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Point of View: Business leaders say Cuba is still open

Point of View: Business leaders say Cuba is still open
News Chief
By Franco Ordonez / McClatchy Washington Bureau
Washington — When the Trump administration announced new Cuba regulations, it sparked a new round of hand-wringing in Washington over a return to a posture not seen since the Cold War. But now, the American business community is quietly spreading the word that things are not so different after all.

What President Donald Trump seems to have accomplished is to make it harder for everyday Americans to meet everyday Cubans, while leaving the doors open for corporate interests to make money on the island.

“The U.S. government has actually made it easier for U.S. companies to engage directly with the Cuban private sector,” the U.S. Chamber of Commerce’s U.S.-Cuba Business Council wrote in a private note to council members that was reviewed by McClatchy. “Specifically, the rule simplifies and expands the ability for U.S. companies to export directly to the Cuban private sector, private sector agricultural cooperatives and private sector entrepreneurs.”

Many Republicans, including some who wanted Trump to tighten restrictions on engagement with Cuba, agree. Much of Florida’s Cuban-American congressional delegation, including Republicans Sen. Marco Rubio and Reps. Mario Diaz-Balart and Ileana Ros-Lehtinen, offered only tepid support of the new regulations, blaming “bureaucrats” for watering down the measures.

According to the new rules, “people-to-people” exchanges are banned. Americans who want to meet Cubans will now have to travel in groups accompanied by authorized representatives of the trip’s sponsoring organization. Americans are prohibited from doing business with 180 entities tied to the Cuban military and intelligence and security services, including 83 hotels, stores, marinas, tourist agencies, industries and even two rum makers owned by the government. U.S. companies also cannot invest in an economic development zone in Mariel that Cuba envisions as crucial to its commercial future.

That seems like a lot, but lobbyists, consultants and lawyers who represent companies doing business in Cuba say the list is actually quite narrow, focused primarily on the tourism industry. Even then, it does not affect some key tourism brands.

Kezia McKeague, who leads the Cuba practice at the McLarty Associates consulting firm, says that even the prohibitions on financial transactions with military-run entities include broad exceptions if the company can argue that it is benefiting the Cuban people more than the government.

The Trump administration successfully drafted regulations that scare away American travelers and uncommitted business leaders while maintaining access for the companies that want it, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. The next question is how the new rules will be enforced.

Kavulich said the effects of Trump’s regulations could have been even lesser had Washington under the Obama administration and Cuba taken more advantage of the opportunities presented by the thaw in their relationship to establish better relations.

“There is not a substantial quantity of impact because so few were impacted; and this is the fault of the Obama administration and Castro administration for not permitting more when they could have permitted more,” Kavulich said, noting there are only about 52 U.S. businesses on the island.

While small, the nascent private sector accounts for nearly 20 percent of the gross income of the Cuban economy, according to the Havana Consulting Group, a firm that analyzes the Cuban economy for businesses looking to invest and considers the private sector as “a necessary and essential force in the development of the country.”

The Trump administration has cautioned that it could change the rules and make it tougher to do business there. The uncertainty is enough to give some CEOs pause. McKeague said that it’s clear to her, from conversations she has had with the State Department, that at least the diplomatic community is worried that the administration’s rhetoric is scaring the U.S. business community away from deals that the regulations allow.

“They are right to be concerned,” she said. “Cuba is already a tough place to do business. The added complications posed by the new regulations and the headlines about the tense bilateral relationship don’t help.”

But business leaders say now that the regulations make getting business licenses to work with the private sector easier and probably expand the list of products that can be sent to Cuba.

John Hughes, who served as deputy director of sanctions policy at President Barack Obama’s State Department, said the new regulations did two main things: make it harder for individual travelers to visit Cuba, and create a list of businesses and entities that U.S. officials can’t work with. He argued that people who are eager for more engagement are making a big deal over a relatively minor change in policy.

“It’s really not that much,” Hughes said. “If you look at Obama’s overall changes, this is about 5 percent of that, maybe less. It’s a pretty small change.”

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