CARICOM and Cuba in a changing hemispheric environment:

A balance since 17DDr. Jacqueline Laguardia Martinez

Institute of International Relations, UWI

Jacqueline.Laguardia-Martinez@sta.uwi.edu

Points to explore

1. Forces to change: Cuba - USA

2. The 17D: facts and consequences

3. Cuba and CARICOM in the new context

4. 2016 and recent developments

End of 2014: the right moment to change

• Growing understanding within the U.S. of the failure of the U.S. policy towards Cuba. • Younger generations of Cuban-

Americans want the U.S. to have a normal relation with Cuba.• U.S. businessmen are interested on

making business in Cuba. • Obama’s presidency second term.

• On 2014, Cuba and the European Union opened negotiations on a bilateral agreement on Political Dialogue and Cooperation.• Latin America and the

Caribbean have asked the U.S. to change its policy towards Cuba: Cuba was invited to attend the Summit of the Americas in April, 2015.

Some revealing signs• April 17–19, 2009: Fifth Summit of the Americas in Port of Spain.

President Obama publicly committed himself to look for a ‘fresh start’ in the relations between the two countries.

•December 10th, 2013: President Barack Obama shook hands with President Raúl Castro in Nelson Mandela’s state memorial service.

•October, 2014: The New York Time’s editorials

Turning point: December 17th, 2014•Both Presidents Obama and Castro addressed their countries and international audiences, almost at the same time.

•Both countries released prisoners.

•They announced the agreement to renew diplomatic relations.

President Obama’s administration towards Cuba before 17D

• To allow Cuban-Americans to travel easier to the island and to send monetary remittances to relatives. • To allow American citizens to visit

Cuba for educational travel.• Bilateral cooperation in drug

interdiction, natural disasters, migration and fighting Ebola in Africa.

• It has being particularly aggressive with companies that negotiate with Cuba or Cuban citizens (BNP Paribas, Red Bull).• It continued mechanisms to organize and

promote internal opposition. • Cuba continued included in the List of

States promoting international terrorism made by the U.S. State Department. • It bypassed the UNGA Resolutions that

demands the end of the embargo.

Sense of failed policy

Some advances until May 2016• Rounds of negotiation and technical meetings: immigration; cultural and academic

exchanges; environment; natural disasters; Internet; drug interdiction; air safety; remittances; humanitarian aid; democracy; human rights; cyber security

• Bilateral Agreements and MOU: telephone calls; postal service; civil aviation; ferry services; security on maritime navigation; agriculture

• Cuba was excluded from the list of State sponsors of international terrorism in 2015

• Opening of Embassies in 2015 (July 21 Cuba in Washington/August 14 U.S in Havana)

• A Cuba-U.S. Bilateral Commission was established on August 2015

• High-level visits, U.S. representatives to Cuba: Sec. Anthony Foxx (Transport); Sec. Thomas J. Vilsack (Agriculture); Sec. Penny Pritzker (Commerce); Sec. John Kerry (State); Virginia’s Gov. Terry McAuliffe; Texas Gov. Greg Abbott; Arkansas Gov. Asa Hutchinson; New York Gov. Andrew Cuomo. Cuban representatives to the U.S.: Rodrigo Malmierca Díaz (Minister of Foreign Trade and Foreign Investment)

Some advances until May 2016• January 2015: U.S. companies authorized to export limited goods; a general license to

establish mechanisms to provide commercial telecommunications services in Cuba or linking third countries and Cuba was approved; permissible use of U.S. credit and debit cards; financial institutions may open accounts at Cuban banks.• February 2015: Cuba’s small private business sector authorized to sell goods to the U.S.• March, 2015: Restoration of direct telecommunication connection.

• April, 2015: Roswell Park Cancer Institute of Buffalo, New York, signed an agreement with Cuba’s Center for Molecular Immunology to import the Cuban lung cancer vaccine with a clinical trial in the United States.• January 2016: More sectors of U.S. business authorized to export goods and services to

Cuba; more general licenses for categories of authorized travelers to Cuba.• March, 2016: First flight from the United States to Cuba after agreement on restoring direct

postal service.• May, 2016: T-Mobile signed an interconnection and roaming agreement with Cuba-based

operator ETECSA (It is understood that AT&T plans to sign a roaming deal with ETECSA as well).

President Obama’s visit to Cuba, March 20-22, 2016 Positive for the

normalization process President Obama

announced the authorization to individuals to travel to Cuba for ‘people to people’ educational trips, allowed Cuba to use American dollars in international transactions and other measures to facilitate trade and maritime transportation.

What has not happened yetThe embargo/blockade is still in place

February 2016: A review of the Treasury Department’s enforcement actions involving Cuba show eight sanctions cases since 17D. Fines imposed since the rapprochement began have totaled USD 5,278,901, according to Treasury. Some of the companies fined are WATG Holdings, Inc., PayPal Inc., CGG Services, Halliburton Atlantic and Halliburton Overseas.October 28, 2015: The United States voted against the UNGA Resolution criticizing the U.S. economic blockade against Cuba (191-2).The economic damages caused to the Cuban people by the blockade have been set at more than 800,000 billion USD.If the blockade were eliminated, exports from the US to Cuba could reach 4,300 million USD a year and Cuban exports could be 5,800 million USD annually (Gary Hufbauer and Barbara Kotschwar, 2014).

Embargo after 17D: nonsenses and contradictions

• In May, 2016, the U.S. State Department announced that coffee is among the products Cuba can export to the U.S. In May, 2016, the National Association of Small Farmers announced it has been impossible for them to export Cuban coffee to the U.S. (high tariffs since Cuba has no preferential trade agreement with the U.S.; impossibility of using U.S. dollars in international transactions; impossibility of relaying in any Cuban foreign trade enterprise/institution)

• In May, 2016, the Cuban government confirmed Cuban institutions have not been able to use U.S. dollars for international transactions in spite of President Obama announcement during his visit to Havana.

There are four aspects of the embargo that the President of the United States cannot act:1. The prohibition on US subsidiaries in third countries from trading

products with Cuba (Torricelli Act, 1992).2. The prohibition on carrying out transactions with US properties

that were nationalized in Cuba (Helms-Burton Act, 1996).3. The obligation to pay in cash and in advance for purchases of

agricultural products by Cuba in the US (Trade Sanctions Reform and Export Enhancement Act of 2000).

4. Preventing American citizens from traveling to Cuba as tourists (Trade Sanctions Reform and Export Enhancement Act of 2000).

The embargo in hands of the Congress• The total dismantling of this policy does require Congressional

approval.

• The US Congress has not approved any of the bills seeking to eliminate some of the embargo regulations.

• Around 40 legal initiatives regarding Cuba have been presented in Congress. The purpose of some is, though, to reinforce several fundamental aspects related to the implementation of the embargo and prevent the approval by the President of new executive measures and the implementation of those which have already been adopted.

What else can President Obama do?

The Helms-Burton Act codified the embargo into law along with the bundle of executive orders that sustain it.

Nevertheless, that same law preserved the broad powers of the President, via the issuance of licenses to allow different transactions prohibited by the embargo.

Consequences of the 17D

A growing interest in Cuba

In the U.S.

• American visits rose 76 % to 161.233 in 2015, not counting Cuban-Americans. • Until May, 2016: 94.000

Americans visited Cuba. • U.S. businesspersons and

companies visiting Cuba.• About 50 American businesses

attended the Havana International Fair (FIHAV) on November 2015.

Out of the U.S.

• More tourism: In 2015 Cuba received a record 3.52 million visitors, up 17.4 % from 2014. In Havana 1,685,381. In the first quarter of 2016, 572,000 visitors in Havana (New 7 Wonders Cities)

• More FDI coming from traditional partners: hotels, airlines, technology.

• Cruise ships: Ponant, Celestyal Cruises• Mariel Special Economic Zone.• Debt renegotiations: UK, Spain, Netherlands,

China, Spain, Japan, Paris Club.

• Cuba was added to Twitter’s list• Netflix and Apple removed Cuba from its restricted country list for foreign trade• Boost Mobile connects Miami customers with Cuba on new prepaid plans• Verizon Communications signed a direct interconnection agreement with the Cuban

Etecsa• Priceline Group makes Cuban hotel rooms available to U.S. customers via subsidiary

Booking.com• Airbnb offers Cuba home-rental facilities• United Continental Airlines, Southwest, JetBlue, Spirit Airlines, Alaska Air Group

and Silver Airways wanting to have commercial flights to Cuba• Feb. 2016: Cuba Cleber LLC was notified that it could open a facility in Cuba to build

tractors• March 2016: Starwood Hotels and Resorts signed three hotel deals in Cuba

U.S. private sector first steps

Why to go to

Cuba NOW?In the future it is expected:1. American

tourists to travel to Cuba

2. American companies to open business in Cuba

Cuba and the rest of the Caribbean

A threat or a partner?To compete or to cooperate?

Monday, April 6 2015, The Jamaica Observer

A threat?• The rise of tourist arrivals to Cuba at the expense of other Caribbean

destinations was one of the forecast negative effects, together with concerns regarding U.S. investments, trade and aid funds deviating to Cuba. • According to a survey of Travel Leaders Group of 2015, the number of

Americans interested in travel to Cuba if all U.S. Government restrictions were lifted is on the rise, with 15% saying they’d go as soon as they could, compared with 11% in 2014.• According a IMF study of 2008, Cuba is bracing for as many as 10 million

American tourists per year.• Cuban officials estimate that 1.5 million Americans would travel to Cuba

annually.

Not really…• According the World Tourism Organization, the Caribbean ended 2015

with a 7.4 percent growth compared to 2014, receiving 24 million tourists.• Cuba’s main assets as tourist attraction for Americans cannot be provided

by any other destination: old American cars, ‘socialist’ experience (history, society)• Caribbean sun and beach destinations (Bahamas, Barbados, Punta Cana)

are well positioned in U.S. markets and Cuba’s resorts cannot compete with them, still.

To come to Cuba FIRST is the strategy followed by other regions to benefit from the growing interest and business opportunities in Cuba and get

there before the U.S. Why not the Caribbean?

Opportunities for the Caribbean1. More tourists expected to visit the Caribbean (Cuba

joined the CTO in 1992).

2. Development of multi-destination tourism (cruises).

3. Development of diverse Caribbean tourist attractions: health tourism, city tourism, cultural tourism

4. Cuba as market for Caribbean products and services.

5. Cuba as hub in the Caribbean (Mariel port’s facilities).

Tourism as main interest focus. FITCuba. May 2016• 36th International Tourism Fair in Havana, Cuba.• More than 2,000 delegates from 53 countries.• The fair was dedicated to Havana as a destination.• The fair was dedicated to Canada as the guest country (Canada is the main source of tourists

to Cuba with 1.3 million in 2015).• The fair was dedicated to Culture as tourism product. • Cuba currently has 62,090 rooms in 360 hotels (68 percent four and five-star hotels) plus other

18,742 in the private sector, a total of 80,832 rooms nationwide.• In Havana, there are 11,309 rooms in hotels, plus 4,700 in the private sector.• About 13,688 new rooms will be built for 2016, especially for sun and sea.• The Cuban government has approved 26 joint ventures, 69 management contracts and 18

international chains.• Cuban hotel development plans to reach, by 2030, a total of 134,300 rooms out of a potential

273,500 (the maximum possible for the Cuban hotel industry).

Caribbean advantages to benefit from the new hemispheric dynamics after 17D

• Cuba’s foreign policy key principles remain the same: International activism, critic to interventionism and supporter of preventive action lead by multilateral organizations (UNESCO, FAO, UNDP, WHO, Human Rights Council), solidarity as main philosophy and cooperation as implementation mechanism in the search for an international insertion qualitatively different.

• Long established and strong diplomatic relations (1972).

• Long established cooperation programs: education, health sector, sports.

• 2000 Trade and Economic Cooperation Agreement between CARICOM and Cuba revised in 2014.

• 1991: A CARICOM Commission visited Havana• 1993: Establishment of the CARICOM-Cuba Joint Commission• 1994: Cuba joins the Association of Caribbean States (ACS)• 2000: Trade and Economic Co-operation Agreement between Cuba and CARICOM.

(Two Protocols)• 2002: First Summit Cuba-CARICOM• 2005: Second Summit Cuba-CARICOM• 2008: Third Summit Cuba-CARICOM• 2009: OAS approves the possibility of Cuba’s return• 2011: Fourth Summit Cuba-CARICOM• 2014: Fifth Summit Cuba-CARICOM• Since 1992: general condemnation to the USA blockade against Cuba

Cuba and CARICOM relations

Cuba in the Caribbean: recent developments•Operation ‘Milagro’ had operated more than 118 000 Caribbean

patients up to October 2014•Medical Brigades are present in 12 Caribbean countries• Technical assistance in key areas such as Disaster Risk Reduction

and in the Caribbean Sea protection and preservation• Cuba was elected Chair of the Association of Caribbean States

(ACS) Ministerial Council for the period 2016• ACS VII Summit of Heads of State and/or Government to be held

in June 2016 in Cuba

CARICOM challenges to benefit from the new hemispheric dynamics after 17D

• Inertia on the Caribbean private sector on not developing economic and trade relations with Cuba.• Difficulties to do business in Cuba: central-planned model, state-owned enterprises,

bureaucracy, legal and institutional differences• Because U.S. changes on how to engage with Cuba are so new and untested,

Caribbean companies should approach new Cuban business opportunities with care and caution.• Cuba is looking for large investments and join business in sector that bring

technology, build infrastructure and create jobs.• Similar economic production and export orientation.• High cost of air and sea transportation within the region.• Insufficient finance and credit mechanisms to foster trade and investments.

Some recommendations for CARICOM Caribbean1. Change the narrative: Cuba more an opportunity than a threat April, 2016: When addressing the newly appointed directors of the boards of key agencies of the tourism ministry on the weekend at the Montego Bay Convention Centre in St James, Jamaica's tourism minister Mr. Edmund Bartlett noted that Cuba is strategically positioned to help in the growth of tourism in the Caribbean and that it will be beneficial for Jamaica (Cuba may enable the Caribbean to secure better airlift arrangements with airlines and facilitate multi-destination marketing in the region)2. To re-evaluate the existing mechanisms that put CARICOM member states in an

advantageous position to conduct business in Cuba.3. To encourage new partnerships with Cuba, specially in areas of interest for the U.S. and

Caribbean business communities (tourism, health).4. To carefully follow the ‘normalization’ process for correctly assessing new business

opportunities in Cuba.5. To carefully follow the updating of the Cuban economic model to understand the changes

within Cuba.

VII Congress of the Cuban Communist Party, April 2016Main subjects of discussion

The Cuban Economic Model: conceptualization, implementation

Economic and Social Development Plan 2030

For the rest of 2016: the process continues• President Obama’s should not announce too many new measures even if there

is still some room of maneuver to act (not many new changes expected).• Keep on advancing and developing the bilateral negotiations and business

opportunities already initiated and opened.• Window of opportunity for third actors on exploring how to establish or

expanding their presence in Cuba will remain opened.• The Cuba-U.S. normalization process is not expected to act as a major influence

in Cuba’s foreign policy and cooperation orientation towards the rest of the Caribbean and Latin America.

• Cuba will advance in its domestic reform in order to improve its economic performance, infrastructure, legal framework and institutions facing the future increasing of economic relations with the U.S. and other foreign partners.

The Rolling Stones in Havana. March 25, 2016.

US President´s Committee for Arts and Humanities visit. April, 2016.

Adonia cruise ship establishes a regular route US-Cuba. May 2016.

‘Fast and Furious’ filming in Havana. April- May, 2016.

Chanel sets Havana as scene for its Cruise collection. May 3, 2016.

U.S. Reality TV. May, 2016.

Images from:• http://www.nytimes.com/2014/12/18/world/americas/in-us-cuba-embrace-rusty-gears-of

-cold-war-diplomacy-finally-move.html?_r=0• http://commons.wikimedia.org/wiki/File:Catedral_de_Las_Habana,_Cuba.jpg• http://www.havanatimes.org/?p=109102• http://

www.bbc.com/mundo/noticias/2016/03/160320_cronica_llegada_obama_cuba_castro_ps• http://www.bbc.com/news/world-latin-america-36183192• http://

www.incubatoday.com/news/ggwjsf/picture74435742/ALTERNATES/FREE_640/rapido2• http://

twt-thumbs.washtimes.com/media/image/2016/03/26/APTOPIX_Cuba_Rolling_Stones.JPEG-09d01_c0-326-5760-3684_s885x516.jpg?e6a1da1171f05790a0f16139de2246927e1e8a56• http://

a2.files.fashionista.com/image/upload/c_fit,cs_srgb,dpr_1.0,q_80,w_620/MTM4NDI3ODE4NDIwNzQxNDQ1.jpg• http://uscdn02.mundotkm.com/2016/05/kardashians-cuba-12.jpg• http://uscdn02.mundotkm.com/2016/05/kardashians-cuba-11.jpg