President Donald Trump has struggled to lure businesses back into Venezuela after deposing its authoritarian leader in January. Cuba could be an even harder sell.
The Trump administration continues to ratchet up economic pressure on Cuban President Miguel Díaz-Canel with sanctions and an energy blockade and is inching closer to military action as it looks to weaken or even topple the regime there.
But helping to “build a better future” for Cuba, as Secretary of State Marco Rubio offered in a video message directed at the Cuban people this week, will require massive private sector investment on the Communist-controlled island. U.S. businesses are wary. And, without their involvement, Cuba could become a dangerously impoverished and ungovernable country of roughly 10 million people situated 90 miles south of Florida.
“You're talking about a country that absolutely, 100 percent needs to be redone,” said Horacio Garcia Jr., a Cuban-American business leader based in Miami who is involved with the Cuban Liberty Council, which pushes for democracy in Cuba. “There's no infrastructure for anything, for water, electricity, nothing, nothing. There's not really a fair banking system. Everything needs to be done from the ground up. You’re talking about a country that’s in ruins.”
Unlike Venezuela, whose oil sector is the main economic driver, there is no single, dominant industry for Trump to tap in Cuba, although both U.S. agriculture and tourism companies have expressed interest in the past.
And the long reign of Havana’s communist regime has led to a far more atrophied private sector, as well as decaying public utilities. Any effort to open Cuba comes with the heavy burden of history, ranging from an expatriate community looking to recoup seized property to layers of U.S. policy that would need to be unwound to promote business development.
That includes unraveling decades of U.S. sanctions, a process that would likely need some approvals from Congress. Adding to the challenges: a case pending before the Supreme Court regarding how entities can sue over property seized by the Cuban government in the 1960s, which the U.S. Chamber of Commerce has warned could expose U.S. companies to lawsuits.
“Cuba is a complex, nuanced place,” said Mark Entwistle, the former Canadian ambassador to Cuba. “So every aspect of it has whole backstories to it and rabbit holes all over the place.”
The White House declined to comment.
But a person familiar with Trump administration discussions on Cuba said the administration is in touch with business leaders about potential future investments on the island. The person declined to give details about the conversations but insisted the administration is “talking to people.” The person was granted anonymity to discuss a sensitive diplomatic issue.
There are already U.S. companies, primarily in agriculture and motorbikes, that export to the island. Tourism companies, like hotels and cruise ships, showed immediate interest in investing during a temporary boost in economic ties under former President Barack Obama’s diplomatic opening to Cuba in 2015. Companies from countries like Spain and Canada have invested in the island, though on a limited basis.
On Thursday, President Donald Trump cited the Cuban American population as a key asset in rebuilding the country. “They want to go back, they want to invest in their country and see if they can bring it back,” he said.
But the Trump team recognizes that Cuba needs significant political and economic change before any U.S. companies would consider serious investment, the person familiar with discussions said.
“I've built businesses all my life, I invested all my life,” said Sen. Rick Scott, a Florida Republican. “You're not going to invest in risk unless you’re an idiot. So it's going to take clear democracy, clear rule of law. People are not gonna put the money up. Not any significant amount.”
Scott compared any reluctance to invest in Cuba to similar reluctance by U.S. companies to invest in Venezuela, even after the Trump administration was able to successfully capture autocrat Nicolás Maduro and replace him with his deputy, Delcy Rodriguez, who is actively working with the administration.
But as Entwistle pointed out: “there is no Cuban Delcy.”
“Short of real warfare, push comes to shove, you’re going to have to deal with the Cuban government,” he said. And they have proven to be more cohesive and united, according to Entwistle, than in Venezuela, where Rodriguez has cooperated with the White House.
“Venezuela worked because it was so weakened. I think Cuba is also weakened, but I think people also deeply misunderstand Cuba and the extra-territorial reach of Cuba,” said an official with a trade association, who was granted anonymity to share the perspective of businesses. That ranges from Cuba’s connections to countries like China and Russia, to the passionate expatriate community in the U.S., to the ongoing legal disputes over property seized by the Cuban government.
Investments by U.S. companies in Cuba carry extra risk, for example, because of a 1996 U.S. law that allows people and companies that had property seized after the Cuban revolution to sue any company that profits off of that property. American Airlines and a Spanish hotel chain recently settled lawsuits brought by Cuban Americans who inherited seized property.
The Supreme Court ruled Thursday that, based on that law, a U.S.-owned port off the Cuban coast had the right to sue four cruise lines that had used the docks between 2016 and 2019. The Court is currently weighing another case, in which energy firm Exxon Mobil is seeking to sue over confiscated oil and gas.
Trade groups say businesses aren’t openly discussing any possible interest in Cuban investment, in part out of fear that failing to live up to promises amid an uncertain economic landscape could result in a sharp rebuke from Trump.
“Everyone is quietly waiting,” said John Kavulich, the president of the U.S.-Cuba Trade Economic Council. “And that means companies that are engaged with Cuba today, where they're permitted, are just engaging, but not talking about it. And ones that are interested in waiting are gathering information and watching, but not going public about it, because there's just too much downside.”
As those companies wait, the U.S. is applying more pressure. On Wednesday, the Justice Department indicted former Cuban President Raúl Castro in connection with the 1996 killings of four people involved in civilian rescue flights, a political escalation that comes as the country is experiencing rolling blackouts.
“It's a failed country, everybody knows it. They don't have electricity, they don't have money, they don't have, really, anything,” Trump said Thursday. “We're going to help them.”
The first thing Cuba needs from the U.S.: food.
Paul Johnson, the chair of the United States Agriculture Coalition for Cuba, said there will be an immediate need for agricultural aid to the island, as the country’s pork and poultry herds have been significantly thinned and a larger food crisis is taking shape.
“My hope is that someone in that [White House] circle is at least talking about agriculture, because from the industry side and from the humanitarian side, there's an obvious food crisis that nobody really wants,” Johnson said.
Currently, U.S. companies export chicken, rice and beef to Cuba. Johnson said those exports could grow. Should the U.S. lift its embargo on the island, Americans could also begin buying more Cuban agricultural products, expanding from coffee and charcoal to tropical fruits and winter vegetables, as well as its famous cigars.
Fixes for Cuba’s crumbling infrastructure would be another immediate investment need. According to Entwistle, it will cost billions to modernize the island’s infrastructure — from water, to electricity, to improving internet access — after decades of neglect.
Despite the significant hurdles, U.S. businesses still see the potential of Cuba — at the very least from tourists looking to visit a country known for its beautiful beaches and deep history.
Kavulich compared business interest in Cuba to an electrocardiogram, which shows peaks and valleys as it monitors a heart activity.
“We're at a peak in terms of interest, but we're in a valley in terms of doing anything about that,” he said. “There's a tremendous amount of knowledge and focus and interest right now in what's going to happen with Cuba, but because it's the question — what's going to happen? — no one's doing anything.”
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