Cuba Libré

More Than Just Cigars

cuba-AFP
Cuba's agriculture is being opened to greater entrepreneurship.
  • Why it matters

    Why it matters

    Cuba could become a fertile place for Europe to do business, as the country moves slowly toward more liberal economic policies.

  • Facts

    Facts

    • After Venezuela, the European Union is Cuba’s second largest trading partner with €2.5 billion in volume.
    • The island nation is seeking outside investment totaling some €8 billion for 246 projects ranging from infrastructure to medical technology.
    • Cuba remains the only Latin American country without a trade and dialog agreement with the European Union.
  • Audio

    Audio

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Federica Mogherini, the E.U. representative for foreign affairs and security who recently visited Cuba, sees the last communist island in a sea of capitalism as a fertile place for Europe to do business as the country moves toward more liberal economic policies.

“The country is changing very dynamically,” said Ms. Mogherini, who also is vice president of the European Commission and the highest-ranking member of the European Union to visit the island nation in years. “We are excited to see how European Union relations with Cuba can move forward for the benefit of all concerned.”

Her mission is to forge new ties and put relations between the European Union and Cuba on a new footing. Recent gestures toward normalization of relations between the United States and Cuba, which have been poisonous since Fidel Castro led a Communist revolution in 1959, have started a race for the best starting position for the economic opportunities and cooperation expected to follow the political opening of the island.

Cuba’s long hibernation is finally over.

Since President Raul Castro took control seven years ago, reforms have come at a dizzying pace: civil rights, Internet access, house and car sales, one-person companies and entrepreneurial start-ups. These things were unthinkable in past decades.

For example, in the capital city of Havana, private “living room” restaurants are springing up everywhere while private accommodation, designer shops and galleries are opening. Agricultural production used to be shaky at best, but has noticeably improved since farmers have been allowed to privately cultivate and sell portions of their harvests themselves.

“Better relations with the E.U. could effectively support Cuba’s political transition and improve the human rights situation.”

Norbert Neuser,, Member of the European Parliament

The European Union is Cuba’s second-largest trading partner after Venezuela with a share of almost 22 percent and around €2.5 billion or $2.75 billion in volume. This is about much more than just the country’s world-famous cigars. Spain is active in the hotel and tourist industries while France is strong in the construction and telecommunications sectors. An estimated 40 German companies are in Cuba either directly or through representatives. German know-how is in great demand for improvements to infrastructure, medical technology and energy production.

Cooperation between Europe and Cuba was reduced to a minimum level in 2003 in the wake of the detention of 75 dissidents, but prior to that, the region was Cuba’s most important economic partner and one of its most intensive dialog partners. After the dissidents were released, Brussels sought a normalization of relations again in 2008.

Since then, Brussels has invested €150 million, or $165.3 million, in collaborative ventures with another €50 million slated through 2020. Yet Cuba remains the only major country in Latin America without an agreement on political dialog and cooperation with the European Union.

“Better relations with the European Union could effectively support Cuba’s political transition and improve the human rights situation,” said Norbert Neuser, a Social Democrat who political development expert in the E.U. parliament. Spain and the Netherlands have pushed hardest for a policy change toward Cuba, largely because the majority of Cuban exports reach Europe through those two nations.

Economic experts say Ms. Mogherini’s visit was long overdue.

 

Cubas Economy-01

 

“It is the right sign for interested companies,” said Johannes Hauser, executive director of the Regional German Chamber of Industry and Commerce for Central America and the Caribbean. “Also given the threat of new competition from the U.S. in case the trade embargo falls in the medium term.”

Cuba, the largest island in the Caribbean with 11 million inhabitants, presents an economically interesting partner since foreign investors are allowed more freedom. In 2014, Havana’s economic planners offered 246 projects for foreign participation, hoping to bring in around €8 billion in investments in energy, infrastructure, hospitality and food sectors.

U.S. businesses already are worried about being left behind.

President Barack Obama’s announcement about normalizing relations didn’t lift the ongoing trade embargo. While it has been loosened here and there, Mr. Obama can lift sanctions only with the approval of Congress. But Republicans hold the majority there and want to continue the cold war in the balmy Caribbean as long as the Castro regime remains in power.

The farm lobby in the U.S. is especially frustrated. “It is one thing to compete with Brazil for the Chinese market,” said Mark Albertson, director of strategic market development for the Illinois Soybean Association. “But it’s embarrassing when our own government stops us from being competitive in our own backyard.”

Farmers, agricultural corporations and other agrarian business have joined together to form a “Coalition for Cuba,” in an effort to press Congress to allow them entry to Cuba.

 

Klaus Ehringfeld is a correspondent for Handelsblatt in Mexico, the Caribbean and Columbia. Moritz Koch is the Washington correspondent for Handelsblatt since 2013. Thomas Ludwig is one of Handelsblatt’s European Union correspondents in Brussels. To contact the authors: ehringfeld@handelsblatt.com, koch@handelsblatt.com, ludwig@handelsblatt.com

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