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HEADLINE: U.S. businesses covet untapped Cuba market

BYLINE: SHELLEY EMLING

SOURCE: Cox Washington Bureau

BODY:
New York --- Carlson Hospitality Worldwide boasts more than 1,530 hotel, restaurant and cruise ship operations in 80 countries as far flung as China, Japan and Russia.

One of the few places the Minneapolis-based company hasn't put its stamp on is Cuba. But, boy, would it like to.

Carlson and other U.S. businesses look at Cuba and see not just enough beaches, mojitos and hand-rolled cigars to entice any American vacationer, but an untapped market of nearly 12 million consumers. But there's one big obstacle: The U.S. government prohibits Americans from doing business with --- or spending money in --- the Communist country.

Many observers point out another obvious fact that's bound to temper enthusiasm: Cuba is an impoverished country with a government that harks back to Cold War days.

Even without the embargo, American businesses in Cuba would be confronted with a web of red tape, a maddeningly inefficient bureaucracy and a government that's seriously strapped for cash.

"Businesses being allowed to operate without restriction doesn't mean Cuba would have the capacity to purchase more than it purchases now," said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, which monitors Cuba's economy.

According to a study by Texas A&M University, the U.S. economy is losing up to $1.24 billion per year just in potential agricultural exports to Cuba. Georgia alone is losing up to $28.7 million, which would translate into about 863 jobs for Georgians, the study says.

But some observers point out that Cuba currently buys no more than $900 million a year of corn, rice, flour, wheat and other farm products from foreign suppliers, mostly in Europe and Asia.

"In order to increase its level of imports, Cuba has to increase its ability to raise foreign exchange, and that's not going to happen until the government makes some structural changes to its economy," Kavulich said.
 
Limited exports begin

No matter what the hurdles, American businesses start to salivate whenever anyone mentions the possibilities of more trade with a nation just 90 miles from Florida.

Business leaders have expressed delight over recent signs that pro-embargo forces are starting to weaken. And they're buoyed by former President Jimmy Carter's visit to the island beginning today, which they hope shines a light on the policy's shortcomings.

The United States enacted an embargo following the aborted 1961 Bay of Pigs invasion, but support has dwindled as most of the world's other Communist countries have become democracies.

In November, the U.S. government allowed the first food exports to Cuba in 40 years, after President Fidel Castro announced his desire to buy food and medicine following the destruction caused by Hurricane Michelle.

The exports were permitted under a law signed by President Clinton in 2000 that allows the humanitarian sale of food and medicine to Cuba, although it forbids U.S. interests to provide financing for such transactions.

So far this year, Cuban interests have bought $73 million in U.S. agricultural products, including 3,000 tons of chicken parts from Atlanta-based Gold Kist Inc.

The Cubans also have signed deals with Perdue Farms, Tyson Foods and others, transactions that make the American Farm Bureau Federation ecstatic.

"We care very much about the Cuban market and feel we could be more than competitive with other suppliers due to our proximity," said Don Lipton, a bureau spokesman.
 
Bets are on infrastructure

Groups working to lift the U.S. embargo say agricultural companies are the obvious beneficiaries of an end to the embargo, but that energy, construction and telecommunications businesses also would benefit.

"Nothing has been invested in infrastructure --- not homes, roads, machinery for sugar crops --- for 40 years," said Sally Cowal, president of the Cuba Policy Foundation in Washington, a group fighting to end the embargo. "The country needs everything."

Damian Fernandez, a Cuba scholar at Florida International University in Miami, agreed that Cuba needs substantial investment, but cautioned that the market does have its limits.

"It's not China's market, but it is an economy that with the exception of sugar, nickel, and tobacco, basically needs everything, from consumer goods to infrastructure," he said. "If I had to put my money somewhere, I'd put it on construction. Cuba needs roads, the modernization of ports and the infrastructure for agriculture. This is where there will be real opportunity."

When it comes to ports, consumer products from the United States to Cuba probably would be shipped through Florida gateways, although ports all across the South to Texas have eyed opportunities related to Cuba.

Tourism also holds potential. Although travel to Cuba is restricted by a license system operated by the U.S. Treasury Department, last year more than 79,000 U.S. residents visited, legally or illegally. In addition, about 140,000 Cuban Americans got permission from the U.S. government to visit.

Tom Polski, a Carlson spokesman, said he sees a great pent-up tourist demand for Cuba.

"We could see ourselves opening hotels and getting cruise ships in there relatively quickly if the embargo was lifted," he said.

"There is a romance about Cuba that makes it a potentially lucrative destination," Polski said. "The fact is that Canadians and Europeans can take advantage of it, but we can't."
 


Shelley Emling is a Cox Newspapers correspondent who formerly covered the Caribbean and Latin America. She is now based in New York.

GRAPHIC: Photo:
A freighter carrying U.S. corn nears Havana in December. It was the first commercial food shipment since 1963. / JOSE GOITIA / Associated Press

LOAD-DATE: May 12, 2002