Category Archives: Business in Cuba

Governor Scott wants funds cut for South Florida ports that ink Cuba deals

The Miami Herald

Florida Gov. Rick Scott threatened Wednesday to strip state funds from two South Florida seaports ready to sign business deals with the Cuban government.

Over three posts on Twitter, the governor said he would ask state lawmakers to restrict dollars for ports that “enter into any agreement with [the] Cuban dictatorship” — as Port Everglades and the Port of Palm Beach plan to do Thursday and Friday, respectively.

“We cannot condone Raul Castro’s oppressive behavior,” Scott tweeted in English and Spanish, using the preferred social media platform of his friend, President Donald Trump. “Serious security/human rights concerns.”

Scott’s position came a day after the first legal cargo from Cuba in more than half a century — artisanal charcoal — arrived Tuesday in Fort Lauderdale’s Port Everglades. The Port of Palm Beach is located in Riviera Beach.

Jackie Schutz, a Scott spokeswoman, said the governor takes issue with the ports inking memorandums of understanding with the Cuban government because he “firmly” believes the U.S. should not do business with Cuba “until there is freedom and democracy.”

“What I don’t believe is in our ports doing business with a ruthless dictator,” Scott told reporters in Fort Lauderdale on Wednesday.

The governor will make his request to the Legislature, which ultimately sets the state budget and can ignore Scott if it wishes. The Florida Department of Transportation’s budget shows more than $37 million budgeted for Port Everglades projects over the next five years — including $23 million for a dredging the port has sought for three decades — and $920,000 for the Port of Palm Beach.

Manuel Almira, the Port of Palm Beach’s executive director, told the Miami Herald in an email Wednesday that the port has reached out to Scott’s office following his tweets.

“The Governor’s position was surprising, to say the least,” Almira said.

Port Everglades did not respond to requests for comment — not even to discuss the Cuban delegation’s schedule Thursday.

Jim Pyburn, Port Everglades’ director of business development, told the Miami Herald on Tuesday, before Scott revealed his position, that the port’s deal with the National Port Administration of Cuba — in the works since early 2016 and ready to sign since May — could lead to joint marketing studies and training.

“We would like to see U.S. exports to Cuba increase,” he said. “Imports are good, too.”

A Cuban delegation plans to visit a number of ports over the coming week, including Port Tampa Bay, which does not have an imminent deal with the country in the works.

“Our port has taken a very cautious approach to Cuba,” said Ed Miyagishima, Port Tampa Bay’s vice president for communications and external affairs, who once worked for Scott. “The port itself is Cuba-ready, in the sense that we’re ready to work with all the entities once the embargo is lifted, but we’re taking a very conservative approach. We are not signing an MOU with the Cuban government, just because there’s so much ambiguity in Cuba policy right now.”

The delegation has no plans to drop in on PortMiami.

“We were never approached by any Cuban port delegation — never got a phone call, nothing at all,” said Andria Muñiz-Amador, a port spokeswoman.

Last May, Carnival Corp.’s Fathom Line launched an every-other-week cruise from PortMiami to Cuba that circumnavigates the island. The cruise is being discontinued this spring, but Carnival hopes to add Cuban ports of call on its other Caribbean cruises.

Executive orders issued by former President Barack Obama over the past two years eased some Cuba-related trade restrictions, making shipping agreements possible. White House Press Secretary Sean Spicer was asked Tuesday if Trump planned quick Cuba action of his own, perhaps to reverse some of Obama’s work, as Trump said he would do absent a more favorable arrangement for the U.S.

“We’ve got nothing that we’re ready to announce,” Spicer said.

Read more here: http://www.miamiherald.com/news/politics-government/article128713509.html#storylink=cpy
Florida Gov. Rick Scott threatened Wednesday to strip state funds from two South Florida seaports ready to sign business deals with the Cuban government.

Over three posts on Twitter, the governor said he would ask state lawmakers to restrict dollars for ports that “enter into any agreement with [the] Cuban dictatorship” — as Port Everglades and the Port of Palm Beach plan to do Thursday and Friday, respectively.

“We cannot condone Raul Castro’s oppressive behavior,” Scott tweeted in English and Spanish, using the preferred social media platform of his friend, President Donald Trump. “Serious security/human rights concerns.”

Scott’s position came a day after the first legal cargo from Cuba in more than half a century — artisanal charcoal — arrived Tuesday in Fort Lauderdale’s Port Everglades. The Port of Palm Beach is located in Riviera Beach.

The Obama Administration is not telling the truth about trade with Cuba

The Miami Herald

The Obama Administration has said that trade with Cuba could reach up to $6 billion under its new policies, but U.S. companies in fact exported barely $380 million worth of goods to the island since the beginning of the thaw in bilateral relations two years ago.
Commerce Secretary Penny Pritzker said early last year that her department had issued 490 licenses to companies trying to do business with Cuba valued at $4.3 billion. More recently, White House spokesman Josh Earnest said that since late 2014 “more than $6 billion in trade has been initiated between Cuba and the United States since then, which obviously has an important economic benefit here in the United States.”

Experts said the administration is exaggerating, and that those numbers must be put in better context.

“While there may be licenses which total that value … in no way do the value of those licenses equate to actual economic activity” with Cuba, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, which has monitored bilateral trade since its founding in 1994.

Kavulich said the George W. Bush administration, trying to ease the bureaucracy, allowed companies to seek licenses for commerce with Cuba with declared amounts that are “aspirational” rather than real.

A U.S. company wanting to export goods to Cuba can then base its license application on its negotiations with the Cuban government, rather than the real value of a purchase. The new procedure voided the need to seek a new license if the final amount of the deal changed, Kavulich added.

Kavulich, who keeps detailed tallies of U.S. exports to Cuba, estimated that from December of 2014 to October of 2016 the total of U.S. agricultural and medical exports to the island barely reached $370.6 million. In fact, he added, all U.S. exports to Cuba since 2001 do not reach the $6 billion figure used by Earnest.

U.S. Census data showed the exports to Cuba over the past two full years totaled $380 million.

One Commerce Department official confirmed that the numbers used by Pritzker and Earnest reflect the paper value of the licenses issued and other operations allowed under the new Obama policies, and do not necessarily reflect real exports.

“Sometimes the companies obtain the licenses when they are still working on the details. The final agreement may be for a different amount, or the deal can die along the way,” the official added.

Cuba, whose economy grew by a meager 0.9 percent in all of 2016 and actually shrank during the last part of the year — going into recession for the first time since 1993 — also simply does not have the money to pay for the level of imports claimed by the Obama administration.

U.S. exports to Cuba — principally food items such as chicken, soya and corn — indeed fell since Obama began easing sanctions on Cuba.

“When the Obama Administration pulls out these numbers without explaining the background, the perception is a). that there is a huge amount of activity between the U.S. and Cuba; b). that Cuba is spending of all this money with U.S. companies and c)…When the numbers do not equate with reality, the perception is that Cuba has refused to engage… and it puts them in the position of they saying no to all this stuff, when they are not,” said Kavulich.

“They are doing it because they want to exaggerate and demonstrate how much progress and success there is,” he added. “But lying to make a marketing point is not a good strategy, especially for a government.”

Big split breaks out among anti-embargo Cuban Americans

Carlos Gutierrez

The Miami Herald

An alliance of powerful anti-embargo Cuban-American businessmen frayed earlier this year after its prominent chairman, former U.S. Commerce Secretary Carlos Gutierrez, returned from Cuba with a simple request: work more closely with Raúl Castro’s communist government.

Behind Gutierrez’s ask was an indication that the Cuban government was eager to negotiate directly with major American corporations — and less enthused by U.S. efforts to assist small-time entrepreneurs on the island.

Gutierrez’s idea riled some members of the U.S.-Cuba Business Council, a group launched last year by the U.S. Chamber of Commerce — a key U.S.-Cuba player — to forge economic and trade relationships between the once-estranged countries. Gutierrez’s detractors questioned the wisdom of aligning the council so firmly with the interests of the Cuban government and of big corporations — at the expense, they feared, of the Cuban people.

The tense disagreement exploded in a conference call over the summer among the council’s board members, who in some cases lashed out at each other using harsh language, several people on the call told the Miami Herald. In the end, three Cuban Americans on the board — Vice-Chairman Mike Fernández, Joe Arriola and John McIntire — quit.

“There was a big fallout,” acknowledged Arriola, the Miami-Dade County Public Health Trust chairman. “Carlos was very much into bringing businesses to partner with the Cuban government, and we were not. We decided to get out. There is nothing wrong with it — we just didn’t agree with it.”

Arriola declined to describe the contentious conference call in detail, saying only: “It was just too many Cubans together.”

Fernández, chief executive of MBF Healthcare Partners, and McIntire, senior adviser to the entrepreneurship nonprofit Endeavor Global, declined to comment. Gutierrez, chairman of the Albright Stonebridge Group, a global strategy firm, was traveling and unreachable over several days this week and last, according to his assistant. A Republican, he served as commerce secretary under President George W. Bush but endorsed Democrat Hillary Clinton this year and starred in a TV ad for her campaign.

Continue reading Big split breaks out among anti-embargo Cuban Americans

Guillermo Fariñas urges U.S. to suspend trade and investment in Cuba until regime stops oppression

farinas

Fox News

One of Cuba’s most prominent human rights activists is in the U.S. to push for a halt or suspension of U.S.-Cuba trade and investment changes that he and other leaders say are enriching and empowering the Castro regime.

In an exclusive interview with FoxNews.com, Guillermo Farinas said the Trump administration should halt or undo the Obama administration’s move to open up trade and business deals with Cuba until the Cuban government commits to making democratic reforms.

Farinas, who has been jailed by Cuban authorities for his activism for human rights, said President Obama’s easing of trade restrictions is enriching the regime of Raul Castro, and hardly benefiting the Cuban people.

Farinas has been tirelessly traveling to several states, including Florida, New York, New Jersey and Washington D.C., meeting with members of Congress, Cuban exile leaders, United Nations officials and representatives of leading human rights organizations to build support for a U.S.-Cuba policy that takes a tougher approach to the Cuban government.

“The people of Cuba see very little of the money that comes in from foreign investment and trade,” Farinas told FoxNews.com

“It makes the regime richer, and stronger, and bolder, because they have felt that because of President Obama’s decision to do business with it, it has credibility internationally,” he said. “It uses this international credibility to thumb its nose at the Cuban people, especially its critics and dissidents. And it’s gotten more brutal and more intolerant of dissent.”

Opponents of normalizing relations with Cuba have fought against growing momentum to lift the decades-old embargo, saying that the Cuban government has done nothing to move toward giving its citizens more freedom. Proponents counter that the embargo failed to bring about democratic reforms, and that it is time to try a different approach.

Farinas said he is not seeking a total rescinding of the restored diplomatic relations. The dissident, who’s got multiple health problems stemming from a recent month-long hunger strike he staged to push for human rights, said that he supports the Obama administration’s expansion of travel.

He said that the people of Cuba have been isolated by the regime for too long, and that the ability of the Cuban people to interact with U.S. relatives and visitors exposes them to new views and ideas.

Proponents of lifting the embargo say the Cuban government has taken some steps to change for the benefit of the Cuban people.

They say more Cuban people are now able to run their own business and invest in real estate.

“In Cuba, there is broad support for these changes,” said Madeleine Russak, communications director for Engage Cuba, an organization that favors normalizing ties with the island. “For 55 years the only people who have been hurt by the U.S. policy are the Cuban people.”

To fuel its campaign to get Republicans in Congress to support lifting the embargo, Engage Cuba has established councils in many GOP-leaning states where agriculture is a main industry.

“But with the free flow of information and travel, we’re in a much stronger position to improve the lives of Cubans. We are very optimistic that President-elect Trump, as a businessman, feels the same way.”

“The American people are the best ambassadors of democracy,” she said. “We’re optimistic that if we lift the full embargo, it will improve the lives of the Cuban people.”

Another defeat for Obama’s Cuba policy

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Cuba says no to Obama-promoted plans to assemble small tractors on the island

The Miami Herald

When President Barack Obama visited Cuba in March he said that a small Alabama company that makes tractors would “be the first U.S. company to build a factory here in more than 50 years.”

That was jumping the gun because although Cleber, based in Paint Rock, Alabama, had authorizations from the U.S. Office of Foreign Assets Control and the Commerce Department to pursue its dream of assembling small tractors in Cuba’s Mariel Special Economic Development Zone, the plan still needed Cuban approval.

After months of anticipation and just days before the company was scheduled to take part in the Havana International Fair, a massive trade show that attracted exhibitors from 73 countries, Cleber finally got its answer: No.

It was a disappointment for a high visibility project that had been touted as a potential example of how the rapprochement process that began on Dec. 17, 2014 was working for both countries.

But this week Saul Berenthal, who co-founded the company with Horace Clemmons, was busy working the Cleber booth at the Havana fair as a video of the tractor in action rolled in the background.

“We’re not giving up. We’re here for the long run,” said Berenthal. “We understand the process.”

But the company is changing its strategy.

Instead of pinning its hopes on assembling its Oggún tractors — named for the Santeria god of iron, tools and weapons — in the Mariel zone, it has begun manufacturing them in Alabama with the hope of exporting them to Cuba and elsewhere.

Cuban authorities “told us Mariel was not the proper venue,” said Berenthal. “They encouraged us and directed us to work with the Ministry of Agriculture and other agencies interested in importing tractors.”

Continue reading Another defeat for Obama’s Cuba policy

Cuban slave workers get paid one tenth of what imported foreign workers get for the same work

indian-workers

Cuba controversy over local and Indian wages
By Will Grant BBC News

Havana is becoming an increasingly popular destination for tourists
Walk along the leafy boulevard of el Prado in Old Havana and you’ll find it hard to escape the sounds of construction.
At least three major hotel building projects are under way along that stretch of the Cuban capital, including the renovation of the Manzana de Gomez, a former shopping mall being converted into a five-star hotel.
With tourist numbers hitting record levels this year, the need for new hotels is self-evident.
However, in recent days the Hotel Manzana building project has generated some controversy.
Not for its architectural style, which remains faithful to its early 20th Century European influences, nor for its budget or timing – it is due to be completed by spring next year.
Rather for the disparity in wages between different employees on the site.
Imported workers
The French industrial company, Bouygues, which is building the luxury hotel in partnership with the Cuban state, brought between 100 and 200 Indian labourers to Cuba to work on the project, Reuters reported earlier this year.

Tight regulations on how much foreign companies can pay Cuban employees mean that in essence the Indian labourers are being paid about 10 times the amount – estimated at between $1,300-$1,700 (£1,000-£1,400) a month – that Cubans are earning.
“It is normal practice for us to bring in our own teams to work on construction sites around the world,” a French foreman for Bouygues explained over coffee.
The foreman, who only gave his name as Franco, said he had travelled extensively with the company, particularly in the Middle East, and had almost always used teams of labourers who came into the country with the company.
But in Latin America employing such a foreign labour force is relatively rare and in Cuba it’s almost unheard of.

Continue reading Cuban slave workers get paid one tenth of what imported foreign workers get for the same work

Newsweek: How Donald Trump’s company violated the US embargo against Cuba

Newsweek

newsweekdonaldtrumpcover

A company controlled by Donald Trump, the Republican nominee for president, secretly conducted business in communist Cuba during Fidel Castro’s presidency despite strict American trade bans that made such undertakings illegal, according to interviews with former Trump executives, internal company records and court filing.
Documents show that the Trump company spent a minimum of $68,000 for its 1998 foray into Cuba at a time when the corporate expenditure of even a penny in the Caribbean country was prohibited without U.S. government approval. But the company did not spend the money directly. Instead, with Trump’s knowledge, executives funneled the cash for the Cuba trip through an American consulting firm called Seven Arrows Investment and Development Corporation. Once the business consultants traveled to the island and incurred the expenses for the venture, Seven Arrows instructed senior officers with Trump’s company—then called Trump Hotels & Casino Resorts—how to make it appear legal by linking it after-the-fact to a charitable effort.The payment by Trump Hotels came just before the New York business mogul launched his first bid for the White House, seeking the nomination of the Reform Party. On his first day of the campaign, he traveled to Miami where he spoke to a group of Cuban-Americans, a critical voting bloc in the swing state. Trump vowed to maintain the embargo and never spend his or his companies’ money in Cuba until Fidel Castro was removed from power.
He did not disclose that, seven months earlier, Trump Hotels already had reimbursed its consultants for the money they spent on their secret business trip to Havana.
At the time, Americans traveling to Cuba had to receive specific U.S. government permission, which was only granted for an extremely limited number of purposes, such as humanitarian efforts. Neither an American nor a company based in the United States could spend any cash in Cuba; instead a foreign charity or similar sponsoring entity needed to pay all expenses, including travel. Without obtaining a license from the federal Office of Foreign Asset Control before the consultants went to Cuba, the undertaking by Trump Hotels would have been in violation of federal law, trade experts say.Officials with the Trump campaign and the Trump Organization did not respond to emails seeking comment on the Cuba trip, further documentation about the endeavor or an interview with Trump. Richard Fields, who was then the principal in charge of Seven Arrows, did not return calls seeking comment.But a former Trump executive who spoke on condition of anonymity said the company did not obtain a government license prior to the trip. Internal documents show that executives involved in the Cuba project were still discussing the need for federal approval after the trip had taken place.
OFAC officials say there is no record that the agency granted any such license to the companies or individuals involved, although they cautioned that some documents from that time have been destroyed. Yet one OFAC official, who agreed to discuss approval procedures if granted anonymity, said the probability that the office would grant a license for work on behalf of an American casino was “essentially zero.”
Prior to the Cuban trip, several European companies reached out to Trump about potentially investing together on the island through Trump Hotels, according to the former Trump executive. At the time, a bipartisan group of senators, three former Secretaries of State and other former officials were urging then-President Bill Clinton to review America’s Cuba policy, in hopes of eventually ending the decades-long embargo.
The goal of the Cuba trip, the former Trump executive said, was to give Trump’s company a foothold should Washington loosen or lift the trade restrictions. While in Cuba, the Trump representatives met with government officials, bankers and other business leaders to explore possible opportunities for the casino company. The former executive said Trump had participated in discussions about the Cuba trip and knew it had taken place.The fact that Seven Arrows spent the money and then received reimbursement from Trump Hotels does not mitigate any potential corporate liability for violating the Cuban embargo. “The money that the Trump company paid to the consultant is money that a Cuban national has an interest in and was spent on an understanding it would be reimbursed,’’ Richard Matheny, chair of Goodwin’s national security and foreign trade regulation group said, based on a description of the events by Newsweek. “That would be illegal. If OFAC discovered this and found there was evidence of willful misconduct, they could have made a referral to the Department of Justice.”Shortly after Trump Hotels reimbursed Seven Arrows, the two companies parted ways. Within months, Trump formed a presidential exploratory committee. He soon decided to seek the nomination of the Reform Party, which was founded by billionaire Ross Perot after his unsuccessful 1992 bid for the White House.
Trump launched his presidential campaign in Miami in November 1999. There, at a luncheon hosted by the Cuban American National Foundation, an organization of Cuban exiles, he proclaimed he wanted to maintain the American embargo and would not spend any money in Cuba so long as Fidel Castro remained in power. At the time, disclosing that his company had just spent money on the Cuba trip, or even acknowledging an interest in loosening the embargo, would have ruined Trump’s chances in Florida, a critical electoral state where large numbers of Cuban-Americans remain virulently opposed to the regime.“As you know—and the people in this room know better than anyone—putting money and investing money in Cuba right now doesn’t go to the people of Cuba,’’ Trump told the crowd. “It goes to Fidel Castro. He’s a murderer, he’s a killer, he’s a bad guy in every respect, and, frankly, the embargo must stand if for no other reason than, if it does stand, he will come down.”‘Its Stock Price Had Collapsed’By the time Trump gave that speech, 36 years had passed since the Treasury Department in the Kennedy administration imposed the embargo. The rules prohibited any American person or company—even those with operations in other foreign countries—from engaging in financial transactions with any person or entity in Cuba. The lone exceptions: humanitarian efforts and telecommunications exports.The impact of the embargo intensified in 1991, when the collapse of the Soviet Union ended its oil subsidies to the island and triggered a broad economic collapse. By 1993, Cuba faced extreme shortages and Castro was forced to start printing money solely to cover government deficits. Three years later, the U.S. Congress passed the Helms-Burton Act, which codified the embargo into law and worsened Cuba’s economic decline. With many financial options closed off, Cuba attempted to find overseas investment to modernize its tourism industry and other businesses.
The first signs that American policy might be shifting came in March 1998, when President Bill Clinton announced several major changes. Among them: resuming charter flights between the United States and Cuba for authorized Americans, streamlining procedures for exporting medical equipment and allowing Cubans in the U.S. to send small amounts of cash to their relatives on the island. However, Americans and American companies still could not legally spend their own money in Cuba.That fall, as critics pressured Clinton to further loosen the embargo, Trump Hotels saw an opportunity. Like the communist regime, the company was struggling, having piled up losses for years. In 1998 alone, Trump Hotels lost $39.7 million, according to the company’s financial filings with the Securities and Exchange Commission. Its stock price had collapsed, falling almost 80 percent from a high that year of $12 a share to a low of just $2.75. (After multiple bankruptcies, Trump severed his ties with the company; it is now called Trump Entertainment Resorts and is a subsidiary of Icahn Enterprises, run by renowned financier Carl Icahn). The company was desperate to find partners for new business which offered the chance to increase profits, according to another former Trump executive who spoke on condition of anonymity. The hotel and casino company assigned Seven Arrows, which had been working with Trump for several years, to develop such opportunities, including the one in Cuba.On February 8, 1999, months after the consultants traveled to the island, Seven Arrows submitted a bill to Trump Hotels for the $68,551.88 it had “incurred prior to and including a trip to Cuba on behalf of Trump Hotels & Casino Resorts Inc.”The 1999 document also makes clear that executives were still discussing the legal requirements for such a trip after the consultants had already returned from Cuba. The government does not provide after-the-fact licenses.“Under current law trips of the sort Mr. Fields took to Cuba must be sanctioned not only by the White House but are technically on behalf of a charity,’’ the bill submitted to Trump Hotels says. “The one most commonly used is Carinas Cuba.”The instructions contain two errors. First, while OFAC is part of the executive branch, the White House itself does not provide licenses for business dealings in Cuba. Second, the correct name of the charity is Caritas Cuba, a group formed in 1991 by the Catholic Church, which provides services for the elderly, children and other vulnerable populations in the Caribbean nation. Caritas Cuba did not respond to emails about contacts it may have had with Trump Hotels, Seven Arrows or any individuals associated with them.The invoice from Seven Arrows was submitted to John Burke, who was then the corporate treasurer of Trump Hotels. In a lawsuit on a different legal issue, Burke testified that Trump Hotels paid the bill in full, although he denied recognizing the document.
The Cuba venture was one of two assignments given to Seven Arrows at that time, and the second has already emerged as an issue in the GOP nominee’s bid for the presidency. Trump Hotels also paid the consulting firm to help develop a deal with the Seminole tribe of Florida to partner in a casino there. Knowing that the Florida governor and legislature opposed casino gambling in the state, Trump authorized developing a strategy to win over politicians to get the laws changed in an effort named “Gambling Project.” The law firm of Greenberg Traurig was retained to assemble the strategy. A copy of the plan prepared by the lawyers showed the strategy involved hiring multiple consultants, lobbyists and media relations firms to persuade the governor and the legislature to allow casino gambling in the state. The key to possible success? Campaign contributions.The plan states “the executive and legislative branches of Florida government are driven by many influences, the most meaningful of which lies in campaign giving.” For the legislature, it recommends giving to “leadership accounts” maintained by state political parties, rather than to individual lawmakers, because “this is where the big bucks go and the real influence is negotiated.” Records show that Seven Arrows also incurred $38,996.32 on its work on the Gaming Project, far less than it spent for the Cuba endeavor.Aside from deceiving Cuban-Americans, records of the 1998 initiatives show that Trump lied to voters about his efforts in Florida during that period. At the second Republican presidential debate in September, one of Trump’s rivals, Jeb Bush, said the billionaire had tried to buy him off with favors and contributions when he was Florida’s governor in an effort to legalize casino gaming in the state. “Totally false,’’ Trump responded. “I would have gotten it.”The documents obtained by Newsweek give no indication why the $39,000 spent on Seven Arrows’ primary assignment—arranging for a casino deal with the Seminole tribe—was so much less than the $68,000 expended on the Cuba effort. The former Trump executive could not offer any explanation for the disparity.Though it has long been illegal for corporations to spend money in Cuba without proper authorization, there is no chance that Trump, the company or any of its executives will be prosecuted for wrongdoing. The statute of limitations ran out long ago, and legal analysts say OFAC’s enforcement division is understaffed, so the chances for an investigation were slim even at the time.And perhaps that was the calculation behind the company’s decision to flout the law: the low risk of getting caught versus the high reward of lining up Cuban allies if the U.S. loosened or dropped the embargo. The only catch: What would happen if Trump’s Cuban-American supporters ever found out?

Controversy erupts over workers from India building Cuban hotel

indianworkers

The Miami Herald

Cuba’s approval for a French company to import Indian workers to build a Havana hotel has been met with disbelief, anger and complaints about a policy that usually requires foreign companies to hire local workers through state labor agencies

About 200 workers from India hired by the French Bouygues company are renovating the Manzana de Gómez, an iconic building that was Havana’s first shopping mall, the Reuters news agency reported. The Swiss Kempinski chain is negotiating to run the luxury hotel in a deal with GAESA, a holding company controlled by the Cuban military.

“Workers brought from far away work in Cuba and receive good salaries, while hundreds of thousands of Cubans try to make ends meet without proper salaries,” wrote former Cuban diplomat Pedro Campos. “They have no way of improving their lives or those of their families other than to leave Cuba any way they can, risking everything.”

The Diario de Cuba, an independent digital publication, also condemned the hiring in a recent editorial.

“Cuba has always been a magnet drawing immigrants from all over the world. But foreigners could not be paid more than their Cuban colleagues for doing the same work,” the editorial said. “…In any case, as one can see, all the factors that have generated this great national humiliation are the sole responsibility of the Castro regime.”

Some analysts said the case sets a precedent because the Cuban government in the past has blocked the hiring of large groups of foreign workers.

Richard Feinberg, a Cuba expert at the Brookings Institution think tank in California, noted that Havana had vetoed a Beijing request to hire Chinese workers to update a petrochemical complex in Cienfuegos, a project financed by China and Venezuela.

One knowledgeable source said, however, that Bouygues Bâtiment International, the construction arm of the French company, also imported workers to build three hotels in Cayo Santamaria, an island off the north central coast of Cuba. The company’s website says it built 17 beach hotels in Cuba from 1998 to 2012.

Feinberg said the long-running relationships between the French company, the Cuban tourism ministry and Gaviota S.A. — the island’s largest hotel enterprise, controlled by GAESA — may have led to some favoritism for the company, which could have been avoided if Cuba had “a more transparent system for awarding contracts.”

Some Cubans who worked for state construction companies also may have quit to cash in on the rapidly growing number of jobs improving homes or restaurants on the island, Feinberg said, perhaps explaining the need to hire foreigners.

Other experts say, however, that the key problem highlighted by the case of the Indian workers is the Cuban government’s much-criticized policy of barring foreign firms from hiring local workers directly and forcing them to hire through state labor agencies.

Cuba has 13 such labor agencies. “The idea is that each ministry has files of its best employees who can be quickly available when foreign companies need to hire,” said Emilio Morales, director of the Miami-based Havana Consulting Group.

Sources quoted by Reuters said the Indians are paid $1,500 euros per month, roughly $1,661. In comparison, Cuban construction workers hired through one of the labor agencies receive about $25 to $30 per month.

The disparity is the perfect recipe for discouraging Cuban workers, said Morales. “The problem is the labor agencies. No foreign investor is going to risk his investment and hire a worker who will not produce,” he said.

Cuban economist Omar Everleny Pérez agreed.

“If the Indians don’t work on the Manzana de Gómez, it never gets done. Because of the problems with the labor agencies, no one is going to work 16 hours if they are going to be paid what they are paid now,” said Everleny, recently expelled from the University of Havana’s Center for the Study of the Cuban Economy. “That’s why the (French) company, to meet quality and deadlines, was forced to look for foreign options.”

Diario de Cuba reported before Reuters that the Manzana project was clearly behind schedule, and that its Cuban construction workers were paid roughly $20-$22 per month plus a “bonus” that could be as high as about $90 but often went unpaid. The digital publication also reported that the Military Construction Group was using recruits from the obligatory military service to work on the project.

The idea that Cuba offers cheap labor to foreign companies is not exactly true, however, Feinberg wrote in his book, Open for Business: Building the New Cuba Economy.

Employees receive a tiny share of the salaries paid by the foreign companies, and the labor agencies pocket the rest, significantly reducing the competitiveness of Cuban workers compared to neighboring countries like the Dominican Republic, Feinberg wrote.

The system has led some foreign companies to pay additional salaries to Cuban employees, but that’s a gray-area practice that has complicated charges of corruption against foreign investors such as Canadian businessman Cy Tokmakjian.

Salary terms are more favorable for Cubans working in the new Mariel Special Development Zone west of Havana, because the labor agencies keep only 20 percent of the salaries paid by the foreign company for Cuban employees.

Cuban laws and regulations technically restrict the hiring of foreign workers to management and administrative jobs in Cuban joint ventures with foreign companies.

The 2014 Foreign Investment Law limits foreign workers to “upper management and some technical positions. The Indian workers, described as electricians, carpenters and plumbers, would hardly meet those descriptions.

The law includes one section, however, that allows joint ventures or foreign companies to hire Cubans directly in “exceptional” cases. Another section, even more vague, authorizes the use of “special labor regulations” only “as an exception.”

Diplomats from a number of European and Asian countries have said that the restrictions on direct hiring of Cuban employees has been a key factor holding back foreign investments.

The U.S. government also has urged Havana repeatedly to lift all restrictions on direct hires of workers. The first U.S. hotel chain to invest in Cuba, Starwood, has publicly promised to “promote local talent” and create job opportunities.

After the Reuters report, which included photos of the Indian workers, measures to block access to the Indian workers were tightened. They are bused daily from their dormitories east of the capital to the work site.

The Bouygues group did not respond to requests for comment for this story. But a news release by Bouygues Bâtiment International said it “recruits locally 100 percent” in Cuba and has created a school to train construction workers.

“More than 150 employees have been trained there during the last five years,” it added.

House approves bill with clauses that strengthen Cuba sanctions

diazbalart

The Miami Herald

The strengthened restrictions are included in the text of a budget bill approved last week after two amendments to remove restrictions on agricultural exports and travel to Cuba were withdrawn by their sponsors.

The budget bill for 2017 financial services and general government spending has been approved in the House of Representatives with several clauses that strengthen sanctions on Cuba.

The clauses limit “people to people” exchange trips, prohibit the use of funds for trafficking in confiscated property, restrict financial transactions with entities tied to the Cuban military and forbid the granting of trademark rights and intellectual property with businesses or properties confiscated by the Cuban government.

The strengthened restrictions are included in the text of the budget bill that was approved last week after two amendments to remove restrictions on agricultural exports and travel to Cuba were withdrawn by their sponsors — Representatives Rick Crawford and Mark Sanford, respectively.

Sanford withdrew his amendment after acknowledging he did not have the support of Speaker of the House Paul Ryan. Crawford also withdrew his amendment but only after receiving a commitment by the House leadership representatives from Florida to start looking for a long-term solution to remove restrictions on cash payments for the purchase of U.S. agricultural products.

“I’ve gotten commitments from leadership and my friends from Florida that there will be a proper path forward,” Crawford said during the plenary session.

Meanwhile, Republican Rep. Mario Diaz-Balart confirmed that agreement was reached with Crawford “…to come up with a solution that meets the needs of our farmers … but that does not jeopardize our national security or support the Castro regime, its military or its intelligence services.”

Diaz-Balart refuted reports that Crawford’s amendment had enough support to pass.

“Once again, the groups allied with the interests of the Cuban dictatorship who for years have been saying that there is no support for sanctions, have been unmasked in the House’s floor,” he said.

Following the announcement of the agreement, the organization Engage Cuba, which lobbies to lift the embargo, had issued a statement claiming that “the momentum for changing our Cuba policies has shifted, and even the most outspoken opponents of lifting theCuban embargo have realized that their position is no longer tenable.”

Diaz-Balart refuted that claim: “There is bipartisan support in the House to strengthen sanctions against the regime and reject the policy of appeasement of the dictatorship,” he said, adding that the passage of the budget bill “contains multiple clauses to strengthen sanctions.”

Not as good as they thought: FedEx Downsizes Cuba Ambitions in Amended Flight Request

master_cl2249

The Wall Street Journal

FedEx Corp. won’t be flying a big cargo plane into Havana anytime soon.

The express delivery giant dropped its bid to operate to Cuba’s capital and is now requesting U.S. regulatory clearance to fly five times a week between Miami and the smaller resort town of Veradero in the province of Matanzas.

In a downsizing of its near-term ambitions, the company also said it would use a Cessna 208 aircraft, which is far smaller than the Boeing 757 it initially proposed for the Miami-Havana route.

Using Varadero as the base for FedEx’s initial operations “would be the more optimal use of its resources under current Cuba marketplace conditions,” it added in the amended application.

A company spokeswoman declined Friday to elaborate on those market conditions or the reason behind the changes. The company reiterated its “strong interest’’ in providing all-cargo transportation service between the countries.

The decision comes amid heated competition for U.S. passenger flight routes to Havana. The Transportation Department last week awarded six U.S. airlines rights to secondary Cuban airports but said it would wait until the summer to apportion flights to the capital after receiving three times more requests than the 20 available daily slots.

FedEx said Friday it plans to provide trucking service from Varadero to Havana, the special development zone in Mariel and Santiago de Cuba. Veradero’s Juan Gualberto Gomez International Airport is roughly 70 miles east of Havana.

The company requested a start date of Jan. 15, 2017 in Thursday’s amended application, citing “the complexities of setting up operations in Cuba with ground and customs clearance capabilities.”

That is later than U.S. passenger airlines plan to arrive on the island nation. American Airlines Group Inc., the largest U.S. airline by traffic, said this week its first Cuban-bound flights will depart Sept. 7 to Cienfuegos and Holguin.

FedEx noted in the amended application that it remains the only all-cargo applicant for U.S.-Cuba scheduled air services. The shift in planned operations, however, suggests tourism, not trade, will take off sooner as the U.S. loosens decades-long travel restrictions to Cuba.

FedEx delivery rival United Parcel Service Inc. confirmed Friday it hasn’t filed an application yet.

“UPS continues to assess the opportunity to provide services to and from Cuba. As trade lanes open and demand for delivery services increases, UPS will take appropriate action to meet the needs of our global customers,” it added in a statement.