By JIM CARRIER
Last month, two Caterpillar Inc. executives had the kind of
face-to-face meeting with a national leader that salesmen dream
about -- except
the leader was Fidel Castro, and they weren't allowed to
sell him anything.
At a dinner the
Cuban leader threw in Havana for several American
business people,
Castro asked the Caterpillar managers about bulldozers.
They told him
the largest Cat exceeded 1,000 horsepower. His bushy
eyebrows shot
up; Cuba's Russian machines are only 100 horse and are
notoriously
unreliable. "I can't comprehend" bulldozers like the ones his
guests were
describing, Castro said through an interpreter.
At about the
same time, a high-ranking Cuban diplomat traveled to the
world headquarters
of the Radisson Hotels, a unit of the Carlson Cos., in
St. Paul. He
assured Peter Blyth, Radisson's president, that three sites
eyed by Radisson
years ago in Havana and Varadero, a resort on the
northern coast,
were still available for hotel development. The properties
have no claims
against them by foreigners forced out of the country after
Castro took
power in 1959, he added, and the Cuban government was
eager to do
business with Radisson.
These two recent
contacts between capitalist America and Communist
Cuba represent
a small but growing movement by American companies to
prepare for
the day when doing business with Cuba is not trading with the
enemy, as most
such transactions are now legally defined. In spite of the
36-year-old
U.S. embargo that prohibits all but a narrow range of
commercial activity,
and in spite of discouragement by the State
Department,
American executives are circling the island like Navy
gunboats once
did, and, in increasing numbers, actually landing.
Cuba's needs
are certainly monumental. American executives who have
visited Cuba
recently estimate the market just for basic goods and
services like
food, medicine and road repair at $2 billion to $4 billion
annually. Blyth
of Radisson Hotels predicts Americans would flood Cuba
in the unlikely
event that travel restrictions were eased -- driving up the
number of annual
foreign visitors to 10 million from the current mostly
European crop
of 1.2 million. Under current law, Americans are free to
travel to Cuba,
but can't spend a dime unless they are licensed by the
State Department
or are the guests of officially designated hosts, like the
Cuban government
or some foreign company.
"You could run
brake shoes over for '53 Chevys and make a fortune,"
said Rob O'Neill,
manager of the Key West, Fla., harbor, who often talks
with associates
about the money-making opportunities that will open up
when the embargo
ends.
Before Americans
can sign deals, however, Congress must lift the
embargo. And
that is unlikely to happen as long as Castro remains in
power. "Castro
has to leave, vertically or horizontally," said Marc
Thiessen, press
spokesman for Sen. Jesse Helms, the North Carolina
Republican who
is chairman of the Foreign Relations Committee. Even
so, he suggested,
Castro's departure may not be so far off. "We're so
close," Thiessen
suggested. "Castro's revolution is dead."
Still, with the
prospect of the bars coming down to the hemisphere's last
forbidden market,
an island of 11 million people just 90 miles south of the
Florida coast,
American business is straining at the leash. "It's not even
controversial
in our membership," said John Howard, director of
international
policy for the United States Chamber of Commerce. "There
is a widespread
and growing sentiment that our policy toward Cuba
makes no sense."
For now, American
business is pretty much limited to advocating a
change in American
policy, which has been dictated for decades by the
mostly anti-Castro
Cuban-American community, to slipping through the
few fissures
that Washington has allowed to develop in the ban, and to
keeping up a
dialogue with Cubans.
The number of
American business representatives traveling to Cuba --
legally, but
in most cases without State Department sanction -- has
quadrupled to
a projected 2,000 this year from 500 in 1994, according to
the U.S.-Cuba
Trade and Economic Council of New York.
Just last month,
a delegation of mid-level officers from major corporations
-- including
the Mobil Oil Corp., Texaco Inc., Pharmacia & Upjohn,
Bristol Myers
Squibb, Continental Grain, the Case Corp., a unit of
Tenneco, and
Caterpillar Inc. -- were the official guests of Castro and his
top ministers
in Havana, and a follow-up trade show is proposed in
September, said
organizer Kirby Jones of Alamar Associates. Another
trade show for
American companies, this one for medical products, is
planned within
the year by PWN Exhibicon International, based in
Connecticut.
For the most part, participants in such events describe them
as fact-finding
tours, though American companies are allowed to take
such measures
as signing nonbinding letters of intent with Cuban groups or
registering
trademarks and brand names.
Meantime, President
Clinton has widened ever so slightly some small
cracks in the
trade embargo. On March 20, he announced a measure to
expedite shipments
of drug and medical equipment, which are already
exempt from
the ban. At the same time, he authorized the resumption of
direct flights
to Cuba and of remittances of up to $1,200 by Americans to
relatives in
Cuba, a measure that should boost sales for the approximately
100 American
companies given special dispensation to trade with Cuba.
Those companies
do a combined $100 million-a-year business in Cuba --
a drop in the
bucket compared with the inroads being made by some of
America's trading
partners. The Cuban government reports that
companies from
25 countries have committed $2 billion to 340 joint
ventures and
associations with the Cubans, and have announced other
deals worth
an additional $4.5 billion.
Canada is the
biggest foreign investor, accounting for one-third of the
money flowing
into the country, followed by Italy, Mexico, Spain, France
and Holland.
The Sherritt International Corp. of Toronto is reportedly the
single most
active foreign company, with $800 million committed. The
company produces
40 percent of Cuba's oil and is also involved in
mining, power
generation, cell phones, tourism and agriculture, said
Patrice Merrin
Best, senior vice president.
Castro, one of
the world's last avowedly Marxist leaders, has made a
series of concessions
to the capitalist West since the collapse of the
Soviet Union
and the end of Moscow's $3 billion-a-year subsidy to his
economy. He
has liberalized agriculture, allowed tourists to spend dollars,
and even invited
the pope for a visit in February. In 1995, his government
created free
trade zones and allowed up to 100 percent foreign
ownership in
many sectors.
This year, the
Cuban government will host 250 trade fairs, a turnabout 38
years after
Castro began the nationalization of hundreds of foreign
companies that
led to the trade embargo. The first property seized, on
June 29, 1960,
was a Texaco refinery. The rest followed on Aug. 6.
President Kennedy
imposed the embargo Feb. 7, 1962.
Nearly 6,000
property claims have been certified by the United States;
more than half
of them, with a 1972 value of $1.8 billion, are held by 30
corporations.
Under the Helms-Burton Act of 1996, the embargo can be
lifted only
after those claims are settled by a democratic government that
does not include
Fidel or Raul Castro.
Rather than cowing
American companies keen on doing business in Cuba,
however, that
requirement has galvanized them to speak out against the
embargo, according
to John Kavulich 2nd, president of the U.S.-Cuba
Trade and Economic
Council, a nonprofit business organization that
describes itself
as nonpartisan. "Large companies moved from just
gathering information
about Cuba to finding out what they could do in
Cuba today,
and then doing it," he said.
Even some companies
with big compensation claims are cautious about
making an issue
of them as they eye the Cuban market. Texaco hopes to
resolve its
demand "if the opportunity represents itself," said Chris Gidez,
director of
external communications. Meantime, the company sent a
member of its
Latin American business team to Havana last month to
meet with government
officials.
Until now, most
American corporations have feared approaching Cuba's
shores, even
when it was legal. Medical sales, for example, have been
allowed for
years, but only 40 transactions have been licensed since
1992, and medical
companies have given away more than they've sold.
Another 10 exploratory
licenses have been issued.
Medical companies
appear reluctant to jump into Cuba; Eli Lilly & Co.
said it had
no plans to apply for a license as long as the full embargo
remained. Part
of the reason for their hesitation is the endless paperwork
that awaits
them. Any pharmaceutical company wishing to exhibit
products at
the planned trade show by PWN Exhibicon International, for
example, must
first get a permit from the federal government, then a
separate license
to sell any product, be it an X-ray machine or a box of
surgical gloves.
Even more daunting
is a prohibition on high-technology exports so broad
that it basically
includes anything with a microprocessor. "They think it's
going to be
put in the nose of a cruise missile and sent back our way,"
said W. Bradford
Gary, a board member of the Medical Device
Manufacturers
Association, who visited Cuba last month. As a result, he
said, Cuban
doctors wash and reuse surgical gloves and operate 1950s
kidney-dialysis
machines with no spare parts.
At the moment,
the largest licensed transaction with Cuba is AT&T's
annual payment
of $23 million for access to the Cuban market, part of
$66 million
in fees from nine long-distance companies. (Most of the
long-distance
calls that AT&T makes money on originate in the United
States.) American
airlines pay another $6 million to fly over Cuban air
space en route
to South America.
Other transactions
range from Western Union moneygrams to three
charter flights
a week from three Miami charter airlines, which last year
were permitted
to fly 17,000 journalists, academicians and humanitarians
and 43,000 Cuban-Americans
home for their once-a-year family visit.
After two American
civilian planes were shot down by Cuba in 1996,
direct flights
to the island were banned, and American visitors had to
travel first
to Mexico or the Bahamas and board foreign airlines there for
the final leg
to Havana. President Clinton's reversal of that policy is
expected to
reduce the round-trip fare to about $300 from $400, while
boosting the
traffic handled by American charter companies by 50
percent, to
90,000 passengers a year, said Vivian Mannerud. president of
the Airline
Broker Co.
"Since the pope's
visit, we've seen an increase in visa applications, nearly
doubling," Ms.
Mannerud said. "People are saying it's time to visit their
families, some
who have waited 30 years."