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Published: Sunday, April 15, 2012, 12:01 a.m.

Cuba embargo costly to U.S. business

On the Communist island, business abounds -- just not from the U.S.

  • A Cuban oil worker works on a well near the town of Santa Cruz del Norte on March 29. China is developing many of the island's energy resources.

    Kevin Hall / McClatchy Newspapers

    A Cuban oil worker works on a well near the town of Santa Cruz del Norte on March 29. China is developing many of the island's energy resources.

  • In Cuba, the embargo is known as the "Blockade." This sign in Havana on March 24 reads in Spanish: "Blockade: The Longest Genocide in History."

    Franco Ordonez / McClatchy Newspapers

    In Cuba, the embargo is known as the "Blockade." This sign in Havana on March 24 reads in Spanish: "Blockade: The Longest Genocide in History."

Leaving Jose Marti International Airport in Havana, a billboard reminds vividly of the U.S. trade embargo on Cuba. It shows a noose with the phrase, "Blockade: The Longest Genocide in History."
The embargo, partially imposed in 1960 and fully in place two years later, is not a blockade. That's clear by the abundance of foreign goods and investment in Cuba.
It is a blockade, however, in the sense that U.S. companies are blocked from doing business in Cuba. That hasn't stopped their international competitors from Canada, Mexico, Brazil and even China from setting up shop.
It's striking when visiting the island just how much the rest of world now trades with, invests in and sends tourists to Cuba.
Just drive east from Havana on the Via Blanca highway along the northwestern coast and toward Varadero, the Cuban resort city where Europeans, Canadians and Brazilians frequently vacation. Even before you reach Varadero's beaches, there are plenty of reminders of globalization.
Near the town of Santa Cruz del Norte, China's Greatwall Drilling Co. is searching for oil in cooperation with the Cuban state oil company known as Cupet. Some workers sport red jumpsuits with the company's GWDC logo. Much of the machinery was made in Romania during the era of Soviet control over the East Bloc.
Chinese Vice President Xi Jinping, expected to become his nation's next leader in 2013, visited the joint venture in June. Greatwall has developed more than 63 wells in Cuba since 2005, the newspaper China Daily reported then.
Greatwall's parent company, the China National Development Corp., won a contract in 2010 to expand a Cuban oil refinery jointly owned with Venezuela's state oil company, PDVSA.
Just down the road from Santa Cruz del Norte, the Canadian flag flies in a joint venture between Cuba's state energy sector and Sherritt International Corp. Sherritt, one of the biggest foreign investors in Cuba, is involved in oil and gas drilling and financed expansion of a nearby gas-fired power plant.
And Spain's oil giant Repsol YPF in February began drilling in the ultra-deep waters offshore, about 30 miles northwest of Havana. Repsol and its Indian and Norwegian partners are drilling for oil about 5,600 feet below the ocean surface in the Strait of Florida.
Foreign firms are seeking opportunities in other business sectors, too. Up until 2004, U.S. farmers accounted for 36 percent of food aid to the island. Much of that involved exports of poultry products, corn and soybeans from the U.S. heartland. But the Bush administration tried to put further pressure on the Cuban economy by requiring more upfront cash from Cuba for imported food.
In 2008, the U.S. exported $710 million in farm goods to Cuba, a figure that fell to $347 million in 2011, according to the U.S.-Cuba Trade and Economic Council, a New York-based group that favors an end to the embargo.
Into the gap came Brazilian farmers, whose government provided looser terms and took much of the business.
Advocates of lifting the embargo say international companies have partnered with Cuba on a wide range of products, including Cuban cigars, rum, bottled water, fruit juices, port development, ice cream and cosmetics.
"Not to mention oil, which is the 800-pound gorilla that's about to walk into the room," said Kirby Jones, whose company, Alamar Associates, has been consulting and leading U.S. trade missions to Cuba since 1974. "Here's China, drilling for oil in Cuba."
Still, there's little expectation that the United States will lift its trade embargo soon. The issue is expected to come up again this weekend as President Barack Obama travels to Columbia to meet with other leaders in the hemisphere. But Obama's hands are tied: Congress in 1996 enshrined the embargo in a law known as the Helms-Burton act. That law mandates that the embargo can be lifted only once a democratic government rules in Cuba.
Pope Benedict XVI, during his visit to Cuba last month, repeated the Vatican's long-standing opposition to the embargo on the grounds that it hurts the poor, not the Cuban government.
"The present hour urgently demands that in personal, national and international co-existence we reject immovable positions and unilateral viewpoints," Benedict said in Havana.
But the embargo is popular in Florida, a battleground state in the upcoming presidential election, where Cuban exile voters in Miami will no doubt prove a major influence.
Ninoska Perez, a commentator on Miami's Spanish-language Radio Mambi, said nothing has happened in Cuba that merits lifting the embargo. The Castro regime continues to repress its people, she said, adding that during Pope Benedict's recent visit, dissidents were prevented from attending events and had their phone lines cut.
Rep. David Rivera, R-Fla., also defended the embargo, saying it's the only foreign policy tool the United States has to ensure that the next government doesn't follow the Castro regime's leadership path.
"Whatever type of transitional government or transitional regime that will be in place will know that unless they move toward democratic reforms, the United States will not lift the economic embargo," he said.
Some former U.S. officials say lifting the embargo, however, might actually encourage change. They note that since the embargo was imposed, the Vietnam War came and went, the Soviet Union collapsed, the two Germanys reunited and communist China rose to become the world's second-largest economy. The United States now trades with all those former enemies, even Vietnam and China, where there has been no political opening. But the Cuban embargo continues and the Castro brothers, Fidel and Raul, remain firmly in control.
Vicki Huddleston, a retired U.S. ambassador who headed the U.S. interests section in Havana from 1999 to 2002, said she now favors lifting the embargo, a step she said would encourage change on the island.
"It would change the whole dynamic," Huddleston said. "Trade is hard to control. They'd have to cope with something they've never had to cope with. And then they would be really forced into making those economic and political changes that they're managing now."

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