MSNBC
September 8, 1998
 
Commerce in Cuba: risky business
 

                        By Rudy Maxa
                        MSNBC CONTRIBUTOR
 

                        For a country that’s been politically ostracized by the United States government
                        for nearly 40 years, Cuba boasts an impressive headquarters in Washington, D.C.
                        More than 40 employees go to work every day in a stone mansion on 16th Street, just
                        next door to the Polish embassy.

                                “But the United States has hundreds of employees in Havana,” notes Gustavo
                        Machin, the first secretary of the Cuban Interest Section that operates under the
                        aegis of the Swiss embassy in Washington. A high black gate surrounds the
                        well-manicured lawn and gardens of the Cuban outpost.  After a guard buzzes the gate
                        open, a visitor approaches the mansion that is really an embassy in everything but name
                        and enters a grand entrance hall whose centerpiece is a sweeping marble staircase with a
                        blood-red carpet running up the steps. It looks like a set for “Evita.”
                                I’m visiting to discuss doing business in Cuba, and Machin, dressed informally in a
                        short-sleeved green shirt, matching tie and thin corduroys, is happy to oblige.
                                Except there isn’t much to discuss.
 
                         NO DEAL

                                While Cuba would be delighted to do business with Yankees, Americans and
                        American companies aren’t allowed to do business with Cuba. In fact, it’s illegal for
                        most Americans, except for journalists and certain specific interest groups, to even visit
                        Cuba. Americans aren’t supposed to spend a U.S. dollar there, though the dollar is
                        commonly accepted as local tender. The Americans who do visit are supposed to be
                        “hosted,” or sponsored, by resident Cubans.
 
                                    But try telling that to the pleasure boaters from the States who routinely sail over to
                        Cuba for a little respite and rum. Or to the American businessmen and women who talk
                        deals in the lobby of the Hotel Nacional in Havana. Want a Coke? Some Kodak film? No
                        problemo, though those American firms are legally prohibited from doing business in Cuba.
 
                                What’s going on?
 
                         THE POLITICAL DOGHOUSE

                                What we have here is one of the strangest political and economic situations Uncle Sam
                        has ever engineered. As European, South American and Asian firms invade Cuba to strike
                        deals, Americans watch from the sidelines, eager to do business with a country only 90 miles
                        offshore of Florida that needs lots of everything. And while the U.S. government sends food
                        and medicine to traditional enemies including North Korea and encourages trade with
                        Communist countries such as China, Cuba remains in the political doghouse.

                                 “I think there’s a psychological thing that’s built up over the years,” says Kirby Jones,
                        who for 24 years has run a Washington-based consulting firm, Alamar Associates, that’s worked
                        with a long list of American companies curious about entering the Cuban market.

                                 “Castro has a beard and wears green fatigues and doesn’t look like your normal head
                        of state. And he comes from a small country. The United States historically hasn’t won a lot of
                        blue ribbons in dealing with small countries. We tend to want them to do what we want them
                        to do, whether it’s Vietnam or El Salvador. But the Chinese, a big country, or the former Soviet
                        Union, we cut them much more slack.”

                                 The embargo against doing business with Cuba is maintained with the help of a “very loud
                        and very effective, right-wing Cuban community,” as Jones describes the largely lorida-based
                        Cuban-American community that loathes Fidel Castro.
 
                         HOPE SPRINGS ETERNAL

                                But, still, American businesses are hopeful. Last May, Jones arranged a seminar in Cancun
                        for executives from firms including Caterpillar, Texaco, Mobil Oil, Continental Grain, Pharmacia,
                        Upjohn and Bristol-Myers Squibb. The purpose: to learn about business opportunities in Cuba.
                        With the permission of the U.S. government, Kirby and more than 50 executives traveled from
                        Cancun to Havana to meet with Cuban officials (including Castro) and Cuban business types with
                        whom the Americans would be likely to partner.
 
                                But, so far, this is a relationship that hasn’t moved past foreplay for decades. Because even as
                        Washington grants Jones and his conference participants permission to go to Havana on a
                        fact-finding mission — Jones is hosting a second such seminar and trip, at $3,250 per person, Sept.
                         9-12 — there’s little indication Washington will loosen trade restrictions.
 
                         HUMANITARIAN CONCERNS
                                 “I was hopeful that as the Cold War ended, we’d find a way to change our policies
                        toward Cuba, and, by the way, that Cuba would change some of its behavior,” says Craig
                        Fuller, former chief of staff to Vice President George Bush and currently an executive at
                        the headhunting firm Korn/Ferry. “I believe Cuba has made some changes. They haven’t
                        gone as far as I’d hoped ... but it’s my view we ought to find ways to bring about a series
                        of changes that ultimately will lead to expanded trade opportunities.”

                                 Fuller, along with former congressman Sam Gibbons, heads an organization begun
                        earlier this year under the auspices of the U.S. Chamber of Commerce called Americans for
                        Humanitarian Trade With Cuba. The group wants to change American law to permit American
                        firms to sell food and medicine to Cuba. There are some heavy hitters on the group’s board,
                        including former Treasury Secretary Lloyd Bentsen, former U.S. Trade Representative Carla Hills,
                        and philanthropist David Rockefeller.

                                “Cuba is the only nation that the United States prevents  food and medical sales to — it puts
                        burdens on the Cuban people that were never intended and should no longer be tolerated,” says Lissa
                        Weinmann, a spokeswoman for Americans for Humanitarian Trade With Cuba.

                                The group has two bills pending in Congress; theSenate bill has 29 sponsors, the House
                        version has 132 sponsors, says Weinmann. Both bills would essentially permit the sale of food
                        and medicine to Cuba, though atleast in the latter category, the trade might not be only oneway.
                        Multinational pharmaceutical companies have their eye on a vaccine against meningitis B that Cuba’s
                        sophisticated biotechnology industry has developed. It’s a vaccine that could save the lives of
                        American children, but the embargo prevents American firms from obtaining it.
 
                         TAKE A NUMBER, PLEASE

                                “You clearly see all the road signs of our competitors worldwide having organized
                        over there,” says H.P.Goldfield, a Washington, D.C., lawyer who has visited Cuba.
                        “Dozens and dozens of companies from Korea, Japan and Europe are all over Cuba,
                        and Cubans are not waiting for America to open its trade. We do lots of business with
                        regimes with whom we don’t agree politically, and I don’t agree with Castro or his
                        regime on almost all issues. But I don’t think we should end up last in line, especially in
                        cases involving humanitarian benefits.”

                                Echoes Kirby Jones: “Havana is a wild West town for investments. Cuba is a
                        country with a highly educated population and a disciplined work force that’s been
                        closed to Western investment for 30 years.” Since Cuba opened its doors to overseas
                        investments a few years ago, foreigners have rushed in — some 500 companies have
                        offices therenow, says Jones. The Israelis are building a multi-purpose building in Havana.
                        Hotels and resorts are opening on beaches. And how do those Cokes and other American
                        products get there? They arrive from other countries.

                                Jones says Cuba would obviously like to deal with suppliers 90 miles away rather
                        than 6,000 miles away. He says the first goods America could sell to Cuba are obvious,
                        big-ticket items: corn, rice, wheat, soybeans, animal feed, pesticide, fertilizers — all
                        commodities that “can be barged down the Mississippi.” Then there’s the obvious lure
                        of tourism should Americans be allowed to visit. And construction entails the sale of
                         equipment, supplies and know-how.

                                 “We’re too late for mining,” says Jones. “Too late for hotel construction,
                        telecommunications, cement, textiles.There are now existing joint ventures of a sizable
                        nature, so it’ll be tough for the United States to break in, unless, say, a Sheraton or Marriott or
                        Inter-Continental wants to buy existing properties.”
 
                         BUSINESS GOES ON

                                But are there Americans actually doing business with Cuba today? A friend tells me of a
                        guy in Los Angeles who has gotten rich bringing in Cuban cigars via Mexico and then selling
                        them at a huge premium to restaurants and nightclubs in southern California who sell them
                        under-the-counter for an even higher price. But he’s not as much a businessman as a smuggler.

                                 “American business people are operating illegally, selling products through third
                        country intermediaries — construction material, shoes, it could be anything,” says Weinmann
                        of the group that’s trying to pry open U.S. law by permitting sales of food and medicine.
                        “You see a lot of American businessmen when you go to Havana, and most are traveling there
                         illegally.”

                                    But even Gustavo Machin of the Cuban Interest Section in Washington reminds
                         me, as we sit and chat in an anteroom with a polished wood floor and high ceilings, that
                        U.S. law makes it illegal for Americans to do business, even through cut-outs in other
                        countries. He doesn’t agree with the law, but he says when American business types call
                        on him or his office for assistance, he’s helpless. Sure, he can suggest a hotel in Havana,
                        and everyone knows it’s easy for an American to reach Cuba by flying out of places such as
                        Canada, Nassau or Mexico. But trade? Not yet.

                                “The passion for keeping the embargo has not been  matched so far by the passion for
                        lifting it,” says John Howard, director of international policy and programs at the U.S.
                        Chamber of Commerce. “The momentum, however, is increasing. It’s not just business
                        people — the Pope said he thought the embargo was inhumane. And it’s nice to have the
                        Pope on your side.”