Louisiana and Cuba once were among each other’s most important trading pners. The C War ended their close relationship.
Last December, more than 50 years after the United States imposed a trade and travel embargo on its island , President Barack Obama announced his re to normalize relations with Cuba. On Aug. 14, Secretary of State ohn Kerry called for dcracy in Cuba while opening the U.S. emby in Haa.
“Decades of U.S. isolation of Cuba have failed to accomplish our objective of empowering Cubans to build an open and dcratic country,” the White House says. “We cannot keep doing the same thing and expect a different result.”
Saul Newsome, a Baton Rouge attorney focused on international trade and foreign investment, is half-Cuban on his ’s side. As a child he lived for 10 years in Miami, a bastion of anti-Castro sentiment, and he’s well aware of the crimes of the Cuban regime.
But in this ent, Newsome sees a chance to help Louisiana’s economy and the Cuban people.
“Increasing and liberalizing trade will lead to reform,” he argues. When we give the Cubans a taste of capitalism, “I think we empower them,” he says.
Cuba’s economy is mostly state-run and sluggish. Most Cubans are poor and have limited ality to buy American goods. Cubans lack political and economic freedom, and often defect when given the chance.
Obama’s critics, including members of Congress whose approval would be needed to lift the embargo, say bolstering Cuba while crackdowns on dissidents continue only rewards the oppressors.
But the relationship between the United States and Cuba is beginning to thaw. If that warming trend continues, Louisiana inesses will have a chance to profit from change.
Beginning in 2001, an embargo exception created by Congress allowed for -only sales of food and agricultural products to Cuba. When Mike Olivier, Gov. Kathleen Blanco’s economic development , made the official visit by a Louisiana official to Castro-era Cuba in 2004, Cuba reportedly was buying goods from 38 U.S. states. Much of that go was shipped th the Port of New Orleans, but very little if any originated in Louisiana.
Blanco, with permission from President George W. Bush’s State Depment, led a Louisiana delegation to Cuba in 2005. She k the trip would be controversial, but she thought the upside was worthwhile.
Blanco secured a deal with Alimport, the Cuban government’s food importer, for Louisiana rice, sauce, and other products. At an event held to rate an agreement worth $10 million annually, she says she made an impromptu proposal.
“I turned to [Alimport head] Pedro Alvarez, and said, ‘$10 million? Why don’t we try for $15 million?’” she says. “He looked at me and said, ‘It’s a deal.’” The lawyers sprang into action, scratching out figures and writing in ones by hand, and the room erupted in applause, she recalls.
A visit with Cuban President Fidel Castro was not on the original agenda, but he hosted the Louisiana visitors for lunch on the last day of their trip, Blanco says. She found the elderly presidente to be physically frail but mentally sharp. He k that Louisiana was a g sugar producer and talked about how Cubans were still harvesting sugarcane by hand.
Looking back, Blanco is glad she made the trip.
“We wanted to be on the forefront,” she says. “We didn’t want to be s when the sanctions would be lifted.”
Today, Olivier is CEO of the Committee of 100 Louisiana, which calls itself the “statewide iness roundtable.” If the embargo is lifted, he says $21 llion worth of trade opportunities could emerge for American companies during the five years. Even with the embargo still in place, rules governing financial transactions now have been relaxed, which should make it easier to do iness in Cuba.
Olivier says the long list of Louisiana products of interest to Cubans includes rice, soybeans, cotton, poultry, bulls and bull semen. He says Cubans tend to prefer the dark meat of the chicken, which might help U.S. chicken producers since the domestic market favors white meat.
Olivier thinks “normalization is going to come” at some point, but says property rights will have to be addressed. Cuba does allow commercial development by foreigners, but only in pnership with the regime. Olivier relays a conversation with an Irish manager of a Cuban el to explain how it s.
When el construction is finished, “Fidel Inc.” keeps the heavy equipment, Olivier says. The government sends the company more ers than needed to build and operate the el and requires it to feed and house those ers.
“They get taken off the back of the Castro government,” Olivier says, “and they pay them $30 a month.”
“It’s like labor,” he says.
The el manager said it only takes five years to begin turning a profit, and the fact that companies are willing to enter these pnerships seems to show that the government has so far upheld its end of the bargain, Olivier says.
He acknowledges that Americans routinely do iness with authorian countries, but in the case of Cuba, “reparations need to be considered.”
“The Castro regime,” Olivier says, “has robbed people of their ets … not to mention the fact that people were killed, ed [and] .”
“We need to have a full, normal trade relationship with Cuba,” says Louisiana Commissioner of Agriculture Mike S, a Rean. “We have to have some trade treaties to deal with Cuba, like any other nation. We trade with China. We trade with Vietnam. We trade with countries that we politically don’t agree with, and Cuba is no different than that.”
S says increasing travel to Cuba would facilitate cultural exchange and benefit everyone involved. “Isolation does not help if we are trying to affect change,” he says.
S has not yet visited Cuba, but he plans to in the near future to “close some deals and sell some products.”
“Things are changing rapidly,” he says. “Before, you could only trade with the government. … You’re going to have import companies, export companies, where you’ll be able to deal directly, iness to iness.”
The Port of New Orleans was the key link between Louisiana and Cuba before the 1959 communist revolution. If the United States normalized trade with the island, much of that iness would flow th Louisiana ports.
“Ending a 50 year-trade embargo with Cuba will bring opportunities for Louisiana, the Port of Greater Baton Rouge and the other ports located on the Mississippi River,” says Karen St. Cyr, director of affairs for the Port of Greater Baton Rouge. “The Mississippi River is an important international gateway, and our state is in an excellent location as trade normalizes and exports increase.”
Treated Louisiana wood products are suitable for construction in Cuba, says Buck Vanders, executive director of the Louisiana Forestry Association. “This is a great opportunity for our lumber mills, our plywood plants, and our treated [wood] industry,” he says.
While Cuba’s door has been open to agriculture since the early 2000s, the purchasing decisions have been driven less by market s and more by a re to influence U.S. policy, says erry Hingle, a New Orleans-based consultant who helps inesses and trade ociations expand internationally. But if relations improve, economic growth on the island and resort construction could boost demand for Louisiana wood products.
“We’re very bullish on Cuba,” Hingle says, but “it’s going to take a while.”
Cuba is a sugar producer, so it could someday rival Louisiana’s sugar industry. But it currently relies on outdated mills and equipment, which puts pressure on the Cuban government to allow more foreign investment.
“Cuba’s sugar industry is nothing like it used to be,” says im Simon, general manager of the Thibodaux-based American Sugar Cane League. But any additional foreign sugar entering the U.S. market could be cause for concern, he says, especially if the country of origin heavily subsidized production, as is often the case.
Louisiana exported to Cuba about $45 million worth of products in 2014, mainly chicken, ce and feed, says Kathe Falls, executive director of international commerce for Louisiana Economic Development. That total will increase as more companies get licenses to do iness with Cuba and the list of products that can be exported is expanded, she says.
Falls says she’s “cautiously optimistic” about the potential benefit to Louisiana. While she has not been to Cuba, her understanding is that Cuba needs “just about everything.”
“The demand will be there,” she says. “I think we have to look cautiously at the ality of the Cubans to pay for the goods.”
In pnership with Brazil, Cuba is building a mive port at Mariel, about 30 miles west of Haa. It’s p of what’s lled as a free-trade industrial zone, the of its kind in Cuba, and the government hopes to attract major foreign investment. Several companies have shown interest, reportedly including an Alabama tractor company that has applied to the U.S. Treasury for a license to build a plant there.
But development has been slow, in keeping with the Cuban government’s “without haste, but without pause” approach to economic reform. It’s also likely that companies are hesitant to invest in a country that nationalized te properties after the 1959 communist revolution and sometimes seizes ets of inesses it accuses of corruption.
Paulo Spadoni, an istant professor of political science at Georgia Regents University, is the author of Cuba’s Socialist Economy Today: Navigating Challenges and Change. He says the embargo was doomed to fail to bring about political change, although it succeeded in harming Cuba’s economy and making the lives of the Cuban people more difficult.
Raul Castro, who officially succeeded his as president in 2008, has implemented several important reforms, Spadoni says. Those include allocating fallow land to Cuban farmers, allowing tely managed agricultural cooperatives, enacting a progressive tax system and restructuring the wholesale market.
Raul Castro wants to eliminate Cuba’s bersome two-currency system, in which most goods are valued in convertible pesos pegged to the dollar, but most Cubans are paid in Cuban pesos worth a fraction of the dollar. Castro also wants to lay off more than 1 million government ers, but that plan is moving slowly in the absence of s for those ers.
Spadoni says more change is needed to spur sustainable growth of Cuba’s economy. The government should allow wealth to aculate in te hands, he says, and let its many well-educated professionals employ their skills as independent entrepreneurs.
When asked if economic change might lead to political change, he says the latter is not a priority for Cuba’s leadership.
“Political and economic reforms will happen at the pace and depth the Cuban government wants,” Spadoni says. But if the United States lifts the embargo, the regime probably would make concessions to create a more attractive iness environment. “So it’s a two-way ,” he says.
Baton Rouge estate pro Beau Box recently visited Cuba with other members of the Young Presidents’ Organization. He says the Cubans he met seemed ing and entrepreneurial. Box was picularly impressed by their ality to keep their circa-1950s American s running.
“Until the Cuban government allows anybody to own estate, it’s not going to take off,” Box says. “When that loosens up, it will be a great place to invest .”
LSU professor George S has visited Cuba seven times over the past three years as p of a affiliated with University Presbyterian Church. UPC has a 25-year pnership with a church in San osé de los Ramos, where the has installed a water filtration system. While the communist nation used to be officially atheist, Cubans now have religious freedom, S says, although it’s to get permission to build a church.
Professor S finds Cubans to be warm and receptive toward Americans. But if asked, they will frankly, albeit politely, express their frustrations with U.S. policy.
“The American government’s embargo has done horrible damage to the people of that country,” he says.
Cuba was a client state of the Soviet Union. Beyond depriving Cuba of its main benefactor, the collapse of the USSR means there is no longer an ally of the “evil empire” less than 100 miles from Florida, which undermines one of the original arguments for American sanctions.
The embargo, which Cuban officials call a “blockade,” has given Cuban leaders an easy scapegoat for their country’s woes. But in contrast to his , Raul Castro has urged Cubans not to blame the American sanctions for all of their nation’s problems.
It’s possible that the embargo would have been lifted already if Florida wasn’t such an important political swing state. When Obama announced his hope of moving toward normal relations, Gov. Bobby indal joined other Rean presidential hopefuls in denouncing the move.
“Taking s to normalize relations with Cuba only serves to reward [the Castro s], and it is a disservice to those in Cuba who wish to be free and who live in fear of a dictatorial regime,” says a indal statement released last December by his official state press . The statement did not mention Louisiana.
As a congressman, indal expressed a more Louisiana-centric perspective, according to a spaper report.
“We as a state shouldn’t be doing anything to perpetuate or legitimize Castro’s reign. But at the same time, I don’t want to see us losing ground to Miami or Houston,” indal said, as reported in a March 2005 in The Advocate. “We need to lay the ground for a post-Castro era, and be ready to resume our historic role as a trading pner with Cuba.”
U.S. Rep. Charles Boustany, a Rean from Louisiana’s 3rd District, favors increased trade with Cuba, sting with agriculture. But he stresses that the United States should proceed cautiously while verifying that the is flowing to the Cuban people, not the military.
“Opening the market for Louisiana growers to sell these -grown products to Cuba would be immensely beneficial to our state’s economy,” Boustany says. “It’s time to examine the impacts of opening this market and the effect it could have on reducing human rights s in Cuba and improving relations between our two countries.”
Newsome, the Baton Rouge international trade attorney who favors increasing trade with Cuba, expects the Cuban government to remain wary of purely foreign investment. But he says they might be open to joint ventures with locals, specifically in agricultural co-ops, which he describes as one of the areas where Cubans have been allowed to go into te iness.
Cuba native George Fowler, a New Orleans-based attorney who specializes in international law, is a prominent and vociferous anti-Castro activist. He says the embargo has been effective in preventing Fidel Castro “from becoming the Third World leader enemy of the United States that was his dream.”
“The world’s worst country to invest in is Cuba,” he says. “How could I advise any of my clients to do iness in a country that has no rule of law?”
Fowler compares allowing into Cuba with paying Adolf Hitler during World War II. He wants the United States to ramp up the pressure on Fidel Castro, who Fowler says is still in charge.
“They got rid of Saddam Hussein. They got rid of [Manuel] Noriega in Panama. We can do it; there’s plenty of crimes against Americans that he’s responsible for,” Fowler says. “We’re ing to make sure [Florida Sen.] Marco Ruo becomes the next president of the United States. Then we’ll deal with Cuba.”
When asked if he thinks it’s OK to do iness with repressive regimes like Saudi Araa and China, he mentions that his firm had an in China for 10 years. “My Chinese pners made and put it in their pockets.” But the Cubans are basically s to their government, Fowler says, surviving on $20 a month while the Castros live in splendor.
“If I could find one of those companies that does iness in Cuba in the United States, I would sue them,” he says. “For ry.”
Newsome also cites China, but to make the opposing argument. He says the world’s most populous nation has shown that increasing trade with the outside world can lead to a better quality of life, if not necessarily an open political system.
“There are a lot of opportunities that I think would benefit Louisiana in a g way,” Newsome says, “and benefit the Cuban people.”
Cracking the Cuban market: Louisiana companies contemplate iness prospects with the Caribbean nation
Cracking the Cuban market: Land of opportunity for Louisiana
Cracking the Cuban market: What’s changed?
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