Cuba is failing to meet its self-imposed foreign investment targets two years after detente with the United States set off the greatest surge of business interest in the country since its 1959 socialist revolution, officials said Tuesday.
Foreign Commerce Minister Rodrigo Malmierca told foreign business people and diplomats at the country’s annual trade fair that Cuba has approved 83 foreign investment projects worth more than $1.5 billion since the passage of a new foreign investment in March 2014. That puts the country at about a third of the annual flow required to meet its goal of attracting $2 billion a year in foreign investment.
Even that figure may be optimistic: The list of 83 projects includes many that are in very early stages or have yet to begin construction.
“We aren’t advancing, I repeat, at the rhythm that we want,” Malmierca said. “We need to keep working hard for deals to become reality without problems, without unnecessary delays.”
He said Cuba was working to ease the flow of investments with new measures like allowing foreign businesses to invest in infrastructure projects and in the agricultural cooperatives that produce much of the country’s food.
“Our government is willing to resolve the problems that still hinder the completion of these objectives,” he said.
Cuba blames most of its economic problems on a U.S. embargo that limits international trade with the island despite new U.S. regulations designed by the Obama administration to ease what Cubans call “the blockade.” International business people and increasingly Cuban officials themselves say the island’s slow-moving and risk-averse bureaucracy is a major obstacle, with important documents often taking months to move from one official’s desk to another.
Investment from European companies appears to be picking up steam, with Cuba in August granting state-backed French firm Aeroports de Paris a concession to renovate and operate Havana’s José Martí airport.
Formal trade between the U.S. and Cuba remains at a trickle despite a few marquee deals for big brands, including airlines starting commercial flights to Havana this month.
The mood was subdued among U.S. companies exhibiting Monday at the International Fair of Havana, the island’s biggest general-interest trade exposition. As Cuba trumpeted new deals with Russia and Japan, U.S. corporate representatives staffing stands at a pavilion shared with Puerto Rico said they saw little immediate prospect for doing business with Cuba.
Retired software entrepreneurs Saul Berenthal and Horace Clemmons made worldwide headlines by winning Obama administration permission to build the first U.S. factory in Cuba since 1959. Cuban officials lauded their plans to build small tractors in the Mariel free-trade zone west of Havana. But after more than a year of courtship, the Cuban government told Berenthal and Clemmons to drop their plan, without explanation, Berenthal said Monday.
A month and a half ago, their first tractors started rolling off their assembly line in the town of Fyffe, Alabama, population about 1,000.
“Producing the tractors in Mariel was not going to happen,” Berenthal said.
He said the company is already selling tractors to customers in the United States and Australia and has had inquiries from Peru, Mexico and Ethiopia. He also still hopes to sell to Cuba.
Obama has enacted six rounds of regulations punching holes in the trade embargo, allowing imports and exports, sales to the socialist government and limited U.S. investment on the island. Cuba has allowed Airbnb, Starwood hotels and U.S. airlines including American and JetBlue to set up operations.
Observers note that Cuba’s small but growing private sector has been able to flourish and produce tens of thousands of new jobs despite the strictures of the embargo. Untold millions of dollars have flowed into Cuba over the last two years, funding thousands of new private bed-and-breakfasts and dozens of new restaurants in the capital as detente with the U.S. sets off a boom in tourism to the island.
Some see the stagnant state of official trade with the U.S. as a conscious decision by the Cuban government to limit commerce to a few high-profile bites of the apple while funneling most business toward European and Asian companies, in order to keep the U.S. business community hungry for more and pushing Congress to do away with the embargo.
“The Cuban government is using the interest by U.S. companies as bait to entice the interest of companies in other countries,” said John Kavulich of the U.S.-Cuba Trade and Economic Council, a private group that produces mostly skeptical analyses of the prospects of U.S.-Cuba trade. “The Cuban government is saying, ‘Let’s not give any more than absolutely necessary to U.S. companies,’ so that the companies will continue to salivate toward illusory potential opportunities. There’s far more inspiration and aspiration than reality.”