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Obama’s Last Days and EU Competition May Drive Some Final U.S. Deals in Cuba

According to reports, the White House has stepped up efforts to secure deals for U.S. companies seeking to get established in Cuba.

What’s at stake is a potential reversal of President Obama’s detente with Cuba in the wake of threats by President-elect Trump to reverse the policy of engagement with the island nation.

General Electric, Google and three cruise companies have potential agreements nearing completion, according to the Miami Herald.

There is another aspect of competition from European Union (EU) companies hoping to capitalize on Cuba’s strategy to attract foreign investors in vital industries.

The EU has not waited for Fidel Castro’s death or a major economic transformation to strike business and political deals with Cuba.

French companies are set to revamp Cuba’s international airport. Germany is opening a trade office in Havana. Dutch giant Unilever began construction this year on a new $34 million soap and toothpaste factory in Cuba’s special development zone. And Spain has edged out Venezuela to become the island nation’s second-largest trading partner, after China.

Indeed, some experts say, it could present new opportunities.

“I don’t think this kind of conflict between the U.S. and Cuba is good for anyone, but to some extent you could say that for certain European businesses, it’s not a bad thing,” said Richard McIntyre, Cuba expert and University of Rhode Island economics chair.

European businesses may view a tougher U.S. policy toward Cuba as “an opportunity for them to step in,” McIntyre said.

Josefina Vidal, who heads the U.S. Department at Cuba’s Foreign Ministry, said in September that at least six U.S.-Cuba business deals were expected before the end of the year. She also said ETECSA, the Cuban telecommunications provider, was in talks with U.S. companies already working with the government — such as Sprint, T-Mobile and Verizon — about expanding web access.

European advantage

Professor Gert Oostindie of Leiden University in the Netherlands agrees that ending the uptick in relations with Havana under the Obama administration “might be advantageous for European companies” by removing potential competition.

France flag

By contrast, the death of Castro, who handed power over to his brother Raul in 2008, is unlikely to make much difference, Oostindie said. “Had it been 10 or 20 years ago, that would have been different,” he added.

In some ways, the transatlantic differences in relations with Cuba can partly be seen through rhetoric.

As Trump responded to Castro’s death last week by condemning him as a “brutal dictator,” European Commission President Jean-Claude Juncker strikingly called the longtime leader a “hero to many.”

Other European leaders have been less complimentary.

French President Francois Hollande called Castro a “towering” figure who incarnated both the hopes and disappointments of his country’s revolution. Strikingly, he also took the opportunity to renew calls for ending the U.S. embargo.

Last year, Hollande became the first Western leader to visit Havana after Washington restored diplomatic ties with the country. Cuban President Raul Castro paid his own visit to Paris in February. In both cases, French businesses were eager to reap the spoils.

EU-Cuba deal

The Europeans have done more than just talk. Earlier this year, the EU and Cuba cinched a deal normalizing relations, which the bloc is expected to formally adopt in December.

“This signifies there’s a definite opening of many doors in the relationship, both economic and political,” said Erwan Fouere, senior research fellow at the Brussels-based Center for European Policy Studies.

A former EU ambassador to Cuba in the late 1980s and early 1990s, Fouere believes the EU’s policy of engaging Cuba is the best way of addressing the human rights issues that Trump has raised.

“Obviously progress has not been as speedy as one would have hoped,” he said, “but there is greater hope of dealing with these issues through dialogue than when there is none.”

The Europeans have made bigger strides when it comes to trade and investment.

Delegations have been flocking to Cuba for months. Earlier this month, Cuba signed a trade agreement with Spain’s Catalonia region, which saw a 50 percent boost in its exports to the island in 2015. Overall, Spain’s trade with Cuba has been growing 15 percent annually, news agency EFE reported.

Then there is France, which ranked as Cuba’s 10th-largest trading partner last year, according to Business France, which supports economic development overseas.

Among other developments, French giant Total signed a deal last year to explore for offshore oil with Cuba’s state owned CubaPetroleo.

Construction, renovations

And earlier this year, industrial heavyweight Bouygues Construction and Aeroports de Paris SA were selected to renovate Havana’s Jose Marti International Airport and an aerodrome outside the capital. Bouygues is also involved in a port project and in constructing several luxury hotels.

“The number of tourists has soared, so great prospects for the Cuban hotel industry,” Bouygues spokesman Mathieu Carre said in an email.

Sign posted outside the construction site of the new Kempinski's Hotel Manzana in Havana. (Simons Chase/Cuba Journal)
Sign posted outside the construction site of the new Kempinski’s Hotel Manzana in Havana. (Simons Chase/Cuba Journal)

That includes French tourists, whose numbers have risen 41 percent since the start of the year, L’Express magazine reported.

“There is a huge flow of tourists from Europe going to Cuba, they’ve been going for quite some time,” analyst Fouere said. “And there is diaspora [in Cuba], particularly from Spain, from Galicia.”

Cuba’s medical and research talent might also pique European business interests, he said.

For his part, the University of Leiden’s Oostindie points to Cuba’s agricultural sector as ripe for development.

“It’s hopelessly backward in technology, so you can really start from scratch,” he said. “Universities also see a lot of potential for green agriculture.”

The red tape, slow pace and unpredictability of doing business in Cuba, however, remains a challenge, experts say – including the uncertainly about what will happen to the country after Raul Castro dies or leaves office.

Obama’s Last Days and EU Competition May Drive Some Final U.S. Deals in Cuba was last modified: December 2nd, 2016 by Simons Chase