TRADE MISSION

Berlin's Man in Havana

Gabriel Havana DPA
Mr. Gabriel in Havana next to an image of Che Guevara.
  • Why it matters

    Why it matters

    Improved relations with Western nations, including eased trade sanctions and debt-restructuring, have opened Cuba to more outside investment.

  • Facts

    Facts

    • Germany exported €191 million, or $208 million, worth of goods to Cuba in 2014, and imported €33 million worth of goods from the country, according to Germany’s statistics office Destatis.
    • German business leaders hope that German-Cuban trade will quadruple in future years, to €1 billion.
    • On Thursday, Germany’s economics minister signed a memorandum to establish a German trade office in Cuba.
  • Audio

    Audio

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Sigmar Gabriel was visibly tired after his 11-hour flight to Cuba. It was 3 a.m. back in Germany, but still the prime of evening in Havana.

The German vice chancellor, who is also economics minister, took the speaker’s podium after a greeting by Germany’s ambassador to Cuba. He encouraged a delegation of German businessmen, who had just landed with him in Cuba, not to be disheartened by the difficult conditions on the Caribbean island, just 90 miles from the United States but still ruled by a communist regime.

The minister wants to help German companies get a foothold in Cuba, as U.S. trade sanctions are lifted and relations with Western nations improve. That’s why he is on the island for a three-day visit this week, accompanied by a 60-member delegation that included representatives from both mid-size companies and DAX blue-chip firms.

“Whoever wants to do business in Cuba needs perseverance.”

Jürgen Nicklaus, partner, Stefan Messer industrial gas group

On the flight across the Atlantic, Mr. Gabriel sought to manage expectations and pointed out that, with certainty, there are good business opportunities in Cuba. But only in the long-term. “We are still at the start of a development there,” he said.

Cuba is very interested in attracting German investment and technologies, from medical to energy to waste management. Investors, however, need secure overall conditions without excessive bureaucracy.

Mr. Gabriel is also leader of the Social Democratic Party, the center-left partner in Germany’s governing coalition. He even passed up his party’s parliamentary group meeting to go to Cuba. Normally, that’s a must-attend event for the head of the SPD.

As a young socialist, Mr. Gabriel said he thought it was “fantastic” when revolutionaries led by Fidel Castro overthrew the military dictatorship of Fulgencio Batista. But he said he was shocked and appalled later, when Cuba trampled on human rights under Mr. Castro’s rule.

The German vice chancellor was actually quite late in coming to the island. Many countries have already sent delegations, after the United States took steps to ease its trade embargo last year.

Mr. Gabriel’s fellow SPD party member, Foreign Minister Frank-Walter Steinmeier, has already been to Havana. French President François Hollande visited in May, accompanied by a high-ranking business delegation. And Italy’s prime minister, Matteo Renzi, arrived in October.  In fall alone, 25 business delegations made the trip.

The economics minister claimed one small success right at the start of his trip. Together with Cuba’s foreign trade minister, Rodrigo Marmierca, he signed a memorandum to establish a German trade office in Cuba.

German business leaders have said German-Cuban trade could quadruple to €1 billion in the coming years, with Cuba looking for foreign investment following its reopening of diplomatic relations with the United States.

Mr. Gabriel said German companies want long-term investment in Cuba under transparent rules.

“We want to put the political and economical relations to Cuba on a new basis,” he said. “We want a new partnership on an eye-to-eye level.”

Before signing, Mr. Gabriel praised Germany’s small and medium-sized businesses and the people who lead them.

“They are the reason why German business is globally so successful and innovative,” he told Mr. Marmierca. “If you can convince these companies to invest in your country, you have found a long-term partner.”

The last German economics minister to visit Cuba was Werner Müller, back in 2000. At the time, he tried to convince the “Maximum Leader” himself that reforms were necessary. The talks with Mr. Castro lasted six hours, but changed nothing.

 

Cuba on the Rise-01

 

But 15 years later, the hype around Cuba is huge — even though its population is under 12 million and conditions for foreign business are not at all easy.

Nevertheless, there’s great optimism about the country’s potential.

“Companies smell great opportunities,” said delegation member Johannes Hauser, executive director of the German-Mexican Chamber of Industry and Commerce.

The feeling of fresh beginnings is seen and felt everywhere: Brand new Chinese buses bump along streets full of potholes, while hip private restaurants are opening in Havana, though only foreigners and wealthy Cubans can afford them.

The first newly renovated buildings stand right next to decaying colonial-style villas. Among it all are Cubans with laptops or cell phones, trying to access the public Internet, which is gradually spreading across the country.

But anyone who travels across Cuba also quickly sees that the country has far to go. Streets are in disrepair and many buildings in Havana are in danger of collapsing. In the country, farmers still plow their fields with oxen, and the Internet is far too slow.

Medium-sized businesses were predominantly represented in Mr. Gabriel’s delegation, including machine manufacturers, pharmaceutical firms and food companies.

Martin Herrenknecht, founder and chief executive of the Swabian company that bears his name, is the world leader in mechanized tunnel technology. He is hoping for contracts in Cuba, for renovating sewage systems or burying power supply lines.

Like others, he said it would take time. “You need two to three years of set-up work in a country like Cuba,” said Mr. Herrenknecht.

“Whoever wants to do business in Cuba needs perseverance,” agreed Jürgen Nicklaus, a partner in the Stefan Messer industrial gas group.

He should know. Mr. Nicklaus is one of two German businessmen in Cuba working in a joint venture with the government. The company is considered a model for how German businesses can succeed in Cuba — and Mr. Gabriel made sure his delegation would visit one of its locations.

Mr. Gabriel is taking a great deal of time to open doors for the companies. He is spending the first full day of his trip in bilateral talks with the important planning and foreign trade ministers, as well as with Vice President Miguel Díaz-Canel. One thing is clear, his mission is all about encouraging the development of the market economy in Cuba. That’s a problem, since other countries, such as China, are not so squeamish about that. Chinese companies often get the contract thanks to the lavish distribution of credit by the socialist brother state.

On the program for this Friday is the obligatory walk through Havana’s old town – there Mr. Gabriel will be able to see for himself how Cuba is rapid changing and its much-publicized “morbid charm,” which will now gradually disappear.

 

Dana Heide is a Berlin-based correspondent for Handelsblatt, covering energy policy, small and medium-sized businesses and innovation. To contact her: heide@handelsblatt.com.

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