Category Archives: Business in Cuba

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.

Panama Papers show Cuba used offshore firms to thwart embargo

calleja

The Miami Herald

At least 25 companies in tax havens had Cuban links

A brother of Raul Castro’s son-in-law appears in the leaked documents

Cuba was at the heart of a deal to export Russian oil that involves a Lebanese company

The Cuban government used the Panama law firm involved in the Panama Papers to create a string of companies in offshore financial havens that allowed it to sidestep the U.S. embargo in its commercial operations.

El Nuevo Herald identified at least 25 companies registered in the British Virgin Islands, Panama and the Bahamas and linked to Cuba.

The documents found in the Panama Papers are dated as far back as the early 1990s, when the Cuban economy crashed following the end of Moscow’s massive subsidies to the island. But Cuba kept its links with some of the firms until very recently.

Listed as a director of one of the companies is a brother of Gen. Luis Alberto Rodríguez López-Calleja — husband of Cuban ruler Raul Castro’s daughter and powerful head of the Cuban armed forces’ business conglomerate, GAESA.

The Panama Papers, documents leaked to the International Consortium of Investigative Journalists and shared with the McClatchy Washington Bureau, Miami Herald and El Nuevo Herald, among others, contain hundreds of thousands of pages from the files of Mossack Fonseca, a Panama law firm with offices in 33 other countries.

Russia-Lebanon-Havana connection

One of the more intriguing schemes mentioned in the documents puts Cuba at the heart of a deal to sell Russian oil to Latin America through a company registered in Panama by the Bassatne family. The family controls BB Energy, a conglomerate founded in Lebanon in 1937 that buys and sells 16 million metric tons of crude and derivatives each year. One Bloomberg report showed BB Energy had $10 billion in revenues in 2012.

The Bassatne family incorporated BB Naft Trading S.A. in Panama, with Jürgen Mossack as a director. The company, which has offices in Havana and other countries, was created “to handle, among other things, its relationship with oil-exporting Latin American countries and with Cuba,” Mossack Fonseca lawyer Rigoberto Coronado wrote in an email.

BB Naft does not appear, however, among the subsidiaries listed on BB Energy’s Web site. They include BB Energy Trading Ltd., BB Energy Management S.A., BB Energy Holdings NV., BB Energy B.V., BB Energy (Asia) Pte. Ltd., BB Energy (Gulf) DMCC and BB Holding S.A.L.

BB Naft did business with Cuba between 1992 and 2001, trading oil for sugar “for $300 million, with credit facilities at low interest rate,” Coronado wrote. He added that in 1996 “there was agreement on a triangular Russia/Cuba/Naft Trading S.A. deal to deliver Russian fuel to other markets for a number of tens of millions of US$.”

One of the markets may have been Ecuador. A letter sent in 1998 by a Mossack Fonseca employee to the international trade office at state-run Petroecuador referred to documents sent by BB Naft “required to register the company.” A 2005 fax also points to an initial contact with the Venezuelan government’s Petroleos de Venezuela (PDVSA).

The relationship between the BB Energy Group and Petroecuador appears to have lasted until recent days. Petroecuador contracted BB Energy (Asia) Pte. Ltd., in February of this year to import 2,880,000 barrels of diesel fuel. In 2015, BB Energy won Ecuadoran contracts for more than three million barrels of naphtha, a petroleum distillate.

The Russian oil scheme appears to have been affected by the agreement between Cuba and Venezuela to exchange oil for medical services, and BB Naft expanded its work in Cuba in 2007 to include “the sale of spare parts and batteries for autos and trucks, work boots, farm machinery, hardware for USD 5.3 million.”

Continue reading Panama Papers show Cuba used offshore firms to thwart embargo

If You Make $30 A Month, What’s The Point Of Chanel?

Chanel

Refinery29

There was them and there was us: “Them” being the guests of the Chanel Cruise 2017 show and “us” being the crowd of Cubans and camera-toting foreigners pressed against the yellow tape that sliced between us and the blue-uniformed Cuban police officers standing close enough to touch. A long block stretched between their backs and the runway illuminated by street lamps.

For many of those guests, the evening’s events began at 6:15 p.m., when a fleet of mint-condition almendrones — Havana’s iconic American cars from the ’50s — began ferrying guests from the Hotel Nacional, one of Cuba’s oldest luxury hotels and former playground of the mafia, to the show space on El Prado, a long and narrow park that bisects an avenue of the same name. On one side of El Prado lies the tourist hub that is Old Havana; on the other is Central Havana, which has historically been home to lower-income families.

For the three Cuban models who walked the show — Lupe, Johana, and Yessica — tonight’s events were the end of a months-long process involving auditions, training at a Cuban modeling academy, and waiting to see which models the house would ultimately choose. For Cubans who weren’t invited, like jewelry designer Mayelín Guevara, the show was nevertheless emblematic of the sort of attention Havana has long deserved.

“We have a lot of artists here too, people of great worth,” Guevara said. “It was time, no?”

Migue Leyva J., model and blogger behind this is this, put it in more definitive terms: “Chanel is going to mark a before and and an after in the history of Cuba,” he said. “Some time in the future, if everything goes the way it has been, we won’t have just Chanel — we’ll have Louis Vuitton Moët Hennessey; we’ll have Hedi Slimane presenting his collections here.”

Continue reading If You Make $30 A Month, What’s The Point Of Chanel?

Editorial: The perils of business in Cuba

canibalDoin

Richmond Times-Dispatch

Earlier this year a delegation of Virginia business leaders traveled to Cuba to explore the potential for commerce there, now that the Obama administration has eased relations between the two countries. At one point, Cuban officials tried to reassure them by vowing that foreign investment could not be “expropriated” except “for reasons of public or social interest.”

Some reassurance.

But having your money, plants or equipment stolen at gunpoint is not the only peril facing American companies in the Castro Brothers’ island paradise. Just ask Carnival Cruise Lines.

The company recently, and wisely, made a hasty retreat from its announced policy of not allowing Cuban-Americans to take cruises to Cuba. We are not making this up. The company blamed the Cuban government, which restricts how and whether Cuban-Americans can visit. Carnival was just following orders, you see.

What’s more, Cuba does not recognize the American nationality of Cuban-Americans who were either born in Cuba or born to Cuban emigrés. In fact, the U.S. government warns such individuals that they “will be treated solely as Cuban citizens and may be subject to a range of restrictions and obligations, including military service.” In some instances, Cuba has even refused to allow such “dual-nationals” to return to the U.S.

Cuba’s reprehensible treatment of its own political dissidents is well-known. So is its treatment of gays and lesbians, who at one time were routinely sent to labor camps for the crime of being gay. That is no longer the case today, and the Cuban regime has tried to reinvent itself as a paradise of gay liberation. That false front is one its critics view, correctly, as little more than pinkwashing.

It’s jarring to watch the American business community boycott North Carolina over that state’s new law regarding LGBT individuals — while racing to see who can open up shop in Cuba, where discrimination is even worse.

No, America’s five-decade embargo did little to change things in the Cuban prison state, and a new approach might produce better results. But those who have flocked to Cuba looking for new business opportunities (a cohort that includes Virginia Gov. Terry McAuliffe) might want to pause and consider whether the potential gain is worth the risk — not only to their own interests, but to the interests of freedom and justice for all.

What You Should Know About Doing Business With Cuba

At a glance, Cuba may seem like a lucrative opportunity for U.S. small businesses. But is it? Our expert reveals what you should know about the reality vs. dream of trade with Cuba.

You may be wondering whether this is a good time for you to consider the possibility of investing in Cuba. Many analysts have arrived at the conclusion that Cuba represents a lucrative opportunity for U.S. businesses because:

• Cuba is home to more than 11 million consumers with nearly 60 years of pent-up demand for U.S. goods and services,

• The Port of Havana is only 198 nautical miles from the Port of Miami, facilitating trade,

• Millions of U.S. tourists will need travel-related services for their planned vacations to Cuba, and

• European companies have already paved the way for foreign investment and business on the island.On the surface, these factors appear to present a compelling case for doing business in Cuba.

However, a deeper analysis paints a different picture. I have studied the Cuban economy for more than a decade, engaging with Cuban economists, small- business owners, struggling entrepreneurs and other embers of Cuba’s re-emerging and fragile civil society. My family emigrated from Cuba in the 1960s, fleeing Fidel Castro’s communist revolution. This seeded a lifelong interest in all things Cuba, especially on how to effectively and peacefully achieve freedom and self-determination for the Cuban people. Continue reading What You Should Know About Doing Business With Cuba