Cuba's big bet
Cuba’s big bet
Cuba hopes the very large new port they are building at Mariel (the largest port in the Caribbean) will help their economy. There’s just one problem - the US embargo (ban on trade). Vanessa Baird writes about it.
Mariel port. © Vanessa Baird
The windy coastal town of Mariel looks too normal to be so important in history – and in the future of Cuba.
This is where US gangster Lucky Luciano wanted to build a casino. But he couldn’t because of the 1959 revolution.
It was also here that Russian navy ships brought the nuclear missiles that started the 1962 Cuban missile crisis.
And this place gave its name to the Mariel Boatlift, when 120,000 Cubans left Cuba to go to the US, between April and October 1980. It began with thousands of people going to the Peruvian embassy in Havana to ask for asylum. Fidel Castro then said that people who wanted to leave the island could leave for a short period of time.
Many people left, including many lesbian and gay Cubans.
Today Mariel is in the news again – but for a different reason. It’s the place they chose to change completely Cuba’s economic place in the world
They are building a very large, deep harbour for very large ships. This is the Panama Canal will become deeper and wider from 2015. Ships carrying three times more will be able to pass through the canal, so transport will be cheaper.
People think a quarter of the Asia-to-US shipping that goes to the US west coast will then go to ports on the east coast.
Not many ports can take the very large ships. So they need a port in a good place to move containers to smaller boats to take to different regions.
Mariel is a good choice. It’s in a perfect place, on the north coast of Cuba. The building is going well - the first phase will be complete by the end of this year. Most of the money ($900 million) is coming from Brazil, and, when it is ready, PSA International (one of the best port operators in the world, from Singapore) will manage it.
But there’s one very big problem: the US embargo (trade ban) on Cuba.
The Cubans don’t talk about the embargo. They say Mariel will be a success, with or without the US.
When Brazilian president Dilma Rousseff went to an opening ceremony earlier this year, Raúl Castro said Mariel is a ‘transcendent’ project.
The port, and the 180-square mile (46,620-hectare) free-trade zone they will create around it, will be so good for Cuba’s future economy.
For years Cuba has imported more than it exports. It does not produce very much. One thing it does produce and export very successfully is medical staff, for international help. They exported 30,000 Cuban medics to Venezuela. And there are 7,400 Cuban doctors in Brazil.
But they will probably not export so many medical services to Venezuela in future, and they get less money from nickel, so the balance of trade is worse this year. Tourism is good, but it’s still not enough to pay for the fuel and food the island needs to import and for the cost of its social services.
Cuba relies too much on Venezuela, which is getting less stable since President Hugo Chávez died. So Cuba needs to produce more and trade with different countries.
The Mariel project is a very important part of that plan. It will mean more exports, fuel development and jobs. To prepare for this, in April this year, the Cuban parliament passed a new foreign investment law.
Investors will now get contracts for up to 50 years with the possibility of renewal and 100-per-cent ownership. They will be not have to pay any labour or local taxes and will get tax breaks on profits which they can take out of the country. In the rest of the country, there is a 30 per cent profits tax and 20 per cent labour tax.
Some people who look at the free-trade zone are worried. It is easy for this type of area to become a place of very low wages, with a lot of (mainly female) very cheap labour and exploitation, which do not benefit the rest of the economy.
Kevin Edmonds from NACLA says: ‘If Cuba, like so many others who have followed the EPZ [export processing zone] model, is not careful on this new economic path, it may lose its self-determination and human development and then have more poverty.’
But Cuba’s new investment law protects the local and national interest more than usual, says Emily Morris (a Cuba expert who teaches at London University).
A government team will need to be sure that any proposal will help Cuban development with new finance, technology, management ‘know-how’, or markets. This may seem logical, but it does not always happen. Another unusual point is that no Cubans will be paid directly in foreign money; the Cuban government will manage everything.
But what about the blockade?
People cannot say the US embargo is responsible for all the problems in Cuba. Writer Leonardo Padura said recently: ‘You can’t say the embargo is responsible when there aren’t enough potatoes in the market.’
But the US embargo has a big effect. It stops Cuban trade with the US, and with other countries too. Often companies have to choose to do business with the US or with Cuba – which is not really a choice.
It also means it is difficult for Cuba to get money from financial markets or for development. And it even has effects on Cuba’s humanitarian work.
The Spanish airline Hola had to end its contract with a Cuban overseas aid programme to treat people with eye diseases after the US government told Boeing to stop working with Hola’s planes.
The US government even took $4.2 million from the Global Fund to Fight AIDS, Tuberculosis and Malaria because they were for co-operation projects with Cuba.
To trade with other countries, Cuba has to be able to take money, but many systems (eg. Paypal) are go through the US. Sometimes payments (in dollars) go through the US by accident and then the US takes them. The US authorities give very big fines to companies that break sanctions (accidentally or not).
In June this year French bank BNP Paribas agreed to pay a fine of $8.9-billion after business with Cuba, Sudan and Iran – the US say these countries ‘sponsor terrorism’. There were other similar big fines to the Dutch Bank ABN Amro and the Royal Bank of Scotland (RBS).
Closest of enemies
Most countries in the world say the embargo is wrong. But recently, more Americans have said it must end too.
The US Chamber of Commerce now says that the embargo is bad for American business, especially for smaller companies that cannot register several different branches.
Even Cuban Americans in Florida, who have always agreed with the embargo, are turning against it, according to a recent poll. This is in part because the people who believed in it most strongly are now old or have died. The new generation wants good relations between the two countries.
It is not likely that the embargo will end soon – partly because of the constitution. The constitution now (1996 Helms-Burton Act) says they cannot end the embargo until Cuba holds free and fair elections and has a democratic government without the Castro family.
Also, they might want to keep Cuba on the list of ‘terrorist states’ so it is more difficult for other countries to do business with Cuba before they do.
US and Cuban governments do not have a good relationship, but ordinary people do. About half of all Cubans have some family members living in other countries, most in the US. Some are political exiles but many more are economic migrants, and they send money home.
Travel between the countries is now easier than at any time since the revolution. In one month in 2013 there were 332 flights from the US to Cuba. More than 520,000 Cuban-Americans will visit Cuba this year.
Rafael Hernández (from Temas magazine in Havana) says maybe they won’t stop the embargo, but it might slowly disappear. Already, the US exports a lot of food to Cuba each year – this started in 2001 when Cuba lost so much food in Hurricane Michelle.
In Mariel they have cut up and moved a lot of earth. There are digging machines, like insects, ready to start work.
Vladimir Putin was interested in the new port when he visited Cuba recently. Russia has agreed that Cuba does not need to pay the $3.5 billion debt they still have from Soviet times – they will re-invested this money in Cuba.
Both Castro brothers have supported Russia’s intervention in Ukraine. And people said that Russia would reopen an electronic listening post on Cuba, but Putin later said this is not true.
Chinese leader Xi Jingping also visited in July, with 50 Chinese business leaders.
They signed many trade, agriculture, biotech and infrastructure agreements. There are lots of construction opportunities at Mariel – factories, transport, hotels, apartments, even a luxury golf course.
China is the country that Cuba owes most money to. And until now, China has not had much involvement in Cuba because Cuba does not like investing countries to bring in their own workers. But the new foreign investment law now makes it possible for investors to bring in people from their country for construction projects.
What effect will all of this have on Cuban workers – and society in general?
One thing is certain – Cuba’s big neighbour, just across the water, will be watching with interest.
Alan Gross and the Cuban Five
Two cases are bad for US-Cuban relations.
One is about Alan Gross from the US. He is from the US Agency for International Development subcontractor and maybe works for the CIA. He still has 11 more years in a Cuban jail for bringing satellite communications equipment into Cuba.
Gross said he was trying to help the Jewish community with communications, not trying to get past Cuba’s strict internet controls. The Cuban court, in 2011, did not agree with him.
And the US arrested five undercover Cuban intelligence officers in Florida in 1998 and put them in prison on 26 charges (including spying and murder). Three of them are still in prison in the US. The Cubans were trying to stop terrorist attacks on Cuba planned by a group in Miami.
Amnesty International and other international organisations have criticised the treatment of the Cuban Five. Cuba offered to free Gross in exchange for the other three Cuban intelligence officers, but the US has not agreed.
NOW READ THE ORIGINAL: http://newint.org/features/2014/10/01/cuba-economic-hope/ (This article has been simplified so the words, text structure and quotes may have been changed).