Germans Attracted to Cuba's Investment Needs
Since Fidel Castro formally announced his retreat from power in Cuba,
foreign firms have begun to hope the island will soon open up to
business. There are already indications it may.
As the world's media reported Castro's retirement, on Tuesday, Feb. 19,
Germany's business community was analyzing the situation. The
Comandante's withdrawal was a "striking turning point," said commercial
lawyer Frank Seifert, head of the German-Cuba Business Union, but it
came as no surprise. "This step had been in preparation for a long
time," he said.
Indeed, nothing is feared as much in Cuba as radical change. The
transition from the Castro era to his likely successor, Raul Castro, was
intended to be a smooth one.
"The people are afraid that the little they have will be at risk if the
change comes too quickly," Seifert said.
That fear is understandable given the powerful groups of exile Cubans in
Florida waiting impatiently for the moment they can reclaim property of
which they were dispossessed.
"Politically, we don't expect a change, but we do expect an economic
opening," said Peter Roesler of Germany's Ibero-America Club.
Decaying industry
There are indications that change may be in store. Raul Castro has
called on Cubans to identify the weaknesses of the socialist system and
to submit suggestions for improvement. Media loyal to the government
have begun to report -- with unusual outspokenness -- about economic
grievances.
Seifert, who has advised companies on investing in Cuba since 1995, said
he foresees new opportunities for German and other foreign firms looking
to do business with the island state.
"Cuba is an investment country with massive pent-up demand," he said.
"Cuba is the gate to the Caribbean. It has a magnificently educated
population."
High hurdles
Whether generators, medical technology or diesel motors, an
ever-increasing stream of products is already making its way from
Germany to Cuba. Exports to Cuba amounted to 412 million euros ($606
million) in 2006, according to Germany's Foreign Ministry.
However, investing in Cuba involves fulfilling myriad regulations and
overcoming daunting bureaucratic hurdles. In addition, Cuban business
conduct takes some getting used to and companies can be fickle when it
comes to dealing with accounts payable.
Cuba's 1995 foreign investment legislation requires foreign companies to
work with a Cuban partner from the same sector and to get state
permission to do business on the island.
The German Foreign Ministry put the number of joint ventures and
international business associations with foreign firms in Cuba at 236,
with the investments from Venezuela and China increasing especially
strongly.
Contingent on US change?
Men walk past a billboard showing a cartoon of the Statue of Liberty at
the Malecon area in HavanaBildunterschrift: Großansicht des Bildes mit
der Bildunterschrift: 100 US Congressman and women said their country's
policy toward Cuba had been a failure
The German engagement was "laughable," Seifert said. German firms were
involved in only six joint ventures, which included Daimler as well as
entrepreneur Stefan Messer, who produces industrial gases and is one of
the most important German investors on the island.
Many more companies would like to invest in Cuba, and socialism isn't
the only deterrence. They are put off by the United States' blockade on
trade with Cuba.
"Laws with ex-territorial effects" like the 1996 Helms-Burton Act, which
allows US courts to penalize foreign firms that trade with Cuba, should
be shelved, Roesler said. Companies active in Cuba risk being barred
from the US market.
But the US won't be able to sustain its blockade much longer, according
to Seifert. The economic embargo, in effect since 1962, has been subject
to mounting criticism in the United States.
On Tuesday, over 100 members of Congress called on Secretary of State
Condoleezza Rice to change the country's approach to Cuba. Politicians
from both the Democratic and Republican parties have declared the policy
of sanctions and isolation aimed at eliciting change in Cuba a failure.
The past 50 years of that approach had had no effect, they said.
Steffen Leidel (ncy)
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