There was a buzz in the air during the 33rd edition of the Havana International Fair, Cuba’s week-long commercial extravaganza. It was 2015, the year the United States and Cuba renewed diplomatic relations and U.S. companies were betting on new business opportunities. on the island.
But three years later, as the fair opened in Havana this week and Cuba’s dealings with the Trump administration have grown prickly, much of that enthusiasm has faded away.
“Dismal” is the way John Kavulich, president of the U.S.-Cuba Trade and Economic Council, describes both the level of interest by U.S. businesses in Cuba and the island’s current investment climate. “There continue to be some companies interested in doing things in Cuba, but for a country of 11 million people interest is nowhere near what it should be,” he said.
Cuban state media has reported about 16 U.S. firms have a presence at the 36th annual fair, which runs through Friday, but it appears fewer than that have set up booths. Among the companies scheduled to participate is Innovative Immunotherapy Alliance, a joint venture recently set up by Buffalo-based Roswell Park Comprehensive Cancer Center and Havana’s Center for Molecular Immunology to try to bring four Cuban cancer drugs to the U.S. market.
Rodrigo Malmierca, Cuba’s minister of foreign trade and investment, said 2,500 foreign business executives, around 30 chambers of commerce and 60 nations are attending Fihav 2018 — evidence, he said, that the “world is with Cuba” despite its problematic relationship with the United States. Among the largest exhibitors are Spain, China and Russia.
In 2015, when more than 70 countries were represented at the fair, the Cuban economy was growing. Companies from around the world thought they should get into the Cuban market quickly before the budding U.S.-Cuba relationship would allow American companies to snap up all the best deals. U.S. exhibitors also were betting that with the rapprochement, the end of the embargo would only be a matter of time.
But now the Cuban economy has stalled, the hostile rhetoric between Washington and Havana has escalated, Trump administration rules designed to limit business dealings with Cuban military enterprises have made U.S. companies wary and the Cuban pace for approving new joint ventures and management contracts has been glacial.
Still, in an interview with Cubadebate, a Cuban news website, Malmierca emphasized that foreign investment has become an economic necessity for Cuba: “We aren’t a country that is rich in natural resources nor is there sufficient national savings to make the investments our social and economic development requires.”
Miguel Díaz-Canel, who succeeded Raúl Castro as president of Cuba’s Council of Ministers and Council of State, sounded a similar note as he cut the ribbon to open the fair on Monday. The fair, he tweeted, “ratifies international interest in trading with Cuba despite the blockade [the term Cuba uses for the embargo].”
But some commentators who responded to the Cubadebate interview questioned the slow pace of efforts to attract investment as well as Cuba’s reluctance to allow Cubans themselves to invest in some of the projects that are being offered to foreign investors. Each year at the fair, Cuba presents its new investment portfolio. Last year, it included 465 projects for which it was seeking $10.7 billion in investment.
“We are selling our country in pieces,” complained one commentator.
Saul Cimbler, a Coral Gables consultant who works with U.S. companies exploring business with Cuba, has attended the fair four out of the past five years. “I’m not going this year and to be honest, I don’t know anyone who is,” he said. “Right now unless you’re in something related to travel, renewable energy or agriculture, there’s not much traction.”
Relatively few agreements have been reached with U.S. companies and most of the interest has come from the airline, cruise and telecommunications industries. In one unusual deal, a Hialeah-based company imported two small shipments of charcoal produced by a private Cuban cooperative.
The U.S. Chamber of Commerce, a longtime advocate of lifting the embargo, brought a delegation of some 40 companies in 2015 that were eager to meet Cuban officials and strike deals. The chamber also launched its U.S.-Cuba Business Council that year.
Carlos Gutierrez, the former Kellogg chief executive who served as secretary of commerce under President George W. Bush, was at the upbeat 2015 fair and he’ll be back at this year’s fair.
“I would expect attendance to be lower than in previous years,” said Gutierrez. “Some companies feel they’ve invested a lot of time [in the Cuban market] and come up empty-handed. You can’t expect magic will happen in the span of two years especially when operating with an embargo.”
“Companies with a long-term view continue to be interested and realize it’s good to stay close to keep abreast of the changes in the Cuban regulatory system, but they know they are going to have to wait,” said Gutierrez, who is the chairman of the U.S.-Cuba Business Council.
Those interested in the long haul understand Cuba has certain advantages, including its strategic location, a relatively untapped consumer market and the tremendous potential for tourism, he said.
Kavulich said that both the Obama administration and the Castro government could have and should have done more to cement the business relationship while there was political will to do so.
Even though many Obama-era regulations continue and the Trump administration also has allowed deals licensed under Obama to proceed, “Cuba, by not taking advantage of the continued opportunities” also has contributed to diminished interest by U.S. companies that “are not seeing that Cuba wants them to have a role in its economy,” said Kavulich.
But Gutierrez looks at the past few years of the normalization process as a learning experience for both countries.
During that time, Gutierrez said, “thousands of executives went to Cuba. For Cuba that meant they had to have people ready to meet with them, follow up and make sure the process was moving forward.”
Cuba often didn’t seem ready for the influx.
Meanwhile, Havana not only wants to pique the interest of foreign investors at the fair but also to sell its products, from rum and cigars to pharmaceuticals and seafood. It has 120 exhibitors at the fair, representing 350 Cuban enterprises. Although there are exceptions to the embargo that allow U.S. companies to export agricultural and food products and medicines and medical products as well as trade with private entrepreneurs in Cuba, U.S. companies aren’t expected to do too much buying and selling.
“The Trump administration has been wildly successful in diminishing commercial interest toward Cuba. It’s created a narrative where it’s really difficult for a CEO to go on television and defend the position of dealing with a country when the military controls so much of the economy,” said Kavulich.
The portfolio of Cuba’s military conglomerate, GAESA, includes hotels, tourism companies, the Mariel Special Economic Development Zone, gas stations, convenience stores, telecommunications companies, a commercial airline, the Cuban Export-Import Corp. (CIMEX) and more, but not all the businesses under the GAESA umbrella are included on the U.S. list of Cuban entities that are off limits for Americans.
The prohibited list hasn’t been revised since it came out in November 2017, but now that “list is in play,” said Kavulich. The Trump administration has indicated it might add more military-controlled companies. Another idea circulating in Washington is to require U.S. companies engaged in joint ventures, management contracts or other business deals with Cuba to directly pay their workers. Now payments go to the government, which passes on a percentage to Cuban workers.
When Díaz-Canel attended his first United Nations General Assembly meeting in New York last month, he also met with U.S. business executives, most in the travel industry, for a roundtable discussion and held private meetings with some companies.
“He pulled it off well; he was well prepared,” said Pedro Freyre, a Miami attorney whose clients include some of the cruise lines that have Cuban itineraries.
“The generational change is evident. Díaz-Canel is the face of Marxist capitalism,” said Freyre who attended the New York roundtable and a reception for Díaz-Canel .
But not everyone is convinced that the Cuban leader will make changes that will make Cuba more attractive to U.S. business. Mid-fair, Díaz-Canel will leave on a trip that will take him to visit more traditional allies of Cuba: Russia, China, Vietnam, Laos and North Korea.
“Diaz-Canel is pro-business, but the question is whether he’s pro-U.S. business,” said Cimbler.
Follow Mimi Whitefield on Twitter: @HeraldMimi