE<br />
41
Wyndham also hopes to sit down<br />
with Cuban state officials to begin talks<br />
on concrete projects, an option still permitted<br />
under U.S. law prior to making<br />
any deals, said Mirabelli.<br />
Cuba already works with foreign<br />
partners in tourism through more than<br />
two dozen joint ventures and more than<br />
80 management contracts. Among the<br />
busiest foreign hotel partners: Spain’s<br />
Melia and Iberostar chains, both active<br />
on the island since the 1990s, and Canada’s<br />
Sunwing, a vertically-integrated<br />
travel company that launched its Blue<br />
Diamond hotel division in 2011.<br />
Executives from these three chains<br />
spoke on conference panels, advising<br />
counterparts to accept Cuba on its own<br />
terms, adapt, and stay on top of local<br />
operations. “As Cubans say, tocar las cosas<br />
con la mano—touch things with your<br />
hand,” said Iberostar’s Cuba country<br />
manager Mateo Caldentey Llull. While<br />
a hotel’s general manager can be an<br />
expatriate, it’s best to keep a Cuban as<br />
deputy manager and work hand-in-hand:<br />
“The GM knows where we want to go,<br />
but the deputy knows how to get there.<br />
Without that teamwork, you can’t succeed,”<br />
said Melia’s Cuba deputy director<br />
Francisco Camps Orfila.<br />
Havana preservationist: Eusebio Leal Spengler<br />
Cuban officials announced new<br />
hospitality options open to foreign<br />
partners, including marina management,<br />
group management of multiple smaller<br />
properties, and infrastructure investment<br />
in projects such as water treatment<br />
plants. State companies are also keen on<br />
proposed golf hotel/vacation home complexes,<br />
some to cost billions of dollars.<br />
But even as Cuba tourism booms,<br />
some U.S. hospitality consultants worry<br />
about too many one-time visitors,<br />
complaints about service quality, and<br />
even terms for doing business in the<br />
communist nation. “The success Cuba<br />
has had so far is indisputable,” said Clay<br />
B. Dickinson, JLL Hotels & Hospitality<br />
Group’s managing director for Latin<br />
America and the Caribbean. “But it’s<br />
still not a place where it’s really clear<br />
what the rules are.”<br />
For Mark Lunt, a principal in EY’s<br />
real estate/hospitality group, woes about<br />
airport and transport services weigh<br />
heavily. “In other countries, there’s more<br />
transparency about how to get a deal<br />
done,” Lunt told Cuba Trade.<br />
The conference also offered an inspiring<br />
example in Eusebio Leal Spengler,<br />
the long-time preservationist who<br />
led the restoration of Havana’s colonial<br />
district and helped make Habana Vieja a<br />
major tourism lure.<br />
The 74-year-old recalled how people<br />
had dismissed him as crazy for aiming to<br />
return Old Havana to glory as a lived-in<br />
city with schools, theaters and homes,<br />
with tourism as its economic base. “The<br />
important thing is to persevere,” Leal<br />
told visiting Americans and others in his<br />
beloved capital city. “Nothing is impossible<br />
here." H<br />
Cuba "Aid" continued from page 22<br />
humanitarian assistance to political<br />
prisoners and their families, and politically<br />
marginalized individuals and groups in<br />
Cuba,” as well as a $754,000 program to<br />
bring young Cubans to the United States<br />
for internships.<br />
Assistance to Cuba is governed by<br />
the 1996 Helms-Burton Act and the 1992<br />
Cuban Democracy Act, which among<br />
many other things authorize donations of<br />
food to non-governmental organizations<br />
or individuals as well as other assistance to<br />
promote nonviolent, democratic change in<br />
Cuba. Such USAID programs have long<br />
been a sore spot between Washington and<br />
Havana.<br />
Among the more controversial US-<br />
AID programs for Cuba in recent years<br />
were a program to create a Twitter-like<br />
network in Cuba called ZunZuneo, a failed<br />
effort to co-opt the Cuban hip-hop scene<br />
in hopes of sparking a youth movement<br />
to oppose the government; and an event<br />
billed as an HIV prevention workshop<br />
that sent young Latin Americans posing as<br />
tourists to Cuba who were hired to scout<br />
for “potential social-change actors.”<br />
The Associated Press first disclosed<br />
these secretive projects in 2014. The goal<br />
of ZunZuneo—Cuban slang for the<br />
sound a hummingbird makes—was first<br />
to create a program for Cubans to speak<br />
freely among themselves and then funnel<br />
political content that could create political<br />
unrest, according to AP. At its height, Zun-<br />
Zuneo, which ended in 2012, had 40,000<br />
Cuban subscribers who had no idea the<br />
network was funded by the United States.<br />
USAID disputed ZunZuneo’s political<br />
nature, insisting its goal was to connect<br />
Cubans so eventually they could engage<br />
on topics of their choice. It said only tech<br />
news, sports scores, and trivia were sent<br />
out on ZunZuneo, but a report by the Office<br />
of Inspector General found some early<br />
messages contained political satire.<br />
ZunZuneo took off just as USAID<br />
subcontractor Alan Gross was arrested in<br />
Havana in December 2009 for distributing<br />
military-grade satellite equipment in<br />
Cuba to link with the internet. Sentenced<br />
to 15 years by a Cuban court that ruled<br />
that Gross intended to undermine the<br />
government, he was released after serving<br />
five years, part of the rapprochement<br />
between the United States and Cuba that<br />
began on Dec. 17, 2014. H<br />
42 CUBATRADE JUNE/JULY 2017
THE STAR OF THE SHOW:<br />
KEMPINSKI DEBUTS IN HAVANA<br />
Cuba’s first major luxury hotel opens<br />
its doors. Is it a sign of the times?<br />
By Doreen Hemlock<br />
Roof with a View: Guests attend a<br />
pre-opening reception atop the hotel.<br />
Photos by Antonio Osa Ramirez/SAHIC Cuba<br />
Veteran hotelier Xavier Destribats strolls down the corridor<br />
of the new Gran Hotel Manzana Kempinski La<br />
Habana, straightening the furniture as he goes. He was<br />
given six months to open Cuba’s first major luxury hotel – far less<br />
than the usual 12- to 18-month time frame.<br />
But you’d hardly know Destribats has been under pressure.<br />
The French Basque exudes calm in his white linen guayabera,<br />
amiably fielding calls and talking with his team. In January, he<br />
left his job heading up 30 hotels in Europe for Kempinski—Europe’s<br />
oldest luxury hotel group—to run the group’s sole Cuban<br />
property and eventually, to develop the Kempinski brand across<br />
the Americas. It’s a huge challenge.<br />
Kempinski came to Cuba through a circuitous route: China.<br />
Cuban state tourism entity Cubanacan had teamed with a<br />
Chinese company in a Shanghai hotel, and the venture wanted<br />
a new hotel manager. The partners called in Kempinski, and the<br />
Shanghai hotel flourished.<br />
Gaviota, a separate Cuban tourism company, heard about<br />
that success, so it contacted Kempinski about managing a 246-<br />
room hotel it planned for a landmark square block in Havana<br />
Vieja that had been home to Cuba’s first European-style shopping<br />
arcade since the early 1900s.<br />
“Gaviota sought us out three years ago,” Destribats told<br />
Cuba Trade. At first, Kempinski said no. Although the Geneva-based<br />
group had pioneered luxury hotels in Russia, China,<br />
and other emerging markets such as Mongolia, Djibouti and<br />
Congo, it had no properties in the Americas and no plans to<br />
launch in the region.<br />
“But when we saw the location, the number of rooms and<br />
the opportunities, we became excited,” said Destribats. The<br />
five-story building was just the kind of site that Kempinski loves<br />
to manage. And Cuba clearly was gaining in tourism—with<br />
potential for a major luxury venue.<br />
As a private company not listed on a stock market and<br />
mainly owned by groups linked with Thailand’s royal family and<br />
Bahrain’s government, Kempinski had no market hurdles to cross.<br />
It soon signed a memorandum of understanding for the deluxe<br />
project, which was off-limits to U.S. hotel companies under terms<br />
of the embargo at that time, said Destribats.<br />
“We like to go to places where others don’t go or can’t go,” he<br />
JUNE/JULY 2017<br />
CUBATRADE<br />
45
We’re going to have a good team. The Cubans<br />
are passionate. They smile.<br />
Hotelier Xavier Destribats<br />
Photos by Antonio Osa Ramirez/SAHIC Cuba<br />
said. “It’s in our DNA.”<br />
Yet negotiations proved lengthy. It took some 22 months<br />
to finalize the management agreement signed in late December.<br />
Kempinski insisted on many details to ensure luxury standards. It<br />
recognized that neither customer service nor luxury were hallmarks<br />
of the Cuban Revolution and that staff training would be vital.<br />
Gaviota assigned a mostly young team to Kempinski to learn the<br />
luxury ropes, and the chain is keeping a training manager in Havana<br />
for a year to help staff master its standards, said Destribats.<br />
“Any luxury brand would be pioneering in Cuba,” noted<br />
Scott Berman, principal for the hospitality and leisure group at<br />
PriceWaterhouseCoopers, based in Miami. “However, there is a<br />
desperate need for quality accommodations on the island, where<br />
demand exceeds supply.”<br />
Beyond service, Kempinski had other details requiring attention,<br />
too. While the hotel group arranged for most furniture to be<br />
made in Cuba, it also needed lots of imports—from high-quality<br />
bedding to expensive wines and spirits. Some of those imports<br />
have yet to arrive on the island, said Destribats.<br />
Then, there’s the issue of the internet. Kempinski spent<br />
months working to secure internet in every room, and only received<br />
set-ups through state telecom ETECSA mid spring.<br />
What’s more, Gaviota has been working mainly with tour<br />
operators, not directly with visitors. Tour operators typically<br />
quote rates for packages, including rooms and other services. So,<br />
there’s been a learning curve, for example, to make sure individuals<br />
can be quoted room rates within hours, he said.<br />
Washington’s embargo adds further complications. Kempinski<br />
uses Oracle, Microsoft and other U.S. software for its<br />
management systems globally, but because of the embargo, can’t<br />
use those systems in Cuba. So the company is figuring out how<br />
to use other software and meld it with Kempinski’s.<br />
Like other international hotel chains in Cuba, Kempinski is<br />
also trying to find ways to speed payments for American visitors<br />
at a time when they can’t use most U.S. credit cards on the island.<br />
Such details matter when guests value Kempinski’s high<br />
standards and pay handsomely for them. In Havana, list prices<br />
start at around $400 to $650 per night for a standard room, $700<br />
to $1,500 for a suite, and $3,000 to $5,000 for the presidential<br />
suite, says Alessandro Benedetti, a Kempinksi sales and marketing<br />
manager in Spain who helped with the Cuba launch.<br />
Destribats is working day and night to reach top standards<br />
as soon as possible. He draws inspiration from the history of<br />
the company, begun in Berlin in 1897 by Berthold Kempinski<br />
as a wine store and high-end delicatessen, and known for such<br />
innovations as wine by the glass. He’s seen the group develop to<br />
now span 70 upscale hotels and residences in Europe, the Middle<br />
East, Africa, and Asia.<br />
After a soft opening in May, the Havana hotel formally<br />
opened in early <strong>June</strong>, complete with restaurants, spa, rooftop pool<br />
and other amenities. Destribats knows the challenge won’t be<br />
what managers call “hardware.” To shine as a true luxury hotel,<br />
the key issue will be human “software:” customer service and care.<br />
“We’re going to have a good team. The Cubans are passionate.<br />
They smile. They’re friendly. They don’t get angry,” Destribats<br />
said with optimism. “I think that’s a good recipe for success.”<br />
Though President Trump signed a policy directive in <strong>June</strong><br />
to ban U.S. business transactions with companies linked to the<br />
Cuban military, such as Gaviota, it's not clear whether regulations<br />
will specifically bar U.S. citizens from staying at the hotel. H<br />
Day and Night, In and Out:<br />
The Kempinski is Havana's<br />
first 5-star hotel<br />
Photos courtesy of Kempinski Hotels<br />
46 CUBATRADE JUNE/JULY 2017
BEFORE THE EMBARGO,<br />
Cuba was the top<br />
destination for our rice.<br />
Cuba Trade Magazine<br />
HOUSTON:<br />
THE INTERNATIONAL<br />
GATEWAY TO CUBA<br />
How the Texas capital of energy, transportation,<br />
and medicine is positioning itself as the gateway<br />
for trade and investment with Cuba<br />
LET’S GET THERE AGAIN.
Celebrating the Connection: Council member Karla Cisneros, Mayor SylvesterTurner, airport director Mario Diaz, and economic development director Andy Icken<br />
By J.P. Faber<br />
The entourage that left from Bush Intercontinental<br />
Airport last September—an assemblage<br />
of 28 prominent citizens from Houston City<br />
Hall, the Port of Houston, the Houston Airport System,<br />
the Texas Medical Center, and companies such<br />
as Halliburton and Siemens—was not a trade mission<br />
headed to any of Houston’s top trading partners,<br />
countries like Mexico, China, Brazil or Germany.<br />
Instead, Mayor Sylvester Turner’s first overseas<br />
trade mission was bound for Cuba.<br />
“It made a big statement that the mayor’s first trip<br />
abroad was to Cuba,” says Felix Chevalier, a Houston<br />
attorney in that delegation. “Any new market, regardless<br />
of size, presents economic potential for U.S. businesses.<br />
In the case of Cuba, they are looking for more<br />
than $9 billion of foreign direct investments in<br />
JUNE/JULY 2017<br />
CUBATRADE<br />
51
Houston: The Port City<br />
Houston attorney Felix Chevalier: Cuba presents economic potential<br />
industries like energy, healthcare, transportation,<br />
hospitality, and telecom. These<br />
are industries where Houston shines.”<br />
Indeed, the potential for trade and<br />
investment between Houston and Cuba<br />
seems almost perfectly aligned. Two of<br />
Cuba’s most pressing needs are Houston's<br />
strong suits: A wealth of expertise and<br />
equipment for energy development, and a<br />
muscular seaport and transportation hub<br />
for agriculture products.<br />
“There are a number of synergies<br />
between Cuba and Houston when it<br />
comes to energy, medicine, education, the<br />
arts—even in sports,” says Mayor Turner.<br />
“When I was there I gave the mayor of<br />
Havana my Astros baseball cap. We had<br />
more conversation about that baseball cap<br />
than anything else.”<br />
That sort of personal diplomacy, a<br />
hallmark of Mayor Turner’s sincere, eyeto-eye<br />
political style, is just what Houston<br />
wanted to bring to Havana, and the point<br />
of the mission: to begin a relationship with<br />
Cuba before the U.S. embargo against the<br />
island ends.<br />
“It takes a while to build relationship.<br />
It’s a step by step process. People have<br />
to get to know you,” says Mayor Turner.<br />
“Houston is an international city and<br />
you can’t be an international city without<br />
playing on an international stage.<br />
And you can’t do that effectively without<br />
building meaningful relationships.” As for<br />
the embargo, says the mayor: “Time will<br />
bring about a change, and those who will<br />
prosper will be those who are prepared for<br />
that moment.”<br />
For Houston, the relationship with<br />
Cuba is what in sports vernacular is called<br />
the long game. Maybe so, says Texas energy<br />
consultant Lee Hunt. But with enormous<br />
potential reserves under Cuba’s land and<br />
coastal waters, he says, “there is a lot of<br />
need in Cuba in their oil fields, for a lot of<br />
energy services… What they understand is<br />
loyalty. If you go help Cuba, even symbolically,<br />
at a time when help is not easy to get,<br />
the reward will be there when the opportunity<br />
arises.”<br />
THE PORT CITY<br />
Beyond the particular opportunities for<br />
individual firms and even whole industries<br />
in Houston, Cuba fits into the city’s grand<br />
strategy to position itself as the transportation<br />
and shipping hub between Latin<br />
The Port of Houston<br />
Cargo handled annually:<br />
163 million tons<br />
Number of jobs generated:<br />
652,000<br />
U.S. rank for export cargo: No. 1<br />
Annual tax revenue local & state:<br />
$5 billion<br />
52 CUBATRADE JUNE/JULY 2017
54 CUBATRADE JUNE/JULY 2017<br />
At some point in time<br />
you have to break the<br />
curse.<br />
Houston Mayor Sylvester Turner<br />
An Interview with Mayor Turner<br />
Shortly after becoming mayor in January, 2016,<br />
Sylvester Turner decided that Cuba would be his<br />
first international trade mission. Since then he has<br />
been an outspoken advocate of opening up relations<br />
with the Caribbean nation. Here are excerpts<br />
of Cuba Trade’s interview with the mayor.<br />
Q: Why did you decide to lead a trade delegation<br />
to Cuba, which is still under a U.S. embargo?<br />
Once the relationship between Cuba and the<br />
United States is normalized, when the embargo<br />
is lifted, I think it’s beneficial for relationships to<br />
already have been established. Once the embargo<br />
is lifted Houston has to be well positioned to<br />
engage in international trade with Cuba.<br />
Q: What were your impressions of Cuba?<br />
Very positive. In fact, they sang 'Happy Birthday'<br />
to me three or four times, because my birthday<br />
landed right in the middle of the trip. The people<br />
are very warm, very friendly. Certainly it was as if<br />
time stopped in 1960, so there is a great need for<br />
investment in infrastructure… There is no question<br />
that with investment in the infrastructure, it is<br />
one of those places that could become an oasis, a<br />
very beautiful place.<br />
Q: What can Houston hope to get or learn from<br />
Cuba?<br />
Their education system is free. The health care<br />
delivery system is impressive. We took with us<br />
Dr. Bobby Robbins, [former head of the Texas<br />
Medical Center] and we were talking about<br />
establishing some kind of collaboration between<br />
their health care delivery system and the Texas<br />
Medical Center. So, there are some synergies that<br />
can be established in medicine as well as from<br />
an agricultural point of view, where there can be<br />
some mutual benefits as well.<br />
Q: What do you think of US foreign policy and<br />
the embargo?<br />
I think I would say to the current administration<br />
and Congress what I say to the people of Houston—the<br />
only question that I need to be asking<br />
and answering is what is in the best interests<br />
of the people of the city of Houston. And I think<br />
the question is what is in the best interest of the<br />
people of the United States. And if the answer is<br />
that it’s in our best interest for us to get past the<br />
embargo and open up those relations, then the<br />
answer speaks for itself.<br />
Q: What about those people who remain bitter<br />
about what happened during the Cuba revolution,<br />
people who lost relatives or property?<br />
I am not naive. I understand the politics, I understand<br />
the history, and I understand why the embargo<br />
was put in place in 1960. I would have supported<br />
it then. The question is, where are we now? And<br />
what should be our position going forward?<br />
Bear in mind the history that I come from as<br />
an African American. The people in my background,<br />
my ancestors, they were slaves. So do you<br />
need to hate the people who enslaved the generation<br />
before you? Do you blame their children and<br />
their children’s children, for what their grandparents<br />
or great grandparents did? Or do we recognize<br />
the wrong that was done, but also recognize<br />
that there are opportunities for the children, and<br />
their children, to build an even greater society and<br />
establish even more productive relationships? At<br />
some point in time you have to break that curse.<br />
America, the Caribbean, and the United<br />
States. With Cuba’s Port of Mariel ready to<br />
become a major deepwater transshipment<br />
point for the region, an alliance with the<br />
mighty Port of Houston only makes sense.<br />
“Above all we view ourselves as a<br />
trading city,” says Andy Icken, head of<br />
economic development for the City of<br />
Houston and a close aide to the mayor.<br />
“We also have a natural affinity for anything<br />
in the Caribbean, Central, or South<br />
America. We like to think of ourselves as<br />
the gateway to the Americas. If we start<br />
with that as an overall theme, a place that<br />
has been left behind from our gateway is<br />
Cuba, for unique reasons.”<br />
Cuba, he adds, “has significant needs<br />
that are apparent now, and much of the<br />
commodities and other things [needed]<br />
are what Houston is known for, or else<br />
come through our port.”<br />
Today the Port of Houston is the second-busiest<br />
U.S. port in terms of tonnage,<br />
and the nation’s leading port in terms of<br />
foreign-bound tonnage. Originally located<br />
entirely within the city limits, the port’s<br />
facilities have since spread for miles down<br />
the channel that connects it to the Gulf of<br />
Mexico. On its banks are more than 150<br />
companies, with everything from oil refineries<br />
to factories for energy equipment—<br />
another advantage the Port of Houston<br />
has over its competitors vis-à-vis Cuba.<br />
“I think there are opportunities for<br />
[shipping] agricultural produce—grain,<br />
rice, beef, chicken—and of course petrochemicals,<br />
oil, and gas,” says Port of Houston<br />
Commissioner Dean Corgey, another<br />
member of the mayor’s mission. “But there<br />
is also what’s called project cargo, such as<br />
oil and gas equipment, power plants, water<br />
treatment facilities, sewage plants, things<br />
of that nature. There is a lot of manufacturing<br />
out there [along the channel] of<br />
those type of things, and it seems to me<br />
they are going to have to redo everything<br />
down there [in Cuba].”<br />
Corgey says Houston should also be<br />
the leading candidate for U.S.-Cuba trade<br />
tonnage because of its diversity. While<br />
some ports are strong in particular categories—Miami<br />
for container cargo, for example,<br />
or New Orleans for petrochemicals<br />
and bulk agriculture products—Houston,<br />
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The Air Link<br />
The Houston Airport System is a key part of the city’s<br />
transportation network. It could also be a part of<br />
Cuba’s system.<br />
“The international component [of the Houston<br />
Airport System, or HAS] is tremendously<br />
important,” says Mario Diaz, director of aviation for<br />
HAS. “Houston is one of only two cities in the U.S.<br />
that has two international airports inside its city<br />
boundaries.”<br />
Just as importantly, especially for Cuba, is<br />
that while Houston is a connecting point to both<br />
Europe and Asia, “we are the international portal<br />
to all Latin America,” says Diaz. “Cuba is a major<br />
developing opportunity in Latin America, so we<br />
believe it is important to develop that relationship<br />
with an air bridge.”<br />
So far, that air link consists of one weekly<br />
flight to Havana by United Airlines—a route that's<br />
doing so well that United has now applied for<br />
daily service between the two cities.<br />
For Diaz, however, the mission to connect<br />
Houston with Cuba has larger implications.<br />
Besides operating its three airports in<br />
Houston, the HAS corporate development system<br />
has now helped construct and operate several<br />
airports in Latin America, including those of San<br />
José, Costa Rica and Barranquilla, Colombia. Diaz<br />
says the most dramatic was the airport in Ecuador’s<br />
capital Quito, which opened in 2013.<br />
56 CUBATRADE JUNE/JULY 2017<br />
Aviation director Mario Diaz: We can help rebuild Cuba's airport system<br />
“It is amazing the impact an airport can have,<br />
not only for a city but a nation,” says Diaz. “Up<br />
until that time [Quito] didn’t have access to Asia or<br />
Europe. Now you can see an Emirates 777 bringing<br />
flowers back to the Middle East.”<br />
Houston would like to do the same for Cuba.<br />
“We would love the opportunity to help the government<br />
of Cuba to develop the José Marti International<br />
Airport in Havana,” says Diaz, who has discussed<br />
the offer with Cuba’s ambassador to the U.S., José<br />
Ramón Cabañas. After energy independence and<br />
internet access, Diaz considers such infrastructure<br />
development to be Cuba’s top priority.<br />
“If the country is going to develop its<br />
manufacturing base, you need the infrastructure<br />
to transfer the raw material, personnel, and products,”<br />
Diaz says. He envisions a complete upgrading<br />
and expansion of José Marti International, from<br />
adding new lighting and navigational systems, to<br />
replacing terminals and creating concentric rings<br />
of cargo facilities and industrial parks. He even<br />
foresees a light rail system linking Jose Marti to<br />
central Havana.<br />
“This is a very general plan that has worked<br />
in many other places around the world,” says Diaz.<br />
“It’s not just what they need. It’s what they want.”<br />
partly as a result of its size, moves virtually<br />
every type of cargo. And that same size<br />
means it can support regular shipping<br />
schedules.<br />
“If you are going to have good commercial<br />
service you need regular service<br />
you can depend on. It sounds simpler than<br />
it is,” says Corgey. “You have to make sure<br />
you can get down there to deliver that cargo,<br />
guaranteed. That is something Houston<br />
can do. And with that back and forth<br />
on a regular basis, it produces jobs down<br />
there as well as here… We can structure<br />
deals that are mutually beneficial for both<br />
countries.”<br />
THE INTERNATIONAL CITY<br />
Beyond providing the foundation for its<br />
global trade relationships, the Port of<br />
Houston was a historical game changer<br />
for the city's character. In many ways it<br />
defined Houston’s personality, and the<br />
swagger of its leadership.<br />
“You’ve got to go back to the history<br />
of the city,” says Icken. “Houston, without<br />
any port facilities of its own, depended<br />
on Galveston until the hurricane of 1900.<br />
The hurricane of 1900 devastated Galveston,<br />
basically eliminating it. So the leaders<br />
of Houston decided that it was time for<br />
the city to have its own port.” While<br />
Teddy Roosevelt was busy with the Panama<br />
Canal, Houston cut its own 25-mile<br />
long complex of channels to Galveston<br />
Bay and the Gulf of Mexico. It opened<br />
in 1914, three months after the canal.<br />
Both were officially opened by President<br />
Woodrow Wilson.<br />
The port not only allowed the city to<br />
prosper. It gave it a global outlook.<br />
“In some sense, internationalism<br />
has always been a part of Houston,” says<br />
Matthew Shailer, the city’s director of<br />
trade and international relations. “We<br />
developed from the very beginning with<br />
an international port and goods being<br />
shipped through Houston. It was agriculture<br />
in the late 19th century—cotton,<br />
sugar, rice—and later oil and oil equipment.<br />
The international element has<br />
always been there.”<br />
What has arrived later on was a truly<br />
From Houston to DC to Havana…<br />
Experience.<br />
Results.<br />
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x
Economic development head Andy Icken: We are a trading city<br />
Senior BP counsel Yuliya Marcer: Legal systems need to converge<br />
Partnership CEO Bob Harvey: Houston needs to be global<br />
Texas Medical Center CEO William McKeon: Time to collabrate<br />
cated manufacturing, aerospace firms, and<br />
medical research, the jobs that needed<br />
filling were for engineers, scientists, and<br />
doctors. “These were filled by Asians and<br />
Africans with much higher levels of education<br />
than Anglos,” says Klineberg. Even<br />
the great stream of Latin immigration,<br />
much of it looking for blue-collar jobs<br />
requiring little education, brought with it<br />
an educated elite.<br />
Bob Harvey, president and CEO of<br />
the Greater Houston Partnership, sites a<br />
Brookings Institution report that identifies<br />
19 “knowledge capitals” around the world,<br />
recognized for innovative products and<br />
services, of which Houston is one. “You<br />
are a seeing a migration of talent to these<br />
knowledge centers,” he says. “Cities need<br />
to lose their provincial nature to be more<br />
global, to be more diverse, to have the<br />
personal connections between their city<br />
and cities around the world.”<br />
It is that combination of intellectual<br />
capital and international reach that<br />
international metropolis and population.<br />
“Houston was an international city early<br />
on because of oil and the ship channel.<br />
But it was Anglos here doing the commerce,”<br />
says Richard Klineberg, a professor<br />
at Houston’s Rice University and<br />
founding director of the Kinder Institute<br />
for Urban Research.<br />
For 36 years, Klineberg has researched<br />
Houston’s demographics. His<br />
conclusion: “Houston is now the most<br />
diverse city in America. All of America<br />
will look like Houston looks today in 25<br />
years.”<br />
While this is partly the result of<br />
geography, what really created Houston’s<br />
international community was a shift in<br />
the economy, says Klineberg. “No one<br />
planned it, no one expected it,” but in the<br />
wake of the 1982 collapse of the oil boom<br />
“all the growth was propelled by an influx<br />
[of immigrants] from around the world.”<br />
With Houston augmenting energy<br />
production and shipping with sophistimakes<br />
Houston such a potent potential<br />
trade and investment partner with Cuba.<br />
Houston also shares deep historical bonds<br />
with the island.<br />
“The connection between the Gulf<br />
of Mexico and Cuba since colonial times<br />
are very important. Don’t forget that the<br />
Spanish conquest of Mexico was launched<br />
from Cuba, and that Texas used to be part<br />
of Mexico,” says Dr. Luis Duno-Gottberg,<br />
chair of the Department of Spanish,<br />
Portuguese and Latin American Studies<br />
at Rice University. “People think of us as<br />
apart from the Caribbean but the connections<br />
historically are tremendous. Before<br />
Cuba existed as Cuba, and Mexico as<br />
Mexico, this area was connected.”<br />
Today that connection is being tangibly<br />
tightened. Among the few air routes<br />
to Cuba outside of Florida and New<br />
York approved by the U.S. Department of<br />
Transportation is a weekly United Airlines<br />
flight between Houston and Havana. That<br />
route has done so well that United has<br />
Our diversity is our strength, and opening doors<br />
to Cuba is another way to expand what is already<br />
a richly diverse community<br />
applied to expand to daily service.<br />
“That route is performing exactly as<br />
we expected,” says Darrin Hall, United’s<br />
Houston-based director of corporate and<br />
government affairs. “We are pleased with<br />
both the United service out of Houston and<br />
Newark, and in Houston so much as that<br />
we are looking to expand United’s offering.”<br />
Altogether, United offers 91 daily<br />
non-stop flights to 52 destinations in Latin<br />
America and the Caribbean. “Houston<br />
will be an important gateway for service to<br />
Havana, because it will directly connect 20<br />
markets across the central U.S. with just<br />
one stop,” says Hall.<br />
William McKeon, CEO of Texas Medical Center<br />
VALUE-ADDED MEDICAL RESEARCH<br />
Like the over-sized ambitions of the Port<br />
of Houston, the Texas Medical Center<br />
began with a big vision—118 acres purchased<br />
in 1945, initially for the construction<br />
of a 1,000-bed Naval hospital. Today<br />
it is home to 54 medical institutions<br />
that include 21 hospitals, eight research<br />
institutions, and four medical schools.<br />
TMC receives more than 3,000 patients<br />
a day and more than eight million a year,<br />
including 18,000 international patients.<br />
TMC staff, including then CEO Dr.<br />
Robert Robbins, visited Cuba with Mayor<br />
Turner, and since then the center's doctors<br />
and researchers have been exploring ways<br />
of collaborating with Cuba’s health system<br />
and biopharmaceutical institutions.<br />
“The medical center has been here<br />
for 70 years and it is now the biggest<br />
medical center in the world,” says William<br />
McKeon, TMC’s new CEO and an<br />
advocate of exploring relations with Cuba.<br />
“We have a highly diverse, educated talent<br />
base. Our diversity is our strength, and<br />
opening doors to Cuba is another way to<br />
expand what is already a richly diverse<br />
community.”<br />
The TMC expands by leasing acreage<br />
to new institutions for $1 a year; these<br />
new schools, hospitals, or research labs<br />
become members of the center and<br />
subsequently share in maintenance fees<br />
for things like road maintenance, lighting<br />
and security. “Whereas most cities would<br />
have fragmented hospitals across a major<br />
metropolis, here we have physicians in<br />
oncology, neurology, orthopedics, and so<br />
58 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
59
The Medical Link<br />
Of all the facilities at the Texas Medical Center, few<br />
show more potential of linking with Cuba than Baylor’s<br />
School of Tropical Medicine<br />
The first thing that Dr. Peter Hotez will tell you<br />
about working with Cuba in the field of tropical<br />
medicine is that is has already been done, and<br />
rather famously. When U.S. forces occupied Cuba<br />
after the 1898 Spanish-American War, Army physician<br />
Walter Reed confirmed the work of Cuban Dr.<br />
Carlos Finlay to solve the cause of yellow fever.<br />
“Dr. Finlay had this fantastical idea that<br />
yellow fever was transmitted by mosquitoes,” says<br />
Dr. Hotez, dean of the Baylor College’s National<br />
School of Tropical Medicine. Reed’s collaboration<br />
with Finlay was so successful it led to the<br />
resumption of work on the Panama Canal, were<br />
previously 10 percent of the laborers died each<br />
year from insect born diseases.<br />
“More than 100 years later we could be<br />
looking at a resumption of [U.S.-Cuban] relations<br />
in tropical medicine,” says Dr. Hotez. “The National<br />
School of Tropical Medicine is unique, the only<br />
one of its kind in North America. One of the few<br />
other places with centers of excellence for this is<br />
in Cuba.”<br />
These include the Kouri Institute of Tropical<br />
Medicine, and the Finlay Vaccine and Serum<br />
Institute, both in Havana.<br />
As Dr. Hotez sees it, the United States and<br />
Cuba share three areas of potential collaboration:<br />
60 CUBATRADE JUNE/JULY 2017<br />
Dr. Peter Hotez: Looking for a resumption of relations in medical research<br />
in clinical tropical medicine; in epidemiological<br />
investigation and surveillance, and in vaccine<br />
development for neglected diseases.<br />
“We currently work with centers all over<br />
Latin America,” says Dr. Hotez, including extensive<br />
programs in Mexico and Honduras. “We would<br />
welcome [Cuba] as a potential partner.”<br />
Adds Dr. Maria Elena Bottazzi, assistant dean<br />
for the school, “Some of these [collaborations]<br />
are for clinical research looking at the wellbeing<br />
of populations, others for building capacity to<br />
produce vaccines for tropical diseases. They learn<br />
from us and we learn from them.”<br />
While the school has had contact with<br />
Cuban scientists, and at least one faculty member<br />
has gone to Cuba, “clearly, lifting some of the<br />
restrictions would make it easier,” says Bottazzi.<br />
As it is, by an odd sort of collaboration the school<br />
has developed a better understanding of leishmaniasis,<br />
a disease leading to non-healing skin<br />
ulcers: Four Cubans who migrated to Houston<br />
via the jungles of Central America were treated<br />
at Baylor.<br />
“The message is that we could yet explore<br />
advances in tropical medicine together,” says<br />
Dr. Hotez. “Our vaccines could have commercial<br />
interest as well.”<br />
on, all of them on the same campus, like a<br />
university,” says McKeon. “The collision of<br />
their minds is what makes this an extraordinary<br />
center.”<br />
With Cuba’s prowess in advanced<br />
drug development, and U.S. regulations<br />
now permitting Cuba to test and market<br />
its drugs in the U.S., McKeon envisions<br />
building a “bio bridge” between the two<br />
countries, similar to what TMC has done<br />
with Australia, where top innovative companies<br />
are invited to set up shop in the<br />
campus incubator.<br />
“I think that is a great model for<br />
Cuba,” says McKeon. “It allows physicians<br />
[and researchers] with innovations<br />
to bring those innovations to market and<br />
get them supported. We provide all the<br />
services and don’t take any cut of their<br />
equity. We like it because it just adds to<br />
the diversity of the campus.”<br />
Another potential area of collaboration<br />
lies with the Cuban health-care<br />
delivery system, says Arun Rajani, head<br />
of Baylor College of Medicine’s global<br />
initiatives program. Baylor has developed<br />
modular health care facilities—fully outfitted<br />
high-tech shipping containers—that<br />
can be deployed anywhere.<br />
“Cuba has a well-developed physician<br />
work force,” says Rajani. “We at Baylor<br />
are experts in guiding and training, but we<br />
cannot provide human resources overseas.<br />
Cuba exports its doctors, so it might be a<br />
good opportunity for us to provide the facilities<br />
while local Cuban doctors provide<br />
the services.”<br />
All across the TMC campus, various<br />
institutions could interact with Cuba’s<br />
biomedical industry, from Baylor’s School<br />
of Tropical Medicine (see sidebar) to MD<br />
Anderson, the largest U.S.cancer research<br />
institute (Cuba has highly developed<br />
cancer drugs).<br />
THE ENERGY PLAY<br />
Even considering the value of Houston’s<br />
port and medical facilities, few areas offer<br />
the kind of explosive growth possibilities as<br />
does collaboration in the energy sector. No<br />
one knows just how much oil lies beneath<br />
Cuba and its coastal waters, but billions of<br />
barrels are potentially at stake—as well as<br />
hundreds of millions of dollars in support<br />
services.<br />
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It’s not just the expertise. As a hub for the transport<br />
of oilfield products, we are unparalleled<br />
Houston by Numbers<br />
“The oil reserves in Cuba are unproven.<br />
They have had mixed results [testing].<br />
But the technology upgrade that is needed<br />
is phenomenal,” says Jonathan Newton, a<br />
partner in the Houston office of Baker &<br />
McKenzie who traveled with the mayor<br />
to Cuba. “I think oil and gas companies<br />
are interested in production—the clichéd<br />
people who take it out of the ground. And<br />
there is a lot of money in that. But there<br />
is also lots and lots of money in the whole<br />
stream of it, the oil field equipment and<br />
service providers, and all those folks see<br />
that opportunity.”<br />
While Newton thinks that it’s still a<br />
long way off, “In a best-case scenario you<br />
can see a pipeline going in between Cuba<br />
and the U.S. It’s only 90 miles after all.”<br />
Yuliya Marcer, the Houston-based<br />
senior counsel for global projects at petroleum<br />
giant BP, notes that 4,800 energy-related<br />
companies have a presence in the city,<br />
including nine of the top 25 publically<br />
traded energy companies—such as Chevron,<br />
ExxonMobil, and Shell. In addition,<br />
eight out of ten global oil companies have<br />
offices in Houston.<br />
“Houston has been for decades—and<br />
even more so now—the energy capital<br />
of the United States,” she says. “For BP,<br />
Houston is now our largest presence in<br />
the work, more than the UK. We have the<br />
most employees here.”<br />
Among other things, the presence of<br />
these firms has spawned a vast network<br />
of international lawyers in Houston,<br />
specialists who understand sanctions,<br />
trade restrictions, export control issues,<br />
anti-money laundering regulations, and<br />
the like. “Houston has a very deep bench<br />
of those kinds of lawyers, particularly in<br />
energy,” says Marcer, who currently chairs<br />
the international section of the Texas Bar.<br />
Marcer says she is “cautiously optimistic”<br />
about doing business with Cuba.<br />
“Even with sanctions aside, however, we<br />
Lee Hunt, Houston energy consultant<br />
are still looking at two very different legal<br />
systems. So, we still must figure out how<br />
to work together to allow businesses to<br />
develop and achieve their goals. There are<br />
still a lot of questions to be answered.”<br />
Regardless of the details, says consultant<br />
Lee Hunt, the affinities are compelling.<br />
“Everything you need to efficiently<br />
run an oil field is manufactured and inventoried<br />
in Houston,” says Hunt, whose<br />
firm Hunt Petty LP advise major oil<br />
firms. “It’s not just the expertise. As a hub<br />
for the transport of oilfield products, we<br />
are unparalleled.” That includes the ability<br />
to respond rapidly to oil spills and other<br />
crises in the gulf, “because everything is<br />
staged and mobilized here for international<br />
distribution.”<br />
Population<br />
Residents of City of Houston: 2.3 million<br />
Residents of Houston MSA:<br />
6.7 million<br />
Rank in population as a U.S. city: 4 th largest<br />
Number of Houstonians foreign born: 25%<br />
Race/Ethnicity of Houston MSA<br />
Anglo 37.3%<br />
Hispanic 36.5%<br />
Black 16.9%<br />
Asian 7.5%<br />
Global Presence<br />
Number of foreign consulates: 90+<br />
Number of foreign banks: 19<br />
Number of foreign chambers: 35<br />
Firms with foreign ownership: 1,000<br />
Economy<br />
Current Houston MSA GDP:<br />
$500 billion<br />
Number of Fortune 500 HQs: 24<br />
Number of Engineers & Architects: 87,500<br />
Number of manufacturing jobs: 220,000<br />
The Houston Airport System<br />
Number of Airports: 3<br />
Passengers (2015):<br />
55 million<br />
Number of jobs generated:<br />
Contribution to local economy:<br />
230,000<br />
$27 billion<br />
The Texas Medical Center<br />
Size of all campuses:<br />
1,345 acres<br />
Number of medical institutions: 54<br />
Annual patient visits:<br />
8 million<br />
Annual international patients: 18,000<br />
Sources:<br />
The Greater Houston Partnership<br />
The Kinder Institute for Urban Research<br />
The Port of Houston<br />
The Houston Airport System<br />
The Texas Medical Center<br />
62 CUBATRADE JUNE/JULY 2017
The Energy Link<br />
It may take a lifting of the embargo to fully engage<br />
Cuba’s energy sector, but cracks in the regulations<br />
offer opportunities even now<br />
“Houston is the oilfield technology capital of<br />
the world,” says Texas energy consultant Lee Hunt.<br />
“Everything you need to efficiently run an oil field<br />
is manufactured and inventoried in Houston.”<br />
Normally that would mean lots of contracts<br />
with Cuba, where substantial oil reserves are<br />
buried underground and offshore. But keeping U.S.<br />
energy companies out of that market is a hallmark<br />
of Washington's embargo. Cuba has been consistently<br />
hobbled by a lack of access to state-of-theart<br />
equipment, even when dealing with willing<br />
foreign companies.<br />
“I’ve talked to a lot [of foreign companies],”<br />
says Hunt. “They can buy embargo compliant<br />
equipment out of China, or other places, but the<br />
quality is not there. American [energy] companies<br />
have been so aggressive in buying up technology<br />
companies that everything they [foreign firms]<br />
want to buy has an American component.”<br />
And until recently, any firm using oil-drilling<br />
gear with more than 10 percent of American components<br />
could be fined for violating U.S. sanctions.<br />
That has now changed, as have other regulations<br />
under the Obama administration, providing<br />
what Hunt sees as opportunities for Houston oil<br />
companies. First and foremost are service and<br />
equipment sales for pollution control.<br />
According to Section 746.2 of the U.S.<br />
64 CUBATRADE JUNE/JULY 2017<br />
Energy consultant Lee Hunt: The time to negotiate with Cuba is now<br />
Commerce Department's Export Administration<br />
Regulations, exceptions to the embargo include<br />
“items necessary for the environmental protection<br />
of U.S. and international air quality, waters and<br />
coastlines…”<br />
That, says Hunt, opens the door. “Frankly, at<br />
least 50 percent of everything on a drilling project<br />
is for prevention of pollution and contamination.”<br />
So far, Houston’s oil companies aren’t jumping<br />
at the bait. “They are compliance oriented,<br />
they know what the law was, but they aren’t<br />
keeping up with the little commercial openings,”<br />
says Hunt. Even when they are, they are hesitant<br />
to act prior to seeing what the Trump administration<br />
policy will be for Cuba.<br />
That shouldn't stop Houston’s energy companies<br />
from negotiating with Cuba in anticipation of<br />
the embargo's end, however, legal under U.S. law<br />
as long as no concrete action is taken. “You can<br />
even sign contracts with the Cuban government<br />
or Cuban agencies, they just cannot be executed<br />
as long as the embargo is in place,” says Hunt.<br />
That sort of future focus is the best posture<br />
for Houston’s energy sector, says Hunt. “For the<br />
Houston guys I talk to, the metaphor that works<br />
is ‘a long putt with a slow ball,’” he says. “Nobody<br />
is in it for the money at this point. It’s all about<br />
occupying the space.”<br />
Moving beyond oil to natural gas,<br />
Houston is equipped there as well. Houston-based<br />
MODEC International, Inc.,<br />
for example, builds and operates floating<br />
production vessels and floating power<br />
vessels that employ natural gas.<br />
“What MODEC is working on, and<br />
what we have spent a couple of million<br />
dollars on in research, is a floating barge<br />
powered on natural gas,” says Sam Webb,<br />
a project development manager for the<br />
company. “I think what Cuba needs is a<br />
natural gas power plant, instead of relying<br />
on diesel and heavy oil. We have the capability<br />
of bringing a floating power plant<br />
that can also desalinate water.”<br />
Webb has visited Cuba twice, once<br />
with Texas Gov. Greg Abbott before the<br />
mayor’s visit, and earlier this year with<br />
a mission organized by attorney Felix<br />
Chevalier.<br />
Chevalier, who many consider Houston's<br />
unofficial ‘soul of Cuba,’ is the son of<br />
Cuba parents who left the island before<br />
his birth. Among the many Cuba-related<br />
projects he's working on is a Houston<br />
leadership academy for young Cuban<br />
entrepreneurs, and trade missions to take<br />
clients beyond Havana to visit regional<br />
port cities, mining operations, industrial<br />
complexes, and agriculture centers. But it<br />
is in energy where Chevalier sees the most<br />
immediate impact, especially regarding<br />
influencing U.S. policy toward the island.<br />
“Generally speaking, I’ve found business<br />
in Houston to be open to the idea of<br />
a trade relationship with Cuba,” he says<br />
“However, uncertainty surrounding the<br />
administration’s plans for Cuba have put a<br />
bit of a damper on the progress made over<br />
the last couple of years.” Consequently,<br />
Chevalier plans to launch an association<br />
that advocates for trade with Cuba on<br />
behalf of the energy industry. “Similar<br />
to what we see in agriculture, I think a<br />
sector-by-sector approach to highlighting<br />
the financial impact of trade with Cuba<br />
may be the most effective way to move the<br />
chains on Cuba policy,” he says.<br />
Until that time, however, it may take<br />
the collective effort of leaders like Mayor<br />
Turner to move the process of engagement<br />
forward.<br />
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with a new addition in heart care.<br />
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With more than 10,000 open-heart procedures and 2,500 valve<br />
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If the leaders of Houston have anything<br />
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those connections will only grow stronger.<br />
That was a big aim for Mayor Turner’s<br />
trip to Cuba. As Icken puts it, “The mayor<br />
made a clear point that this is not just<br />
a one-time opportunity.” He also did it<br />
with a style that has been the hallmark of<br />
his political career, his enormous sincerity<br />
and the authenticity of his own journey.<br />
“He is very present in all his meetings.<br />
He is there with you. He really wants to<br />
understand where you are coming from,”<br />
says Shailer, something that comes from<br />
the Mayor’s own personal struggle as the<br />
youngest of seven children in a family that<br />
was “far from affluent.” By sheer determination<br />
and effort he became valedictorian<br />
of his high school’s first integrated class<br />
and ultimately graduated Harvard Law<br />
YUCATAN<br />
HOUSTON - CUBA CONNECTIONS<br />
School.<br />
“Cuba could appreciate that,” says<br />
Shailer. “It is a very hardworking country<br />
that believes what you put into people is<br />
what you can get out of them, one reason<br />
they have such a strong education system.”<br />
Indeed, Mayor Turner is a man who<br />
knows how to interact with people, and<br />
how to personalize any encounter.<br />
“He made some friends in Cuba,<br />
that is for sure. And that's what this was<br />
about,” says Dr. Laura Murillo, president<br />
and CEO of the Houston Hispanic<br />
Chamber of Commerce and another<br />
memer of the mayor’s delegation.<br />
"Relationships are built over time,<br />
and on a person-to-person basis," says<br />
the Partnership's CEO Harvey, whose<br />
organization co-sponsored the trip. Like<br />
other Houston leaders, Havey sees only an<br />
upside for a Houston-Cuba connection.<br />
"I think of Cuba just as a great opportunity.<br />
We think that the relationship<br />
between the U.S. and Cuba will improve,<br />
and we see a natural kinship there with<br />
Houston," he says. That kinship includes<br />
Houston's strong Latin heritage, its<br />
healthcare system, its emphasis on education,<br />
and above all, its energy expertise.<br />
Indeed, personal diplomacy aside, the<br />
mayor was also in Cuba to ask a specific<br />
favor for that sector.<br />
“One of the reasons we went to Cuba<br />
was because of the World Petroleum<br />
Conference in 2020, which we wanted for<br />
Houston," says Mayor Turner. Cuba, it<br />
turns out, is one of the countries that had a<br />
vote at the conference executive committee<br />
meeting in Bahrain in December.<br />
Houston beat Vancouver for the<br />
event, which is expected to draw 10,000<br />
visitors and have an economic impact of<br />
$60 million to $80 million. Says the mayor:<br />
“I thank Cuba for their vote.” H<br />
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66 CUBATRADE JUNE/JULY 2017
The premier gateway to Latin America<br />
opens even wider for Cuba.<br />
market report<br />
The<br />
Havana<br />
Nestlé<br />
Niche<br />
How the Swiss multinational has<br />
thrived in Cuba while protecting<br />
itself against the entry of U.S.<br />
products<br />
IAH now offers nonstop service to HAV.<br />
By Emilio Morales<br />
Cuba may lie only 90 miles from the U.S. shoreline, but until recently it seemed a world away for most travelers. Bringing this<br />
world a bit closer, Houston’s George Bush Intercontinental Airport (IAH) is now offering weekly nonstop service to Havana.<br />
IAH already serves 53 destinations nonstop across Latin America and the Caribbean, making it the premier gateway to Latin America.<br />
With this new flight, IAH ranks as just one of 10 U.S. airports with scheduled service to Cuba and one of two airports west of the<br />
Mississippi River with service there. The gate is wide open to a new world of opportunity for exploring this intriguing island nation.<br />
For more information, contact the Houston Airport System at HASAirService@houstontx.gov or +1-281-233-3000.<br />
Nestlé SA, the world's largest food company,<br />
intends to expand production by investing<br />
$60 million in Cuba’s Mariel Special Development<br />
Zone (ZED Mariel). The investment<br />
constitutes a strategic move by Nestlé to position<br />
itself in the Cuban market before the arrival of its<br />
U.S. competitors.<br />
fly2houston.com<br />
JUNE/JULY 2017<br />
CUBATRADE<br />
69
Brand Command: Nestlé products in Cuba include Ciego<br />
Montero sodas and water, and its famous ice cream<br />
Taking advantage of Washington’s embargo,<br />
which for more than half a century has<br />
prohibited U.S. companies from investing<br />
in the island, Nestlé’s planned facility will<br />
produce coffee, biscuits, and cooking<br />
products. The firm has also extended its<br />
current contract by 20 years to expand<br />
the company’s existing factories in<br />
Cuba to produce ice cream, water, and<br />
carbonated soft drinks.<br />
The Swiss multinational, active<br />
on the island since the mid-1990s,<br />
now joins other large non-U.S.<br />
investors such as Unilever ($35 million)<br />
and Brascuba ($100 million)<br />
that are betting on the ZED Mariel<br />
(see story on page 74).<br />
In the beginning: mineral water,<br />
soft drinks, and ice cream<br />
Nestlé entered Cuba’s food and beverage<br />
market in 1999, when its Nestlé Waters<br />
unit bought out San Pellegrino’s share of<br />
Los Portales—a joint venture between<br />
the Italian sparkling water producer<br />
and Coralsa, a unit of Cuba’s Ministry<br />
of Food Industry (MINAL).<br />
Since then, Nestlé has managed the<br />
company’s brand strategy, production<br />
and marketing.<br />
Los Portales bottles carbonated<br />
soft drinks under the Ciego<br />
Montero brand (since 1994) as well<br />
as mineral water under the Ciego<br />
Montero and Los Portales brands<br />
(since 2002). Ciego Montero, the<br />
company’s top brand, controls 92<br />
percent of Cuba’s total mineral<br />
water sales, while sales of Ciego<br />
Montero’s 11 flavors of soft drinks<br />
exceed those of imported Coca-Cola<br />
and Pepsi.<br />
In 2015, Los Portales exceeded<br />
100 million CUC in revenues—<br />
roughly US $100 million. Production<br />
reached 200 million cans and<br />
58 million plastic bottles that year,<br />
though that was still not enough to<br />
satisfy demand.<br />
Nestlé also makes ice cream for the<br />
local market, under the Coralac SA joint<br />
venture formed in 1997 between Nestlé and Coralsa. Initially, the<br />
venture imported ice cream from Mexico, then built its own plant<br />
in 2003. But it wasn’t easy breaking in, since Cubans were long<br />
accustomed to their beloved local brand, Coppelia. The domestic<br />
dollarized economy was another challenge; back then, the average<br />
Cuban citizen’s purchasing power in dollars was very low. As a<br />
result, the market favored low prices over quality.<br />
At first, Nestlé produced only three flavors: chocolate,<br />
strawberry, and a “seasonal” flavor that rotated between almond,<br />
orange-pineapple, and vanilla. Nestlé refrigerators filled with<br />
ice-cream products helped promote the brand’s image in Cuban<br />
supermarkets; likewise, Coralac had its own network of refrigerated<br />
trucks to distribute products in retail chains and tourist<br />
outlets. Today, Nestlé is Cuba’s ice cream leader, yet—as is the<br />
case with mineral water and soft drinks—domestic production is<br />
not sufficient to cover demand.<br />
Coffee, cookies, and cooking products<br />
Nestlé’s new project targets coffee, cookies, and cooking products—all<br />
in high demand in Cuba. Local producers now face<br />
shortages of raw materials and the financing needed to boost<br />
production, often resulting in prolonged absences of products<br />
in Cuban retail chains. By moving production to ZED Mariel,<br />
Nestlé takes advantage of incentives such as a 10-year tax<br />
exemption on profits and zero tax on sales during the first year of<br />
operation, rising to only 1 percent after that.<br />
Various locally produced coffee brands are now sold in Cuba,<br />
though production is unstable. The most popular brands are<br />
Café Cubitas, Serrano, Indiana, Turquino and Cristal Mountain.<br />
Cohiba Atmósfera and Montecristo, produced on a smaller scale,<br />
are mainly aimed at foreign tourists who enjoy cigars. Imported<br />
brands include Nestlé’s instant coffee, sold under the Dolca and<br />
Classic varieties. Also present in the market are Gallego (Spanish),<br />
Bahia (Brazilian) and Mokarabia (Italian), though Cuban<br />
consumers—used to the flavor of strong local coffee—don’t<br />
particularly like these brands.<br />
Black market sales of coffee arriving to Cuba—either sent by<br />
emigrants to their relatives or brought back by Cubans visiting<br />
overseas—help make up for the shortage of local coffee. The most<br />
popular brands in the informal market are La Llave, Pilón and<br />
Bustelo, ‘Cuban’ coffee produced in the U.S.<br />
Coffee production in Cuba itself has plummeted in recent<br />
years, and by 2014 accounted for just over a third of total<br />
consumption. In fact, from 2010 to 2014, the island spent an<br />
average $31.2 million a year on coffee imports, which averaged<br />
11,434 tons annually. During this period, annual domestic coffee<br />
production averaged only 5,901 tons a year—less than a tenth of<br />
the 60,000 tons of coffee Cuba produced in the 1960-61 season,<br />
when it ranked among the world’s top coffee exporters. So, for<br />
Nestlé, there is an opportunity to replace all that imported coffee.<br />
Much of the raw material Nestlé is expected to use in its<br />
Photo by Larry Luxner<br />
70 CUBATRADE JUNE/JULY 2017
future Mariel plant will come from the Cuba Mountain Coffee<br />
Company Ltd. (CMC). The British firm has contracted with the<br />
Cuban government and coffee processor Asdrúbal López to market<br />
and sell premium coffee produced in Guantánamo province.<br />
Nespresso, a Nestle subsidiary, has signed a memo of understanding<br />
with CMC to acquire coffee produced by the venture.<br />
Nestlé’s facilities at ZED Mariel will also make cookies—a<br />
consumer staple plagued by almost zero national production,<br />
little variation, and unstable supply. Cuba now imports cookies<br />
from a dozen countries including Brazil, Guatemala, Spain, Colombia,<br />
Vietnam, Chile, Costa Rica, Mexico, El Salvador, and the<br />
Dominican Republic.<br />
Besides coffee and cookies, Nestlé will also manufacture a<br />
variety of cooking products such as instant soups, condiments,<br />
and broths—widely used by cooks and food-service operators—<br />
as well as lasagnas, pastas, sauces, and other refrigerated and<br />
frozen products. At present, these products are imported, with<br />
Nestlé’s Maggi brand—especially the chicken and meat broths—<br />
quite popular among Cuban homemakers. Nestlé is also a key<br />
supplier of these products to the Cuban tourist sector, mainly<br />
restaurants in the island’s hotels.<br />
What’s driving Nestlé’s new investment?<br />
Cuba’s consumer market has exploded over the last eight years,<br />
thanks to liberalized U.S. trade policies and domestic reforms<br />
that have expanded Cuba’s self-employment sector. Four factors<br />
in particular are driving Cuban demand for food products: a<br />
jump in tourism; the growth of private food preparation businesses;<br />
the increase of cash remittances; and the burgeoning<br />
purchasing power of the Cuban people.<br />
Each of these has seen meteoric rises, beginning with the<br />
ballooning of tourist arrivals from 1.5 million in 2010 to four<br />
million in 2016. In tandem with that expansion, the number of<br />
privately run restaurants, or paladares, jumped from only 113 in<br />
2010 to 1,565 last year.<br />
People are also eating more thanks to remittances (up from<br />
$1.9 billion in 2010 to $3.4 billion in 2016) and the growing<br />
private sector, where workers earn 10 times what a state employee<br />
makes. Both have given Cuban citizens an estimated $4.8 billion<br />
worth of purchasing power in foreign currency, up from $2.6<br />
billion in 2010.<br />
All this has boosted consumption of cooking products in<br />
retail networks, since thousands of food preparation businesses<br />
need these products to make their dishes, which are gobbled up<br />
by Cuban customers as well as tourists.<br />
Nestlé knows this, and undoubtedly also benefits from its<br />
20-plus years of experience in the Cuban market. Even so, it is<br />
wary of large U.S. companies now exploring the Cuban food<br />
market. Virtually overnight, the United States has become the<br />
second largest source of tourists to Cuba, after Canada; in a few<br />
years, it could be the leader. This is a golden opportunity for U.S.<br />
food giants to market their products on the island. But for the<br />
time being, it will be European companies—especially Nestlé—<br />
that flourish in this market. H<br />
72 CUBATRADE JUNE/JULY 2017<br />
Imported vs. Locally Produced Coffee in Cuba, 2010-2014<br />
Coffee 2010 2011 2012 2013 2014 Average<br />
Imported (tons) 17,884 9,334 8,250 10,078 11,624 11,434<br />
Value ($USD thousands) 38,043 26,814 28,485 30,261 32,567 31,234<br />
National Production (tons) 4,400 6,000 7,100 N/D 6,105 5,901<br />
Source: Oficina Nacional de Estadística e Información (ONEI) and other sources.<br />
Variables that have most impacted on the growth of<br />
food demand in Cuba, 2010-2016<br />
Remittances and Purchasing Power (Millions)<br />
Tourism (Thousands)<br />
• Purchasing Power (Millions)<br />
• Remittances (Millions)<br />
Private Sector Food Processing<br />
Licenses (units)<br />
• Tourism (Thousands)<br />
• Private Sector Food Processing Licenses (M)<br />
Source: Compiled by the THCG Business Intelligence Unit from own data, data published by the<br />
National<br />
Source:<br />
Office of<br />
Compiled<br />
Statistics<br />
by<br />
and<br />
the THCG<br />
Information<br />
Business<br />
(ONEI)<br />
Intelligence<br />
and by<br />
Unit<br />
the<br />
from<br />
National<br />
own<br />
Taxation<br />
data, data<br />
Administration<br />
published<br />
(ONAT),<br />
by the National Office of Statistics and and Information other sources. (ONEI) and by the National Taxation<br />
Administration (ONAT)<br />
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THE PROMISE OF MARIEL<br />
Cuba’s play to develop the next great shipping hub is an<br />
ambitious call to foreign investors. It has momentum,<br />
but still needs more capital.<br />
By Nick Swyter<br />
Photos by Jon Braeley<br />
Ready to Ship: Containers recently<br />
unloaded at the Port of Mariel<br />
74 CUBATRADE JUNE/JULY 2017
Forty-five kilometers east of Havana lies Mariel—a place<br />
that gained world fame in 1980 after Fidel Castro allowed<br />
about 125,000 Cubans to leave the island through the city’s<br />
port if U.S. vessels picked them up. Nearly four decades later,<br />
Cuba seeks to use Mariel for more lucrative purposes by courting<br />
overseas investors to use its deep-water port and fledgling special<br />
economic development zone, regularly referred to as ZED Mariel.<br />
A push for more foreign investment couldn’t come at a<br />
more opportune time for cash-strapped Cuba. The island’s GDP<br />
shrank by 0.9 percent in 2016, and there are few signs it will<br />
recover this year. Venezuela, Cuba’s largest trading partner, is in<br />
economic freefall and has slashed its precious oil deliveries to the<br />
island. Revenue from Cuban medical professionals serving abroad<br />
is stagnant because of economic difficulties in Venezuela and<br />
Brazil. President Donald Trump’s new policy to limit U.S. interaction<br />
with military-controlled firms also complicates matters.<br />
As a play to kickstart its economy, Cuba is betting on Mariel<br />
becoming the next industrial and transshipping hub of the<br />
Americas. About $1 billion was committed to modernizing the<br />
port and building a container terminal that opened in 2014. Brazilian<br />
development bank BNDES provided a development loan<br />
of about $700 million—a move that drew ire at home against<br />
former President Dilma Rousseff.<br />
“It makes sense from a logistical and an economic standpoint,”<br />
said Paolo Spadoni, an associate professor at Georgia’s<br />
Augusta University who specializes in Latin American politics<br />
and economies. “The benefits are there, and they are competitive.”<br />
The fruits of that investment are already visible. Most of<br />
Cuba’s shipping container traffic has moved to Mariel, freeing up<br />
much-needed space in Havana harbor for cruise ships. Thanks to<br />
dredging, parts of the bay are 17 meters deep, making it suitable<br />
to welcome the massive ships passing through the recently expanded<br />
Panama Canal. The container terminal also has four giant<br />
Chinese-built gantry cranes for moving containers from ship to<br />
shore. And once containers reach the shore, a new railway can<br />
transport them from Mariel to Havana.<br />
Right next door is ZED Mariel, a 180-square-mile development<br />
zone that also opened in 2014 and aims to attract foreign<br />
investors by offering them tax incentives and other benefits if<br />
they set up shop there. One of the zone’s primary missions is to<br />
use foreign direct investment to domestically produce goods that<br />
76 CUBATRADE JUNE/JULY 2017<br />
Cuba has imported for decades.<br />
Now that many of Mariel’s major construction projects are<br />
complete, the area must convince foreigners it’s worthwhile to<br />
put money into a country facing tight U.S. sanctions. Hordes of<br />
trade delegations visiting Mariel over the last few years demonstrate<br />
undoubtable interest in the area. But Mariel’s port and<br />
development zone officials are well aware that interest does not<br />
always translate to investment.<br />
“We’ve had a lot of visitors,” said Armando Mina, a commercial<br />
specialist at the container terminal. “I don’t know what<br />
they have been able to do with the information we provide them<br />
here, but they’ve been here and they keep on coming.”<br />
MARIEL AS A TRANSSHIPPING HUB<br />
Geographically, Mariel is well positioned to become a transshipping<br />
hub for the Americas. It has easy access to U.S. and Mexican<br />
ports in the Gulf. Ships that use the Panama Canal to get to and<br />
from the U.S. East Coast are also likely to pass near Mariel.<br />
In addition, Mariel is physically and technologically capable<br />
of becoming a transshipping hub. While many ports in the region<br />
are deep enough to receive post-Panamax ships, Mariel is one<br />
of the few that can handle those vessels fully loaded. The port’s<br />
modern cranes make it possible to unload those ships without<br />
making them turn around.<br />
“There would be no restrictions on those ships going into the<br />
Port of Mariel.” said Brendan Barry, a partner in the South Florida-based<br />
law firm Shutts & Bowen and a board member of the<br />
Port Everglades Association. He added that one of Mariel’s perks<br />
is that it can handle ships with larger loads than Port Everglades.<br />
Mariel’s modern container terminal is also guided with<br />
valuable foreign expertise. Singapore-based PSA International,<br />
the world’s largest port operator, has been managing the terminal<br />
since 2011.<br />
Those infrastructure and administrative improvements have<br />
led to a bump in container traffic over the last three years. But<br />
the port is still operating at less than 40 percent of its capacity of<br />
about 824,000 twenty-foot equivalent units (TEUs) per year. In<br />
2014, the port handled about 160,000 TEUs, more than doubling<br />
to 330,319 TEUs in 2015, before dipping slightly to 325,319<br />
TEUs in 2016. By comparison, last year the Port of Miami han-<br />
Chinese Cranes Add Lift:<br />
Armando Mina, a commercial<br />
specialist at the container<br />
terminal
ZED MARIEL APPROVED PROJECTS<br />
COMPANY INDUSTRY COUNTRY OF BUSINESS ALREADY<br />
ORIGIN STRUCTURE OPERATING?<br />
Richmeat Food & beverages Mexico Foreign capital No<br />
Devox Caribe Paint Mexico Foreign capital No<br />
BDC LOG Logistics Belgium Foreign capital Yes<br />
BDC TEC Technology products Belgium Foreign capital Yes<br />
COI Construction Brazil Foreign capital No<br />
FIDAS Logistics Brazil Foreign capital No<br />
Profood Food & beverages Spain Foreign capital No<br />
TOT COLOR Paint Spain Foreign capital No<br />
Bouygues Construction Construction France Foreign capital Yes<br />
Womy Equipment rental Netherlands Foreign capital Yes<br />
Thai Binh Hygiene products Vietnam Foreign capital No<br />
Arco 33 Medical equipment South Korea Foreign capital No<br />
Engimov Construction Portugal Foreign capital No<br />
Autocentro ZED Logistics Panama Foreign capital No<br />
BrasCuba Cigarettes Brazil Joint venture No<br />
Teconsa Construction Spain Joint venture No<br />
Logística Hotelera del Caribe Logistics Spain Joint venture No<br />
Financiera Iberoamericana Logistics Spain Joint venture Yes<br />
Unilever-Suchel Hygiene products Netherlands Joint venture Yes<br />
CMA CGM Construction France Management contract Yes<br />
Mariel Containter Terminal Shipping Cuba Cuban capital Yes<br />
Banco Financiero Internacional Finance Cuba Cuban capital Yes<br />
Servicios Logísticos Mariel Logistics Cuba Cuban capital Yes<br />
Centro de Ingeniería Genética y Biotecnología Biotechnology Cuba Cuban capital No<br />
Deciding To Build: Wendy Miranda Borotto, director of coordination and formalities at ZED Mariel, and Andy van der Heijden, president of Womy<br />
dled over one million TEUs.<br />
Traffic at Mariel may be up this year, however, thanks to an<br />
October 2016 decision by the Obama administration to end the<br />
ban on cargo ships entering U.S. ports if they called on a Cuban<br />
port 180 days before docking.<br />
Even though Mariel operates well under capacity and uncertainties<br />
about the embargo remain, the port has a long-term<br />
plan to extend its wharf by 300 meters, and eventually by another<br />
1,400 meters—ultimately giving Mariel a capacity of 3 million<br />
TEUs per year. This dramatic expansion shows the port’s desire<br />
to establish itself as a regional transshipment hub—a transition<br />
that will be more difficult if the embargo isn’t lifted.<br />
“Even if they do not achieve the goal of three million<br />
[TEUs], it might still make a difference because it will position<br />
Cuba within the transshipment industry,” Spadoni said. “That’s<br />
really the biggest prize in the short to medium term.”<br />
Besides the embargo, several challenges stand in the way<br />
of Mariel’s lofty aspirations. Foreign companies must hire and<br />
pay workers through a government staffing agency, making<br />
labor costs higher than other countries in the region, despite the<br />
relatively low wages Cuban workers receive. The global shipping<br />
business also faces a gloomy outlook. Ever since the 2008 financial<br />
crisis, the industry has struggled to deal with overcapacity<br />
and falling freight rates. “There is a powerful worldwide crisis,”<br />
said Mina. “The boats will keep on getting bigger, but the amount<br />
of containers arriving keeps decreasing.”<br />
Mariel also faces the uphill battle of easing wariness from<br />
the business community about working with Cuba and its government.<br />
“In order for the Port of Mariel to be the transshipping<br />
port on the east side of the Panama Canal, I think there has to be<br />
78 CUBATRADE JUNE/JULY 2017<br />
more time, more comfort, and more confidence by the business<br />
community,” Barry said. “And I think that has to come from acts<br />
and behaviors from the Cuban government.”<br />
Adds Spadoni: “It will take some time for anybody to say<br />
whether that port is indeed a game-changer or not for the Cuban<br />
economy.”<br />
CUBA LOOSENS ITS RIGIDNESS<br />
A quick drive through ZED Mariel, the development zone<br />
surrounding the Port of Mariel, makes it clear that the global<br />
business community is only just starting to notice its potential.<br />
Construction crews are busy working on facilities for businesses<br />
that have already claimed their stake here, but the zone is far<br />
from sprawling. It has a few offices and temporary buildings, but<br />
most of the seaside land is untouched. “Right now we are in the<br />
launch phase,” said Wendy Miranda Borotto, director of coordination<br />
and formalities at ZED Mariel.<br />
Cuba has taken unprecedented steps to attract foreign<br />
investors to the nearly four-year-old ZED. These include 50-year<br />
contracts that can be renewed, 100 percent foreign ownership,<br />
and no tax on profits for the first 10 years of operation (and only<br />
12 percent after that). Various Cuban support services are also<br />
onsite to help investors develop their projects. More importantly,<br />
ZED Mariel has streamlined the bureaucratic procedures that<br />
have stalled investment in Cuba for decades.<br />
Andy van der Heijden, president of Dutch equipment and<br />
transportation company Womy, says those incentives influenced<br />
his company’s decision to build a $22 million facility in Mariel.<br />
Although Womy has been in Cuba since 1991, van der Heijden<br />
Wrapping It Up: Contractors<br />
work on a Womy equipment<br />
rental facility
Backhoe to the Future: Contractors building the infrastructure at the ZED Mariel<br />
Multimodal: Container leaving by road from the Port<br />
Heavy Lifting: Four Chinese-built gantry cranes move containers from ship to shore; a new railway can transport them from Mariel to Havana<br />
says “with the new development in Mariel, we got the possibilities<br />
to rent [more] equipment.”<br />
Yet while many of ZED Mariel’s incentives seem attractive,<br />
it hasn’t created the boom in investment Cuba desperately needs.<br />
So far, the zone has approved 24 projects from 11 countries,<br />
including four from Cuban state-owned enterprises. Only nine of<br />
those projects are now in operation.<br />
“On the ground you still have very little,” Spadoni said. “It<br />
raises questions of how long it will take to develop some sort of<br />
potential out of the special development zone and the overall<br />
Port of Mariel.”<br />
The approved projects demonstrate Cuba’s tepid interest in<br />
engaging in new forms of business with a wider array of partners.<br />
The zone hasn’t yet approved any projects from Venezuela, China,<br />
Canada, or even Russia—Cuba’s traditional trading partners.<br />
Instead, ZED Mariel has approved projects from Spain, Vietnam,<br />
Brazil, France, Panama, South Korea, Mexico, Belgium, Portugal,<br />
and the Netherlands.<br />
ZED Mariel has also given many projects full foreign ownership,<br />
a move largely unheard of in Cuba; 14 of the approved<br />
projects are 100 percent foreign-owned, five are joint ventures,<br />
four have 100 percent Cuban capital, and one has a management<br />
contract with a foreign firm.<br />
We have no preference between joint ventures<br />
and businesses with 100 percent foreign capital<br />
Wendy Miranda Borotto<br />
“We have no preference between joint ventures and businesses<br />
with 100 percent foreign capital,” Miranda said, adding<br />
that the only sector where ZED Mariel is more interested in<br />
establishing joint ventures than 100 percent foreign ownership is<br />
biotechnology, because of “Cuba’s potential in that sector.”<br />
Miranda said ZED Mariel isn’t picky about foreign ownership<br />
because it isn’t relevant to the zone’s goals. These include<br />
domestically producing goods that Cuba imports, creating jobs,<br />
boosting overall exports, and using clean, modern technologies.<br />
The zone aims to accomplish these goals by approving projects<br />
that fall under three “pillar industries”—advanced manufacturing;<br />
biotech and pharmaceuticals; and logistical services.<br />
One of ZED Mariel’s major obstacles is Cuba’s reputation<br />
for dragging its feet on the approval of foreign investment projects.<br />
Even though ZED Mariel is young, it hasn’t escaped this<br />
image. Van der Heijden says Womy’s application process took six<br />
to seven months, but admitted the process may have had delays<br />
because his company was one of the zone’s first applicants. “You<br />
need to be patient—decisions take longer than in Europe or in<br />
the United States,” he said.<br />
Spadoni agrees. “It all depends on how fast they want to<br />
move and their political will to accept different kinds of investment,”<br />
he said.<br />
The zone is aware of Cuba’s reputation for delays, and it has<br />
taken steps to streamline the approval process. Miranda’s job includes<br />
managing the zone’s “one-stop shop”—a single office that<br />
handles all the paperwork and approval processes for a potential<br />
investor. This office saves potential investors from communicating<br />
project plans to countless layers of Cuban bureaucracy.<br />
Miranda insists projects can be approved in 35 to 65 days,<br />
which is lightning-speed in Cuban business time. However, she<br />
said, the most tedious aspect of the approval process isn’t Cuba’s<br />
review of the project, but rather the time it takes a company to<br />
prepare the various application documents. “That’s the time they<br />
always add, which works against the approval time,” Miranda said.<br />
It’s still not clear when, or how frequently, new projects will<br />
start sprouting at ZED Mariel, and Cuban officials are tightlipped<br />
on specifics. Miranda declined, for example, to reveal any<br />
details regarding Nestlé's recent announcement that it was close<br />
to reaching a deal to build a $50-60 million factory in the zone.<br />
“We manage that information confidentially,” she said.<br />
THAT PRICKLY ISSUE<br />
No matter how modern and efficient Mariel’s port and development<br />
zone becomes, the facility still faces the daunting task of<br />
convincing businesses to invest in the blacklisted neighbor of the<br />
world’s largest economy.<br />
A Cuban trade delegation of Mariel representatives was<br />
forced to handle that conundrum when they toured U.S. ports in<br />
January. Shortly before delivering a presentation at Fort Lauderdale’s<br />
Port Everglades, Florida Gov. Rick Scott tweeted a threat<br />
to cut state funds to ports that do business with Cuba. Scott’s<br />
move effectively demolished the relevance of a pitch presentation<br />
that was already problematic, thanks to the trade embargo.<br />
Mariel’s port and development zone officials aren’t shy about<br />
criticizing the embargo, but they don’t seem hopeful it will end<br />
anytime soon. “While the blockade exists, there will always be a<br />
fear of investing and entering Cuba,” said Mina.<br />
For other officials, the embargo appears secondary to putting<br />
Mariel on the map for the rest of the world. “We are underneath<br />
an economic blockade by the United States. It still exists, and we<br />
created this zone under this scenario,” Miranda said. H<br />
80 CUBATRADE JUNE/JULY 2017<br />
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81
THE CUBA ADVISORS<br />
Cuba Trade’s Annual List of the Leading Legal and<br />
Consulting Firms For Doing Business in Cuba<br />
By Doreen Hemlock<br />
They come in all sizes, from the full-service international<br />
firm to the sole practitioner who contracts others<br />
for projects as needed. Some work on a broad range of<br />
industries, others specialize in one or two. Some operate with<br />
offices around the world, and others keep a presence in a single<br />
city or state.<br />
Say “hola” to the Cuba Advisors, law firms, and business consulting<br />
firms in the United States that assist companies in doing<br />
Cuba business. Cuba Trade magazine reached out to dozens of<br />
firms known in U.S.-Cuba business circles and sent out requests<br />
via social media for input to compile this inaugural list.<br />
For any company interested in doing business overseas,<br />
it’s wise to check with experts. Laws differ, as do regulations,<br />
licensing, and business culture. With Cuba, complications are<br />
even greater. Because of the 55-year-old U.S. embargo on Cuba, a<br />
plethora of rules, regulations, and even licenses govern what U.S.<br />
business is allowed with Cuba; many activities remain off-limits.<br />
What’s more, Cuba’s ongoing transition from a centrally planned<br />
to a mixed, state-led economy presents its own special challenges,<br />
as Cuban laws and rules evolve, according to advisors.<br />
Knowing the rules is not enough. Relationships are key, says<br />
Houston attorney Felix Chevalier whose services were recently<br />
requested by a large U.S. energy firm. The company had applied<br />
for a license to do business in Cuba but got stuck in the process.<br />
An agency had asked for information on a form, but the company<br />
didn’t have it. “The only way to get the answers is having relationships<br />
in the Cuban government,” said Chevalier, who reached out<br />
to Cuban officials he knew.<br />
The advisors have seen many U.S. companies falter in<br />
attempting business with Cuba. Among the most common<br />
mistakes: Focusing on what their U.S. business needs and wants,<br />
and not checking how Cuba operates and what Cuba needs and<br />
wants. Some also underestimate the competition already present<br />
in Cuba from Canadian, European, Asian, and other non-U.S.<br />
rivals.<br />
Some U.S. multinationals also get snagged when subsidiaries<br />
or other affiliates outside the United States do direct<br />
business with Cuba. “Companies must consider all U.S. jurisdictional<br />
‘hooks’ that could implicate U.S. law, including where<br />
foreign persons re-export U.S. origin goods or even where U.S.<br />
dollar transactions are involved,” said advisors at New Yorkbased<br />
law firm Pillsbury Winthrop Shaw Pittman LLP.<br />
Many advisors see strong opportunities for U.S. business<br />
in Cuba in those areas where U.S. law already allows, including<br />
U.S. food sales to the island, air and sea transport, and U.S.<br />
hotel management in Cuba. But the time is now to prepare for<br />
activities that could be allowed later, some advisors add.<br />
“Take advantage of the recent regulatory authorization to<br />
engage in business discussions and contract negotiations with<br />
Cuban counterparties on a contingent basis,” said Toby Moffett,<br />
co-leader of the Washington-based Cuba practice at law firm<br />
Mayer Brown. Once U.S. government approvals are needed later,<br />
such talks “may prove a very useful tool to better understanding<br />
the Cuban business environment and regulatory framework,<br />
as well as to building relationships and making strategic decisions<br />
in advance of U.S. policy changes toward Cuba.”<br />
82 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
83
Akerman LLP<br />
www.akerman.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: Advises<br />
clients with business interests in Cuba across<br />
various sectors, primarily in aviation, agriculture,<br />
hospitality, telecommunications, finance<br />
and real estate.<br />
Basics of firm: More than 650 lawyers and<br />
government-affairs professionals in a network<br />
of 24 offices across the United States.<br />
Key people in Cuba practice: Augusto E.<br />
Maxwell, chair of the firm’s Cuba practice; Pedro<br />
A. Freyre, chair of the firm’s international<br />
practice<br />
Location for key people: Miami<br />
Biggest mistake U.S. companies make in<br />
Cuba: U.S. companies sometimes assume that<br />
Cuba is like other Caribbean or Latin American<br />
countries and do not take the time to understand<br />
Cuba’s unique system of government<br />
and centrally-planned economy.<br />
Why clients come for Cuba advice: We have<br />
been in the Cuba space for over 15 years. …<br />
We have broad and pioneering experience<br />
which includes agriculture, telecommunications,<br />
airlines, cruise lines, real estate, and hospitality<br />
clients.<br />
Akin Gump Strauss Hauer & Feld LLP<br />
www.akingump.com<br />
Headquarters: N/A; largest office is in Washington<br />
DC<br />
Specialty area for Cuba practice: Advocacy,<br />
aviation, biotechnology, energy, health care, infrastructure,<br />
international sanctions program,<br />
international trade policy, internet technology,<br />
manufacturing, public private partnerships,<br />
real estate and hospitality, telecommunications,<br />
and transportation.<br />
Basics of firm: More than 900 lawyers in 20<br />
offices in North America, Europe, Asia and<br />
the Middle East.<br />
Key people in Cuba practice: Scott D. Parven,<br />
partner, public law and policy practice; Wynn<br />
H. Segall, partner, international trade practice;<br />
Anya Landau French, senior policy advisor,<br />
public law and policy practice<br />
Location for key people: Washington DC<br />
Biggest mistake U.S. companies make in<br />
Cuba: To assume that Cuba needs or wants<br />
assistance. Cuba is seeking trade and investment<br />
partners, and companies in the U.S. are<br />
well-positioned to respond to that interest.<br />
But we always advise our clients to approach<br />
Cuban counterparts with an open mind, and<br />
advise that they offer partnership, rather than<br />
help.<br />
Why clients come for Cuba advice: To help<br />
them assess the landscape and opportunities in<br />
Cuba, to make connections and build relationships<br />
on the island, to help win U.S. approval<br />
Augusto E. Maxwell<br />
Akerman LLP<br />
Pedro A. Freyre<br />
Akerman LLP<br />
Scott D. Parven<br />
Akin Gump Strauss Hauer & Feld LLP<br />
for their projects and to assist them with routine<br />
and complex transactions.<br />
Albright Stonebridge Group<br />
www.albrightstonebridge.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: Works with<br />
clients to navigate business in Cuba, from<br />
sanctions and policy monitoring, to market<br />
assessment, strategy and implementation. Advises<br />
and assists clients across sectors, including<br />
financial services and technology.<br />
Basics of firm: Consulting group of leaders<br />
from business, public and social sectors featuring<br />
more than 20 former ministers and ambassadors.<br />
Its network spans 180-plus experts<br />
in more than 50 countries. Has served clients<br />
in more than 110 countries.<br />
Key people in Cuba practice: Carlos Gutierrez,<br />
chair of the group and former U.S. Secretary<br />
of Commerce; Mark Feierstein, senior<br />
advisor; John Hughes, vice president; Karen<br />
Poreh, director<br />
Location for key people: Washington DC<br />
Biggest challenge for Cuba business: The<br />
challenges are two-fold. The U.S. trade embargo<br />
continues to limit what U.S. companies<br />
can do, and Cuba’s decision-making process is<br />
bureaucratic and slow. Decisions are not made<br />
lightly or in haste. Successful engagement<br />
in Cuba requires great patience and an acknowledgement<br />
that despite an official policy<br />
welcoming commercial deals with American<br />
companies, reservations about the U.S. remain.<br />
Ambar Diaz, P.A<br />
www.adaizlaw.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: Travel industry,<br />
humanitarian projects, artistic productions,<br />
Cuban law in general, and U.S. export<br />
and OFAC regulations.<br />
Basics of firm: Boutique firm. Diaz, with law<br />
degrees from Cuba and the U.S, has been<br />
working on Cuban issues for 14 years.<br />
Key people in Cuba practice: Ambar Diaz<br />
Location for key people: Miami<br />
Biggest opportunity for Cuba business: Cuba's<br />
human resources.<br />
Biggest challenge for Cuba business: Doing<br />
business in Cuba is like doing business in another<br />
planet. Be ready to learn new rules.<br />
Americas Market Intelligence<br />
www.americasmi.com<br />
Headquarters: Coral Gables, Florida<br />
Specialty area for Cuba practice: Market intelligence<br />
in Cuba.<br />
Basics of firm: Provides market intelligence<br />
services across Latin American and Caribbean<br />
markets. Has offices and affiliates in Miami,<br />
Mexico City, Sao Paulo, Santiago, and San<br />
Francisco as well as stringers across 20 countries.<br />
Key people in Cuba practice: John Price,<br />
managing director<br />
Location for key people: Miami area<br />
Biggest opportunity for Cuba business:<br />
Tourism and anything tourism related, such<br />
as car rentals, hotels and high-end restaurants.<br />
Biggest mistake U.S. companies make in<br />
Cuba: Rush in without coldly and objectively<br />
studying the viability of their plans.<br />
Ankura Consulting Group<br />
www.ankuraconsulting.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: Geopolitical<br />
risk, research and analysis, market entry<br />
strategies, infrastructure, cybersecurity and<br />
technology, financing, energy and environment,<br />
tourism development.<br />
Basics of firm: More than 300 consultants in<br />
11 offices in the United States, focusing on<br />
five primary service groups: investigations &<br />
accounting advisory, litigation and disputes,<br />
regulatory and contractual compliance, as well<br />
as risk, resilience and geopolitical, plus turnaround<br />
& restructuring.<br />
Key people in Cuba practice: Jorge L. San<br />
Miguel, head of the Latin American practice;<br />
Michelle DiGruttolo, head of the geopolitical<br />
team<br />
Location for key people: Puerto Rico and<br />
Washington DC<br />
Biggest opportunity for Cuba business:<br />
Medical tourism is one of the best hidden investment<br />
opportunities in Cuba. The potential<br />
for development of a trade corridor between<br />
Cuba and Puerto Rico would facilitate the establishment<br />
and rapid embrace of such mutually<br />
beneficial medical clinics.<br />
Biggest challenge for Cuba business: The<br />
biggest hurdles include sanctions (which normalization<br />
could remedy), financing (based on<br />
legal and judicial structures), and upgrading<br />
essential public infrastructure, particularly<br />
21st century technology infrastructure.<br />
Antilles Strategy Group Inc.<br />
www.antillesgroup.com<br />
Headquarters: Chicago, Illinois<br />
Specialty area for Cuba practice: Focus areas<br />
include agriculture, biotechnology, medical<br />
research, pharmaceutical manufacturing, nano-technology,<br />
hospitality, tourism, and cultural<br />
exchange.<br />
Basics of firm: Formerly called Taino-Caribbean<br />
services, the group has been working<br />
with Cuba for more than two decades and<br />
completed more than 200 missions to the<br />
island. Offers services in strategic planning,<br />
public affairs, and legal-regulatory issues.<br />
Wynn H. Segall,<br />
Akin Gump Strauss Hauer & Feld LLP<br />
Anya Landau French<br />
Akin Gump Strauss Hauer & Feld LLP<br />
Carlos Gutierrez,<br />
Albright Stonebridge Group<br />
Also facilitates travel, meetings, and relations<br />
in Cuba, the Caribbean, and South America.<br />
Has offices in Chicago, Washington DC, Miami<br />
Beach and in Santo Domingo, Dominican<br />
Republic.<br />
Key people in Cuba practice: Charles A. Serrano,<br />
managing director and director of Cuba<br />
trade & missions; John Edward Glennon, director<br />
of financing & development; David S.<br />
Rodriguez, director of licensing, regulations &<br />
legal<br />
Location for key people: Chicago and Miami<br />
Beach<br />
Biggest challenge for Cuba business: The<br />
socio-economic and political idiosyncrasies<br />
unique to Cuba, due to its historical experience<br />
and context in the last 60 years and since<br />
1989, are fundamental for U.S. business people<br />
to know. Businesses must be aware of these<br />
aspects of Cuba as legitimate, and empathize<br />
them when exploring Cuba. Not considering<br />
these areas in a Cuba strategy results in impatience,<br />
lack of understanding of the “Cuban<br />
reality,” and failure to secure decision-making<br />
relationships.<br />
Biggest mistake U.S. companies make in<br />
Cuba: U.S. business entities cannot expect to<br />
obtain positive and productive results if they<br />
incorporate customary U.S. business practice,<br />
process, negotiation styles and focused profit<br />
intentions in Cuba. There is a “Cuban reality”<br />
that is necessary to be adopted, assimilated,<br />
and integrated into a strategy to do business<br />
in Cuba.<br />
BG Consultants Inc. (BGC)<br />
www.bgconsultants.net<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: Analyzes<br />
and evaluates the impact and risks of trading<br />
or investing. Areas of expertise include manufacturing,<br />
shipping, financial management,<br />
strategic planning and operations.<br />
Basics of firm: Providing strategic services<br />
related to Cuba since 1991, consultants are<br />
advisors, coaches, and specialists on Cuba’s industry,<br />
commerce, and emerging markets.<br />
Key people in Cuba practice: Teo Babun,<br />
CEO and managing director; Sumaya Davila,<br />
research associate; Sergio Casines, marine and<br />
maritime advisor, vice president of ATL Miami<br />
Inc.; Enrique Lopez, telecom and technology<br />
advisor, president of Gables Business<br />
Solutions Advisors.<br />
Location for key people: U.S.<br />
Biggest opportunity for Cuba business: Sectors<br />
such as infrastructure, housing, agriculture,<br />
tourism, consumer products, healthcare,<br />
and pharmaceuticals.<br />
Biggest challenge for Cuba business: Uncertainties<br />
and risks inherent in an evolving economy.<br />
Those may require responses to complex<br />
regulatory barriers, corruption control, risk<br />
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management, due diligence, and obtaining<br />
concessions from a Cuban partner.<br />
Caribbean Portal XXI<br />
www.cpxxi.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: Consulting<br />
across a wide range of topics from the<br />
perspective of Cuban requirements. Work<br />
includes preparing industry-specific market<br />
surveys and analysis; staying up-to-date with<br />
the latest Cuban regulations relevant to foreign<br />
entities; registering and licensing companies;<br />
preparing and submitting documents for<br />
compliance with accounting, banking and tax<br />
requirements; securing approval for business<br />
travel, import, export, and immigration issues;<br />
strategic planning and business development;<br />
customary business practices in Cuba.<br />
Basics of firm: Led by three lawyers in Miami<br />
and two lawyers in Havana, with access to top<br />
Cuban law firms that engage with foreign investment,<br />
trade, and commerce. Also, features<br />
representatives from various industries including<br />
senior business executives, financial consultants,<br />
economists, accountants, engineers,<br />
and contractors. Has reach into all provinces<br />
in Cuba.<br />
Key people in Cuba practice: Manuel Supervielle<br />
and Antonio Zamora<br />
Location for key people: Miami<br />
Biggest opportunity for Cuba business: The<br />
Cuban people. Tapping the vast potential latent<br />
in the Cuba population, especially the<br />
younger generation, represents a gold mine<br />
of talent not found on a per-capita basis anywhere<br />
else in the Western Hemisphere and<br />
perhaps, anywhere else on earth.<br />
Biggest challenge for Cuba business: Development<br />
of a Cuban business culture is moving<br />
forward at a very slow pace. At times, it<br />
may feel like there is no progress at all. Thus,<br />
the key component for foreign investors and<br />
business people interested in Cuba is patience.<br />
… Foreigners may view the process as overly<br />
restrictive, cumbersome and antiquated, but<br />
there is no other way to engage in Cuba.<br />
Carlton Fields<br />
www.carltonfields.com<br />
Headquarters: Tampa, Florida<br />
Specialty area for Cuba practice: Corporate<br />
and healthcare<br />
Basics of firm: 335 lawyers and consultants in<br />
10 U.S. offices, including five in Florida and<br />
one each in New York, Los Angeles, Atlanta,<br />
Hartford, and Washington DC.<br />
Key people in Cuba practice: Robert Macaulay<br />
and Irma Reboso Solares<br />
Location for key people: Miami<br />
Biggest opportunity for Cuba business:<br />
Medical tourism<br />
John Price<br />
Americas Market Intelligence<br />
Michelle DiGruttolo<br />
Ankura Consulting Group<br />
Robert Macaulay<br />
Carlton Fields<br />
Biggest challenge for Cuba business: Absence<br />
of a reliable legal system for enforcing<br />
contracts and property rights.<br />
Chevalier Law Firm PLLC, The<br />
www.chevalierlaw.com<br />
Headquarters: Houston, Texas<br />
Specialty area for Cuba practice: Advises<br />
companies in various industries seeking to enter<br />
the Cuban market on the legal framework<br />
in the U.S. and the business, legal, and political<br />
landscape in Cuba. Also, provides clients cultural<br />
insight and on the ground guidance on<br />
conducting business in Cuba.<br />
Basics of firm: Offices in Houston and Washington<br />
DC. Works with others on projects, as<br />
needed.<br />
Key people in Cuba practice: Felix Chevalier,<br />
Tamika Spaulding<br />
Location for key people: Houston, Washington<br />
DC<br />
Biggest opportunity for Cuba business: U.S.<br />
firms have an opportunity to grow their businesses<br />
and enter a nearby market that has been<br />
virtually untapped by U.S. companies for more<br />
than 50 years.<br />
Why clients come for Cuba advice: For relationships<br />
and on the ground experience.<br />
Guidance on whether Cuba is seeking the<br />
products or services that a U.S. company provides<br />
or how to seek U.S. government permission<br />
are important preliminary steps for doing<br />
business in Cuba.<br />
Coto & Associates<br />
www.crlawpr.com<br />
Headquarters: San Juan, Puerto Rico<br />
Specialty area for Cuba practice: Foreign<br />
investment, trademarks, Cuban assets control<br />
regulations, construction.<br />
Basics of firm: Seven lawyers, one office in<br />
Puerto Rico.<br />
Key people in Cuba practice: Ramon “Chito”<br />
Coto-Ojeda, managing partner<br />
Location for key people: San Juan, Puerto<br />
Rico<br />
Biggest challenge for Cuba business: Normalizing<br />
relations with trading partners, travel<br />
restrictions, and regaining access to money<br />
markets.<br />
Why clients come for Cuba advice: Protect<br />
and defend trademarks, learn about Cuban<br />
law and opportunities, develop their Cuban<br />
contingency plans.<br />
Cuba Strategies Inc.<br />
www.cubastrategiesinc.com<br />
Headquarters: Larchmont, New York<br />
Specialty area for Cuba practice: Renewable<br />
energy, infrastructure.<br />
Basics of firm: Five consultants and two at-<br />
torneys in three offices.<br />
Key people in Cuba practice: Guennady Rodriguez,<br />
Juan G. Espinosa, Jose de Lasa<br />
Location for key people: New York, New Jersey,<br />
Miami<br />
Biggest opportunity for Cuba business:<br />
Large-scale renewable energy projects.<br />
Biggest mistake U.S. companies make in<br />
Cuba: Underestimate how much Cubans value<br />
their independence, something that will be<br />
reflected in any business consideration.<br />
Foley & Lardner LLP<br />
www.foley.com<br />
Headquarters: Milwaukee, Wisconsin<br />
Specialty area for Cuba practice: Construction<br />
and infrastructure work, compliance, U.S.<br />
trade and export controls, intellectual property,<br />
immigration, corporate and aviation law.<br />
Basics of firm: 840 attorneys in 19 offices<br />
worldwide.<br />
Key people in Cuba practice: Ralf Rodriguez,<br />
Laura Ganoza, Roy Barquet, Lauren Valiente,<br />
Kimberly Ashby, Christopher Swift, Gregory<br />
Husisian, Carlos Abarca, David Bannard<br />
Location for key people: Boston, Miami, Orlando,<br />
Tampa, and Washington DC<br />
Biggest opportunity for Cuba business: Under<br />
the current legal framework, construction<br />
and infrastructure work presents a huge opportunity<br />
– basically for humanitarian projects<br />
that improve the lives and welfare of the Cuban<br />
people. Likewise, the telecommunications<br />
and technology sectors appear to present large<br />
opportunities.<br />
Biggest challenge for Cuba business: Trust<br />
and establishing norms of contact acceptable<br />
to both Cuban and U.S. entities for managing<br />
risk and resolving business disputes. Identifying<br />
and understanding the limits on Cuban<br />
business opportunities that can arise from domestic<br />
Cuban laws and reconciling any conflicts<br />
with U.S. law.<br />
.<br />
GrayRobinson P.A.<br />
www.gray-robinson.com<br />
Headquarters: Orlando, Florida<br />
Specialty area for Cuba practice: Trade with<br />
and travel to Cuba, as well as changing U.S.<br />
laws and regulations. Helps clients obtain specific<br />
licenses for restricted activities, and advises<br />
in structuring business transactions permissible<br />
under U.S. law, among other activities.<br />
Basics of firm: Full-service corporate law firm<br />
with 300 attorneys and consultants in 13 offices<br />
across Florida.<br />
Key people in Cuba practice: Peter Quinter<br />
and Milton Vescovacci<br />
Location for key people: Miami<br />
Biggest opportunity for Cuba business: International<br />
logistics and hospitality.<br />
Felix Chevalier<br />
The Chevalier Law Firm<br />
Laura Ganoza<br />
Foley & Lardner LLP<br />
Peter Quinter<br />
GrayRobinson P.A.<br />
Why clients come for Cuba advice: To obtain<br />
a legal opinion about whether the proposed<br />
business activity is allowed under U.S. law and<br />
then, to obtain any U.S. government approval,<br />
if necessary.<br />
Greenberg Traurig<br />
www.gtlaw.com<br />
Headquarters: Miami<br />
Specialty area for Cuba practice: Assists clients<br />
in obtaining U.S. regulatory clearance to<br />
do business in Cuba, including implementation<br />
of related compliance programs. Advises<br />
clients on Cuba’s foreign investment process.<br />
Has advised clients doing business across<br />
many industries, including hospitality, logistics,<br />
aviation, real estate, software, arts and entertainment,<br />
energy, and infrastructure. Team<br />
includes Osvaldo Miranda, a Cuban lawyer<br />
who served as a judge in Cuba and now, focuses<br />
his practice on advising foreign investors<br />
seeking to do business in Cuba.<br />
Basics of firm: An international, multi-practice<br />
law firm with approximately 2,000 lawyers<br />
serving clients from 38 offices in the United<br />
States, Latin America, Europe, Asia and the<br />
Middle East. Founded in Miami, the firm is<br />
recognized for its Latin American practice.<br />
Key people in Cuba practice: Yosbel Ibarra,<br />
co-chair Latin American and Iberian practice;<br />
Kara Bombach, shareholder, export controls<br />
and economic sanctions practice; Carl Fornaris,<br />
co-chair, financial regulatory and compliance<br />
practice<br />
Location for key people: Miami and Washington<br />
DC<br />
Biggest opportunity for Cuba business: In<br />
the short term, tourism and hospitality, including<br />
commerce necessary to support those industries<br />
such as banking, telecommunications,<br />
and food imports. Longer-term, there could<br />
be opportunities in industries such as agriculture<br />
(including food processing), pharmaceuticals<br />
(both research and production), software<br />
development (happening on a basic level), and<br />
if the Port of Mariel is further developed, light<br />
manufacturing/assembly for export.<br />
Biggest mistake U.S. companies make in<br />
Cuba: Frequently, U.S. companies focus on<br />
what they need to address regarding U.S. regulations<br />
and licensing requirements, almost<br />
to the exclusion of Cuban laws, policies, and<br />
practices. But a parallel track is required for<br />
exploring and managing the necessary approvals<br />
on the Cuban side. It can take a year to get<br />
an authorization from the U.S. government,<br />
but may take as long or longer to achieve an<br />
agreement with Cuban authorities. If not<br />
managed concurrently, a U.S. license may<br />
expire or need to be renewed. Consider both<br />
sides of the equation, and be prepared to be<br />
patient with both.<br />
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Havana Consulting Group<br />
www.thehavanaconsultinggroup.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: Market<br />
intelligence in retail, tourism, automotive, remittances,<br />
financial, agriculture, tobacco, sugar<br />
industry, energy, real estate, private sector,<br />
industry, air transportation, transportation,<br />
telecommunications, investment, biotechnology,<br />
health sector, infrastructure, mining, oil,<br />
tech, and more.<br />
Basics of firm: A team of 14 international<br />
consultants with decades of experience studying<br />
Cuba and in all, has written more than<br />
100 books and 500 articles on Cuba’s economy.<br />
The group does fieldwork in Cuba and<br />
designs technology tools for data monitoring<br />
and data-base management. Consultants include<br />
programmers, market researchers, geographers,<br />
statisticians and pollsters.<br />
Key people in Cuba practice: Emilio Morales,<br />
president and CEO<br />
Location for key people: U.S., Canada,<br />
Spain, and Cuba<br />
Biggest challenge for Cuba business: To understand<br />
the mechanics of doing business in<br />
Cuba, to have patience and a feel for a good<br />
market niche, to prepare the intelligence to<br />
minimize risks and better negotiate with Cuban<br />
counterparts.<br />
Biggest mistake U.S. companies make in<br />
Cuba: They don’t do market studies, or prepare<br />
properly to negotiate with the government,<br />
they underestimate competitors from<br />
other countries … and think that they can do<br />
business in three months.<br />
Haynes and Boone LLP<br />
www.haynesboone.com<br />
Headquarters: Dallas, Texas<br />
Specialty area for Cuba practice: Aviation,<br />
joint ventures, financial services, mergers and<br />
acquisitions, and international arbitration.<br />
Basics of firm: Full service law firm with<br />
more than 575 lawyers in 15 offices in the<br />
United States, Mexico and China.<br />
Key people in Cuba practice: Alberto de<br />
la Peña, George Y. Gonzalez, Edward M.<br />
Labow, Larry Pascal, and Rick Martinez.<br />
Location for key people: Dallas, Houston,<br />
Washington D.C., and New York.<br />
Biggest opportunity for Cuba business: The<br />
strengthening of U.S.-Cuba ties offers significant<br />
business potential.<br />
Why clients come for Cuba advice: Many<br />
of our lawyers have served in positions of responsibility<br />
for Latin America policy in the<br />
U.S. government as well as public and private<br />
organizations and companies that foster regional<br />
trade.<br />
Emilio Morales,<br />
Havana Consulting Group<br />
Judy Kruger<br />
Kruger International LLC<br />
David E. Lewis<br />
Manchester Trade Limited Inc.<br />
Kruger International LLC<br />
www.kruger-international.com<br />
Headquarters: Grand Rapids, Michigan<br />
Specialty area for Cuba practice: Market research<br />
and entry for all industries, Cuban business<br />
partner matches and executive in-country<br />
trips.<br />
Basics of firm: 10 consultants in the U.S. and<br />
Cuba, retained for projects as needed.<br />
Key people in Cuba practice: Judy Kruger,<br />
principal<br />
Location for key people: Michigan, Miami,<br />
and Havana<br />
Biggest opportunity for Cuba business:<br />
Those patient with the slower Cuban process<br />
for market entry will be the first wave of U.S.<br />
or foreign companies to get in, hopefully faster<br />
than their competition.<br />
Why clients come for Cuba advice: To navigate<br />
and strategize regulatory and timeline challenges.<br />
Manchester Trade Limited Inc.<br />
www.manchestertrade.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: Business<br />
facilitation, trade/investment advisory services<br />
and policy advice covering pharmaceuticals,<br />
manufacturing, construction, energy, agriculture/food,<br />
as well as beverages/alcohol. Cuba<br />
expertise since 1984. Focuses largely on business<br />
delegations to Cuba and support/facilitation<br />
for businesses entering the Cuba market.<br />
Works with delegations from Puerto Rico and<br />
other Caribbean/Latin American markets, as<br />
well as U.S. clients.<br />
Basics of firm: Trade advisory firm for more<br />
than 30 years, focused on Latin America and<br />
Caribbean business development. More than<br />
100 associates worldwide in the Americas,<br />
Europe, Africa, and Asia.<br />
Key people in Cuba practice: David E. Lewis,<br />
vice president<br />
Location for key people: Washington DC<br />
Biggest opportunity for Cuba business:<br />
Travel and entertainment, including tourism.<br />
Biggest challenge for Cuba business: Rule<br />
of law and transparent regulations for foreign<br />
business.<br />
Mayer Brown LLP<br />
www.mayerbrown.com<br />
Headquarters: N/A.<br />
Specialty area for Cuba practice: Sanctions<br />
and export controls across all sectors. Transactional<br />
advice related to market entry of companies<br />
in the hospitality sector, as well as in<br />
retail, professional services and agro-food.<br />
Basics of firm: More than 1,500 lawyers in 24<br />
offices in the Americas, Europe, Asia, and the<br />
Middle East.<br />
Key people in Cuba practice: Toby Moffett<br />
in Washington DC; Alejandro Lopez Ortiz in<br />
Paris, France<br />
Location for key people: Washington DC,<br />
Chicago, and Paris<br />
Biggest opportunity for Cuba business: The<br />
key is to identify those sectors in which U.S.<br />
policy overlaps with the interest of the Cuban<br />
government.<br />
Why clients come for Cuba advice: Initially,<br />
to be sure they were behaving according to<br />
current U.S. rules and regulations. Now, because<br />
Mayer Brown has a Cuban lawyer who<br />
spends a great deal of time on the ground in<br />
Havana and who is licensed to practice law in<br />
the US.<br />
McNees Wallace & Nurick LLC<br />
www.mcneeslaw.com<br />
Headquarters: Harrisburg, Pennsylvania<br />
Specialty area for Cuba practice: A variety<br />
of areas, particularly related to nonprofit organizations<br />
seeking to support the Cuban<br />
people.<br />
Basics of firm: General business practice<br />
with approximately 140 lawyers in four offices<br />
in Pennsylvania and one each in Ohio,<br />
Maryland, and Washington DC.<br />
Key people in Cuba practice: Louis A. Dejoie,<br />
Meaghan Hill<br />
Location for key people: Harrisburg, Pennsylvania,<br />
and Washington DC<br />
Biggest challenge for Cuba business: The<br />
unknown. Despite significant progress towards<br />
diplomatic normalization and market<br />
openings under the Obama administration,<br />
no one can predict how and whether these<br />
trends will continue. … A lot needs to be<br />
done before Cuba is truly open for business<br />
to U.S. companies. Nevertheless, given the<br />
enormous opportunities, U.S. businesses<br />
should do all they can to be ready. When it<br />
happens, it will happen quickly.<br />
Why clients come for Cuba advice: Our<br />
clients are very interested in potential opportunities<br />
that the Cuban market can offer<br />
to them. While we most often see inquiries<br />
from nonprofit organizations which want to<br />
engage with the Cuban people, we are also<br />
fielding inquiries from agricultural, heavy<br />
equipment, and internet businesses.<br />
Moore & Company<br />
www.moore-and-co.com<br />
Headquarters: Coral Gables, Florida<br />
Specialty area for Cuba practice: Marine and<br />
aviation. The firm has facilitated more than<br />
150 yacht trips to Cuba. It has worked with<br />
diving expeditions, documentary films, marine<br />
scientists, and others.<br />
Basics of firm: Law firm specialized in marine,<br />
aviation, and art law. The sole office has<br />
a staff of 14, but teams with others as needed.<br />
Alejandro Lopez Ortiz<br />
Mayer Brown LLP<br />
Toby Moffett<br />
Mayer Brown LLP<br />
Louis A. Dejoie<br />
McNees Wallace & Nurick LLC<br />
It also acts as consultants on Cuba to lawyers<br />
worldwide.<br />
Key people in Cuba practice: Michael T.<br />
Moore, Clay Naughton, Laura Wisman<br />
Location for key people: Coral Gables<br />
Biggest opportunity for Cuba business: As<br />
specialists in marine law, the immediate business<br />
opportunity for our clients is legal yacht<br />
expeditions to Cuba. We will have facilitated<br />
more than 200 of these trips to Cuba by 2018.<br />
Our clients are now turning their attention<br />
to how they can more broadly support Cuba<br />
and its ongoing environmental, ecological, and<br />
educational needs and changes, related to protecting<br />
and preserving the waters around the<br />
island.<br />
Biggest challenge for Cuba business: Continuing<br />
the progress to a less bureaucratic, adhoc<br />
system, to a more open and streamlined<br />
method of dealing with the applications of<br />
those who come to Cuba with projects.<br />
Morgan Lewis & Bockius LLP<br />
www.morganlewis.com<br />
Headquarters: N/A<br />
Specialty area for Cuba practice: Business,<br />
financial and corporate matters, particularly<br />
related to emerging opportunities and navigating<br />
U.S. legal and regulatory complexities.<br />
Focus areas include market entry strategy and<br />
planning; transactions and licensing for the<br />
telecommunications, travel and transportation<br />
sectors; investigations and external enforcement<br />
actions involving alleged violations of<br />
the U.S. embargo and U.S. Foreign Corrupt<br />
Practices Act; trademark protection in Cuba;<br />
filing claims with the U.S. Foreign Claims<br />
Settlement Commission; and monitoring U.S.<br />
regulatory and legislative developments related<br />
to the U.S. embargo.<br />
Basics of firm: International law firm with<br />
nearly 1,900 lawyers in 30 offices in North<br />
America, Asia-Pacific, Middle East, and Europe.<br />
Key people in Cuba practice: Carl A. Valenstein<br />
and Mark E. Zelek, co-chairs of the<br />
Cuba initiative<br />
Location for key people: Boston, Massachusetts<br />
and Miami, Florida<br />
Biggest opportunity for Cuba business: The<br />
potential liberalization of the Cuban economy<br />
following the retirement of Raul Castro in<br />
2018. There is hope that the country may at<br />
least follow the Vietnamese model of opening<br />
the economy to foreign investment, even if it<br />
decides to maintain a one-party communist<br />
political system.<br />
Biggest challenge for Cuba business: President<br />
Trump’s new directive on Cuba policy<br />
was to be a rollback of Obama’s liberalization.<br />
However, the actual actions taken - restricting<br />
self-directed people-to-people travel and transactions<br />
involving the Cuban military – were<br />
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modest, not to mention subject to OFAC's implementation.<br />
That said, if the Cuban government<br />
is slow to address human rights and U.S.<br />
claims to confiscated property, the Trump administration<br />
may take further action, and this<br />
creates uncertainty in the market.<br />
Pillsbury Winthrop Shaw Pittman LLP<br />
www.pillsburylaw.com<br />
Headquarters: N/A<br />
Specialty area for Cuba practice: Travel/transportation,<br />
telecommunications<br />
Basics of firm: International law firm with<br />
about 700 lawyers and 21 offices around the<br />
world. Has a particular focus on the technology,<br />
energy and natural resources, financial services,<br />
real estate and construction, as well as the travel<br />
and hospitality sectors.<br />
Key people in Cuba practice: Christopher<br />
Wall, Stephen Becker, Nancy Fischer<br />
Location for key people: Washington DC<br />
Biggest challenge for Cuba business: Companies<br />
need to think of all the angles when examining<br />
a potential opportunity in Cuba. The U.S.<br />
maintains a complex regulatory regime over<br />
business activities involving Cuba, including<br />
distinct rules enforced separately by the U.S.<br />
Departments of Treasury and Commerce.<br />
Why clients come for Cuba advice: For handling<br />
export controls and sanctions matters, to<br />
help analyze potential business opportunities,<br />
to help prepare and procure licenses when required,<br />
and for the aviation practice to advise<br />
on compliance with Cuba sanctions, as well as<br />
other matters.<br />
Reneo Consulting LLC<br />
www.reneodc.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: Trade and<br />
investment, strategic consulting, regulatory<br />
compliance, agriculture, energy and hotels<br />
Basics of firm: 27 attorneys/consultants; one<br />
office in Washington DC.<br />
Key people in Cuba practice: Scott D. Gilbert,<br />
founder and managing director; Craig J. Litherland,<br />
Emily P. Grim, Michael P. Hatley<br />
Location for key people: Washington DC<br />
Biggest opportunity for Cuba business:<br />
Though it may seem counterintuitive, one of<br />
the biggest opportunities relates to regulatory<br />
and other obstacles to doing business in Cuba.<br />
The obstacles, as frustrating as they are, act as<br />
a barrier to entry for competitors – often providing<br />
more far-sighted companies willing to<br />
master the intricacies…the opportunity [for] a<br />
foothold in the Cuban market uncontested.<br />
Biggest mistake U.S. companies make in<br />
Cuba: They fail to take into account the additional<br />
stakeholders involved in any business<br />
venture in Cuba – which include U.S. regulators<br />
and Cuban government officials – and to<br />
Michael T. Moore<br />
Moore & Company<br />
Mark E. Zelek<br />
Morgan Lewis & Bockius LLP<br />
Christopher Wall<br />
Pillsbury Winthrop Shaw Pittman LLP<br />
adjust their project strategically, so that it sits<br />
nearer to the intersection of those often-competing<br />
interests.<br />
Richard Graves & Associates<br />
www.rgassoc.com; www.cuba-boating.com<br />
Headquarters: Fort Lauderdale, Florida<br />
Specialty area for Cuba practice: Marinas and<br />
tourism<br />
Basics of firm: Marina business development<br />
consultant, works with associates as needed.<br />
Key people in Cuba practice: Richard Graves<br />
Location for key people: Fort Lauderdale,<br />
Florida<br />
Biggest opportunity for Cuba business:<br />
Tourism and related fields, such as hotels and<br />
marinas<br />
Biggest mistake U.S. companies make in<br />
Cuba: Not taking the time to become familiar<br />
with the business culture of Cuba and the people.<br />
In my experience, to do business in Latin<br />
America, you must build a relationship. You<br />
are not going to do business by giving out your<br />
business card and brochure.<br />
Robert L. Muse, Law office of<br />
www.robertmuse.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: U.S. Treasury’s<br />
OFAC and U.S. Commerce’s BIS<br />
regulations, license applications, compliance<br />
advice, and business planning relating to authorized<br />
activities in and with Cuba.<br />
Basics of firm: Solo practice working on<br />
Cuba projects since 1989 and exclusively on<br />
Cuba since 1991. Has worked with universities,<br />
philanthropies, policy institutes, environmental<br />
groups and major travel and carrier<br />
service providers, among others. Has written<br />
and spoken on Cuba and legal issues for decades,<br />
especially on the broad power of the<br />
U.S. executive to “essentially end the embargo<br />
on Cuba.”<br />
Key people in Cuba practice: Robert L. Muse<br />
Location for key people: Washington DC<br />
Biggest opportunity for Cuba business: The<br />
agricultural sector. A high priority of the government<br />
of Cuba is import substitution. They<br />
want to end the oddity of a fertile country importing<br />
more than 70 percent of its food. …<br />
So, the reconstitution and modernization of<br />
Cuba’s agricultural sector is the biggest business<br />
opportunity available to U.S. businesses.<br />
Why clients come for Cuba advice: The most<br />
frequent inquiries I get are from U.S. companies<br />
seeking to do business in Cuba. The second<br />
most frequent inquiries are from companies<br />
in European countries that either are, or<br />
wish to be, involved in business in Cuba but<br />
seek advice on how to avoid violations of U.S.<br />
embargo laws and U.S. export restrictions.<br />
Sandler, Travis & Rosenberg, P.A.<br />
www.strtrade.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: U.S. export<br />
controls and import requirements administered<br />
by Customs and Border Protection<br />
(Department of Homeland Security),<br />
Bureau of Industry and Security (Commerce),<br />
Office of Foreign Assets Controls<br />
(Treasury), and the Department of State.<br />
Basics of firm: Since 1977, provides international<br />
trade-related legal and consulting<br />
services. Nearly 1,000 employees focused<br />
on international trade, customs and export,<br />
including about 70 attorneys. Offices<br />
worldwide in North and South America,<br />
Europe, Asia, and the Middle East.<br />
Key people in Cuba practice: Lenny Feldman<br />
and Steven Brotherton<br />
Location for key people: Miami and San<br />
Francisco<br />
Biggest challenge for Cuba business: For<br />
U.S. companies to understand how to properly<br />
engage with, and import from, Cuban<br />
cuentapropistas (entrepreneurs) in order to<br />
conduct lawful transactions.<br />
Why clients come for Cuba advice: One<br />
of the biggest reasons is to understand how<br />
U.S. laws and regulations affect U.S. companies<br />
whose foreign subsidiaries or affiliates<br />
are conducting business directly with<br />
Cuba.<br />
Shutts & Bowen LLP<br />
www.shutts.com<br />
Headquarters: Miami, Florida<br />
Specialty area for Cuba practice: All areas<br />
of the law<br />
Basics of firm: Full-service law firm with<br />
more than 260 lawyers and seven offices<br />
across Florida. Established in 1910.<br />
Key people in Cuba practice: Aliette Del-<br />
Pozo Rodz, chair of Cuba task force<br />
Location for key people: Miami, Florida<br />
Biggest mistake U.S. companies make in<br />
Cuba: Companies often times consider<br />
what is and/or what may work best for them<br />
without realizing that they need to visit<br />
Cuba, understand its market and learn what<br />
may work for Cuba, and what are its current<br />
needs.<br />
Why clients come for Cuba advice: For business<br />
licenses, know-how of Cuba and requirements<br />
to ensure compliance with U.S. laws.<br />
Transnational Strategy Group<br />
www.transnationalstrategy.com<br />
Headquarters: Washington DC<br />
Specialty area for Cuba practice: Consulting<br />
for tourism-related activities, investment, and<br />
trade<br />
Scott D. Gilbert,<br />
Reneo Consulting LLC<br />
Aliette DelPozo Rodz<br />
Shutts & Bowen LLP<br />
Vicki J. Huddleston<br />
Transnational Strategy Group<br />
Basics of firm: A commercial, economic/political<br />
and policy consulting providing services to<br />
private and government clients. Approximately<br />
30 consultants, including former ambassadors,<br />
top officials, and senior executives, in offices<br />
worldwide.<br />
Key people in Cuba practice: Vicki J. Huddleston,<br />
former Chief of the U.S. Interests Section<br />
in Havana and former State Department<br />
coordinator of Cuba affairs, who has worked<br />
on Cuba for more than 25 years.<br />
Location for key people: Santa Fe, New Mexico<br />
Biggest opportunity for Cuba business: Tourism<br />
and services related to tourism, including<br />
transport, tours, communications, lodging, and<br />
food.<br />
Biggest challenge for Cuba business: Topdown<br />
decision making, communications and<br />
transport infrastructure, and government regulations.<br />
World Wide Title<br />
www.wwti.net<br />
Headquarters: Coral Gables, Florida<br />
Specialty area for Cuba practice: Title to<br />
property, mostly to land.<br />
Basics of firm: Set up decades back by a Cuba-born<br />
lawyer/consultant to support U.S. title<br />
insurance underwriters, the firm initially<br />
helped clients venturing into Mexico and other<br />
nations in such fields as resorts and light manufacturing.<br />
For more than seven years, it has<br />
focused on Cuba.<br />
Key people in Cuba practice: Jose Manuel Palli,<br />
lawyer and consultant.<br />
Location for key people: Coral Gables<br />
Biggest mistake U.S. companies make in<br />
Cuba: U.S. companies (and U.S. lawyers) tend<br />
to see Cuba from an “America-centric” point of<br />
view, which is understandable culturally. But on<br />
Cuba, that “mistake” is magnified by the fact<br />
that most Americans – business people and<br />
lawyers alike – have been exposed to a heavy<br />
dose of biased and misleading propaganda for<br />
almost six decades. This is slowly changing<br />
for the better, due to the growing number of<br />
Americans visiting the island for the first time<br />
in half a century who are thus able to make<br />
their own assessment of what Cuba is - warts<br />
(and there are many) and all.<br />
Why clients come for Cuba advice: Some<br />
people want to see how they can plan ahead to<br />
get back the property their families owned before<br />
the Revolution came to power in 1959. But<br />
they are victims of the same “America-centric”<br />
bias, especially in their belief that the question<br />
of “who owns what in Cuba” in the future will<br />
be played out in U.S. courts under the U.S. legal<br />
system. In our view, this is nothing more<br />
than a delusion, which is why World Wide<br />
Title doesn’t have clients with those types of<br />
concerns. H<br />
90 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
91
REPORTER'S NOTEBOOK<br />
TOBACCO<br />
COUNTRY<br />
A VISIT TO THE VALLEY OF VIÑALES IS A GREAT ESCAPE<br />
FROM THE URBAN DENSITY OF HAVANA<br />
A<br />
two-hour drive west from Havana, the breathtakingVallede<br />
Viñales National Park has a superlative reputation<br />
among Cubans and visitors alike. Here, you find Cuba’s<br />
best rock-climbing, most impressive caves—and, according to<br />
many, the best tobacco in the world.<br />
Named a UNESCO World Heritage Site in 1999, the<br />
Viñales valley is especially popular among European tourists and<br />
outdoor adventurers, as well as those wanting to escape urban<br />
crowds of Havana for a few days—or even just one.<br />
The valley’s karst landscape is characterized by sprawling tobacco<br />
fields and domed limestone mogotes, the rocky protrusions<br />
that jump up almost vertically from the alluvial plains. While<br />
the valley’s landscape remains untouched, the town has changed<br />
spectacularly since economic reforms allowed individual entrepreneurs<br />
to enter the services industry.<br />
“In Viñales, the state’s footprint is so light,” says Philip<br />
Peters, vice-president of the Lexington Institute, a conservative<br />
think tank. “There are 193 beds in the three small state hotels,<br />
and more than 1,100 private bed–and-breakfasts. If it weren’t<br />
for the private sector, it would be impossible for this amount of<br />
tourism to be going there.” How Trump's restriction of people-topeople<br />
travel by U.S. citizens will affect this remains to be seen.<br />
Meanwhile, private restaurants have also “exploded,” says<br />
Peters, who counted 28 on the town’s main drag earlier this year.<br />
“That was unbelievable to me, and it continues to expand. A<br />
huge number of building permits are active in Viñales, and that’s<br />
because of tourism.”<br />
Though the private service industry is well developed, the experience<br />
still feels small-scale and personal. A tourist can simply<br />
show up with little or no planning at all, and count on local family<br />
hosts to help arrange any number of tours, from inexpensive<br />
hikes around the lush valley to horseback riding, cave exploration,<br />
and beach excursions.<br />
Story and photos by Victoria Mckenzie<br />
92 CUBATRADE JUNE/JULY 2017
Along for the Ride: A small group of tourists on horseback leaving the Valle del Silencio restaurant<br />
Tobacco Time: The leaves are first stored and dried...<br />
and then rolled into a completed cigar<br />
Walking Tour: Our guide heads toward a tobacco drying house<br />
Yusleidy “Yuya” Valdes Machin, a former social worker who<br />
opened a private B&B in the center of town two years ago, says<br />
the changes in Viñales have helped her community. “There are<br />
many more work options now,” she told Cuba Trade. She and her<br />
mother, a former seamstress who lives in the house next door,<br />
combined their homes into one guest house; her mother serves as<br />
chef. She offers a private room with air conditioning and a good<br />
shower for 25 CUC; an enormous home-cooked breakfast costs<br />
an extra 4 CUC. Within minutes of our arrival, Yuya arranged<br />
both a guided walking tour of the valley and transportation back<br />
to Havana.<br />
VALLE DEL SILENCIO<br />
Exploring Viñales can be as adventurous or easygoing as you like.<br />
On the more relaxed end, a guided walking tour through the Valle<br />
del Silencio (also known as the “Coffee, Cave, and Rum” tour)<br />
costs between 15 and 20 CUC, and will take you on a leisurely<br />
four-hour trip through sprawling tobacco fields and green-canopied<br />
mogotes. The sun is strong here, but several shady stops<br />
along the way offer chances to have a drink, talk to farmers, and<br />
sample their cigars, coffee and rum.<br />
Just beyond the entrance, José Aliesky, a young tobacco<br />
farmer, shows Cuba Trade around his family’s fields and drying<br />
house, giving us a private lesson on cultivation—from first planting<br />
to final cigar.<br />
Once the leaves are harvested, Aliesky strings them up to dry<br />
for four months in one of the distinctive “tobacco houses” that<br />
dot the western landscape; later, he rehydrates them in a cocktail<br />
of honey and aguardiente, and packages them in wide palm leaves<br />
to cure for another three months.<br />
“When the leaves are moist and flavorful, they are ready to<br />
smoke,” explains Aliesky, demonstrating how he peels away the<br />
central vein—which is high in nicotine—from the pliable leaf.<br />
“My cigars don’t cause addiction,” he says with an air of gravity.<br />
Unlike the government-produced cigars, his family does not add<br />
any chemicals to the leaves.<br />
Once Aliesky has rolled the cigar, he offers it for us to<br />
smoke, adding a dollop of honey on the tip as per local custom.<br />
The thin, flavorful honey comes with its own legend: according to<br />
locals, it is produced by a tiny species of black bee that burrows<br />
underground, its combs hidden deep between tree roots. Only<br />
one family knows how to extract the honey without destroying<br />
the comb, says the guide.<br />
While the private service industry is thriving in Viñales,<br />
tobacco is still a government monopoly. Independent growers<br />
must sell 90 percent of their crops to the government, keeping 10<br />
percent for their own use. According to Aliesky, farmers are still<br />
prohibited from branding homemade products, though visitors<br />
have ample opportunity to buy hand-rolled cigars directly from<br />
the growers. Aliesky sells his family’s cigars for 2 CUC a piece.<br />
BEATING THE HEAT<br />
The Viñales valley heats up quickly in the morning, and it’s best<br />
to start out early (and bring a good sunhat) in order to make the<br />
most of each stop along the tour. Walking through the fields, our<br />
guide points out crops of beans and yucca, and open pasture for<br />
grazing. Here, there’s almost no sign of the three-year drought<br />
that has plagued Cuba; horses and cows look fat and contented.<br />
The path dips down to follow a small shady stream, then<br />
re-emerges at the entrance to a cave. Tourists cluster around the<br />
entrance, paying 2 CUC to escape the sun and explore the inside<br />
of the mogote.<br />
At their base, the vertical faces of the limestone mogotes<br />
look impossible to scale. Yet the valley has over 250 climbing<br />
routes, according to Cubaclimbing.com. A glance at rock-climbing<br />
website MountainProject.com’s message boards shows a<br />
steady flow of serious U.S. climbers to Viñales, many of whom<br />
make a point of leaving gear behind to support the local climbing<br />
community.<br />
Our next stop is a thatched cabaña near a small lake, where<br />
visitors can swim and enjoy drinks in the shade. Several European<br />
women on a National Geographic tour are enjoying their<br />
walk without skimping on rum cocktails. Nearby, several tourists<br />
emerge on horseback from a small restaurant overlooking the<br />
Valle del Silencio.<br />
Our final stop includes a lesson on arabica coffee cultivation<br />
and processing techniques (though coffee is grown higher up in<br />
the mountains), as well as the history behind Guayabita del Pinar<br />
rum. Here, you can buy small bottles of arabica beans, coffee<br />
grounds, and bottles of rum.<br />
By the time we emerge from the park, the sun is at its peak,<br />
and the five-minute walk back to Yuya’s house feels Homeric.<br />
Other travelers wheel past on rented bicycles that can be found<br />
next to the Centro Cultural, or provided by B&B hosts. We arrive<br />
hot and dusty, and are grateful for the air-conditioned room<br />
and clean shower. H<br />
94 CUBATRADE JUNE/JULY 2017<br />
JUNE/JULY 2017 CUBATRADE<br />
95
in closing<br />
A WIN-WIN<br />
SCENARIO<br />
The Argument for Congress<br />
to Open Agriculture Trade<br />
with Cuba Now<br />
American wheat<br />
growers stand ready<br />
to meet demand<br />
in Cuba.<br />
It’s time to end<br />
the embargo.<br />
By Rep. Rick Crawford (R-Ark.)<br />
Choosing Wisely: Crawford examines food at a market in Cuba<br />
Direct on-farm employment accounted for 2.6 million American<br />
jobs in 2015, about 1.4 percent of U.S. employment. Meanwhile,<br />
Cuba imports nearly 80 percent of its food, which includes<br />
about 400,000 tons a year of rice—an important crop grown in<br />
my home state of Arkansas.<br />
But instead of buying from Arkansas, Cuba currently<br />
imports its food from faraway countries like Vietnam. American<br />
farmers could provide cheaper, better quality goods in a matter of<br />
hours instead of weeks. And we now have the opportunity to ever<br />
so slightly alter our Cuba policy to create that economic opportunity<br />
for millions of Americans, as well as to offer better, cheaper<br />
food for the Cuban people.<br />
The kind of change I’m talking about wouldn’t repeal the<br />
embargo, nor would it change its structure. Simply put, this<br />
change would allow agricultural goods to be sold on credit.<br />
Producers can already trade agricultural goods with Cuba, but<br />
credit restrictions limit that trade to cash-only transactions. As a<br />
result, trading with Cuba is more difficult, especially considering<br />
that nearly all global trade relies on credit. By lifting the credit<br />
restriction, the United States would gain access to an important<br />
market 90 miles off the coast of Florida.<br />
My legislation, the Cuba Agricultural Exports Act, would<br />
provide new economic opportunities for U.S. agriculture by providing<br />
access to that market, which is worth over $1 billion per<br />
year. Producers from Arkansas, Louisiana, Texas, Kansas, Minnesota<br />
and other rural states would be the first to directly benefit<br />
from this change.<br />
Running on a platform of job creation and revitalizing rural<br />
areas, President Trump would like to fulfill his promise to rural<br />
America without angering Cuba hardliners by repealing the<br />
embargo. The Cuba Agricultural Exports Act would help him<br />
appease both groups. President Trump also loves a good bilateral<br />
trade deal, and that’s essentially what this bill would allow: fair<br />
trade between two countries that supports American jobs and<br />
puts America first.<br />
Some believe that trade with Cuba would only benefit the<br />
Castro regime, but the Cuba Agriculture Exports Act does not<br />
permit agricultural sales that would help the Cuban military,<br />
Communist Party or members of the Politburo. Any U.S. entity<br />
that violated these terms would be held liable under the Trading<br />
with the Enemy Act.<br />
If there ever was a time for this bill to move, it is now. Some<br />
Americans may not be ready to completely repeal the embargo,<br />
but if the United States wants to prevent nations like China and<br />
Iran from dominating Cuba’s future, then we must consider ways<br />
to increase our influence now, for both national security and<br />
economic reasons.<br />
After Fidel’s death, President-elect Trump said, “our administration<br />
will do all it can to ensure the Cuban people can finally<br />
begin their journey toward prosperity and liberty.” Allowing agricultural<br />
trade on credit would be an undeniable victory for this<br />
administration: it’s a move that supplies the Cuban people with<br />
high-quality food and supports rural American jobs, all while<br />
respecting the sensibilities of embargo supporters. H<br />
96 CUBATRADE JUNE/JULY 2017
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