Investment in Cuba
FOREIGN INVESTMENT IN CUBA: THE LIMITS OF
COMMERCIAL ENGAGEMENT
María C. Werlau
Since the collapse of the Soviet Bloc, the Cuban government embarked on economic liberalization based on the adoption of capitalist mechanisms which include an opening to foreign investment. This has led to increasing claims abroad that engagement— particularly commercial engagement within the context of constructive engagement1 —is the policy instrument that will lead to economic and political reform and the eventual collapse of Castro’s regime.
Engagement, in fact, is the fundamental element of the foreign policy of most countries towards Cuba.
The emerging “new consensus” argues that the Communist Cuban regime will not be able to withstand the corrosive practices of liberal capitalism and, for this reason, considers the development of business ties with the current government desirable.2
The United States’ policy towards Cuba has generally varied in approach; its importance is widely recognized given the two countries’ geographic proximity
and the historic significance of their relations. With some exceptions—the most notable during the Carter Administration—since the early years of the Castro government, it has been essentially founded on political isolation and a comprehensive economic embargo.3 For this reason, since Cuba began a decisive opening to foreign capital, U.S. investors have been precluded from potential business opportunities there and Cuba has been unable to access the largest consumer market and source of capital and tourism in the hemisphere. Presently, the issue of U.S. commercial engagement with Cuba is considered settled until a transition to democracy is initiated there or further legislation dictates a change in policy. The
Clinton Administration had been committed to encouraging a distinctive policy mechanism, which might be described as “focused engagement,” aimed at supporting the emergence of a civil society in Cuba.4 But after
COMMERCIAL ENGAGEMENT
María C. Werlau
Since the collapse of the Soviet Bloc, the Cuban government embarked on economic liberalization based on the adoption of capitalist mechanisms which include an opening to foreign investment. This has led to increasing claims abroad that engagement— particularly commercial engagement within the context of constructive engagement1 —is the policy instrument that will lead to economic and political reform and the eventual collapse of Castro’s regime.
Engagement, in fact, is the fundamental element of the foreign policy of most countries towards Cuba.
The emerging “new consensus” argues that the Communist Cuban regime will not be able to withstand the corrosive practices of liberal capitalism and, for this reason, considers the development of business ties with the current government desirable.2
The United States’ policy towards Cuba has generally varied in approach; its importance is widely recognized given the two countries’ geographic proximity
and the historic significance of their relations. With some exceptions—the most notable during the Carter Administration—since the early years of the Castro government, it has been essentially founded on political isolation and a comprehensive economic embargo.3 For this reason, since Cuba began a decisive opening to foreign capital, U.S. investors have been precluded from potential business opportunities there and Cuba has been unable to access the largest consumer market and source of capital and tourism in the hemisphere. Presently, the issue of U.S. commercial engagement with Cuba is considered settled until a transition to democracy is initiated there or further legislation dictates a change in policy. The
Clinton Administration had been committed to encouraging a distinctive policy mechanism, which might be described as “focused engagement,” aimed at supporting the emergence of a civil society in Cuba.4 But after
Cited: in Negocios en Cuba, Suplemento del Mundo en Síntesis (19-25 August 1996), p.1. 26. “Cuba Report/Lage…,” The Cuba Report (August 1996), p. 4. Between 1993 and 1995 tourism in the Caribbean is said to have grown 6.8 percent per annum, while in Cuba growth reached 17 percent. 31. USCTEC, Economic Eye on Cuba (1-7 July 1996), p.2. Reportedly, there are 26,000 hotel rooms in the island, “but many do not yet meet international standards.” 32. USCTEC, Economic Eye on Cuba (24-30 June 1996), p. 3. On July 1, 1996, for example, Canada’s Wilton Properties Ltd. formed a joint venture with Cuba’s Gran Caribe Tourism Corporation (VANCUBA Holding, S.A.), to purportedly build 11 hotels with 4,200 rooms during the next ten years. The investment calls for both partners to divide the US$400 million cost of the plan. See USCTEC, Economic Eye on Cuba, USCTEC, 1 to 7 July, 1996, p.2.) 34. Business Tips on Cuba, Vol. 3, No. 9 (September 1996), p. 4. Business Tips on Cuba, a monthly magazine which promotes business in Cuba, is a project of the United Nations Program for Development empresario interesado,” El Nuevo Día (23 November 1995) and Negocios en Cuba, Suplemento del Mundo en Síntesis (19-25 August 1996), p.1. Foreign Investment in Cuba, as of August 1, 1996 (in U.S