Cuba: The wild card of the Caribbean

With relations softening between the United States and Cuba, one has to wonder about the possibilities of trade and business opportunities for the Caribbean region should the final trade barriers fall.

U.S.-based transportation and logistics company Crowley has been shipping goods to Cuba since 2001 by sea, mostly poultry and food products. Jay Brickman, Crowley’s vice president of liner services, said it’s complicated when it comes to the decades-old U.S. embargo. He said there are four amendments that have to go through the senate and house and eventually to the president. “It depends on a lot of things,” he said. “Legislators opposed to opening trade with Cuba have the ability to veto the amendments. Then the question is, is this still something they want to do?”
Both Brickman and Cari Cossio, of U.S.-based OHL Logistics, said the biggest problem with Cuba is infrastructure. Cossio said the roads are terrible and the business knowledge of the islanders in Cuba is limited. “They have a lot to do. They need tires, trucks,” she said. “How are they going to move freight in trucks from the ’60s?”

CUBA_CarribeanCossio said negotiations between Cuba and the U.S. will have to be massaged, because businesses from other countries have been kicked out by the Cuban government and their assets seized. “The Spaniards and the Canadians have done business in Cuba, but they’ve had trouble because the money is manipulated by the Cuban government,” she said. “And at the end of the day, we’re still facing OFAC [the U.S. Office of Foreign Assets Control],” which is responsible for enforcing sanctions against foreign countries. Cossio said many of the older Cubans who now live in the U.S. will be against trading with Cuba because their assets were seized when they left.

Raul Dube, with Miami Air Lease, said expanded trade with Cuba would have to be bilateral. “There are a lot of demands on the Cuban government,” he said, in the form of compensatory claims from Cubans living in the U.S. who lost assets. In the meantime, every day there are developers, architectural firms and investors going to Cuba to look for possible opportunities. According to an article in The Washington Post earlier this year, Cubans earn an average of $20 a month, which limits their potential as consumers. Exporters who sell agricultural and other permitted items to Cuba, often don’t get paid because of the lack of credit and direct banking between countries. Not only that, as Cossio said, the economy is government-controlled, and, with the exception of a few sectors including agriculture and telecommunications, U.S. firms are prohibited from selling to the Cuban government at the present.

Brickman said the Cuban government is overwhelmed right now with requests from everywhere; China, Iran, Mexico, France, and Brazil all want a piece of Cuba, not to mention Russia’s president Vladimir Putin, who is “very, very aggressive,” he said, and is willing to forgive all of Cuba’s debts to get in on any investment opportunity. He said these countries are concerned the U.S. will get there first and snap up all the best investments.

It will no doubt be some time before it is known what role Cuba will play in the airfreight market in the Caribbean. Cuba has been trading with other countries besides the U.S. Even with all of the obstacles outlined above, IATA forecasts Cuba to remain the largest economy in the region in terms of GDP through 2033, with forecast growth of 4.6 percent per year over the next 20 years. But until U.S. lawmakers lift the embargo, it’s a wait-and-see situation.

To read about the Caribbean region click here.

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