In funding Cuba port project, Brazil set to gain key foothold

In helping fund Cuba port project, Brazil has its sights set on becoming the island's No. 1 partner

Heavy trucks groan through the muddy hills, laden with cement mixers, earthmovers and tractors. Gigantic cranes loom just beyond piers and shipping containers in Cuba's Caribbean waters. Stern guards keep watch.

A billboard proclaims: "The economic battle is today our principal task."

Thirty-five years ago, this port on Cuba's northwestern coast rose to international prominence when, in a matter of days, tens of thousands of mostly poor Cubans boarded rickety boats and crossed the sea to Florida, in a hostile maneuver by Fidel Castro to overwhelm U.S. shores.

Today, it is bustling with anticipation as the Cuban government, with international assistance, tries to reinvent Mariel as a crossroads of global trade and commerce.

If business and goods pour into Cuba as relations improve and restrictions are relaxed with the U.S., this will be a main entry and transshipment point.

Brazil, with its own geopolitical aims in mind, is footing much of the $1-billion bill to modernize a massive deepwater port that could become the largest in the Caribbean, and build a 180-square-mile "special development" zone for industrial and energy production. The idea is partly patterned after China's special economic zones, such as the city of Shenzhen, which, beginning in 1978, was given breaks from regulations and taxes and allowed to become an incubator for the country's explosive economic growth.

"They are challenging nature," a worker was overheard saying as rain carved rivulets in piles of gravel. Authorities would not let journalists from The Times enter the port, saying permission was needed from an office that didn't answer the telephone. The reporters' driver was interrogated for about half an hour.

Still, it was clear that work was well underway. Dredging will deepen the port to nearly 70 feet, allowing the entry of gigantic ships in the region after completion of the Panama Canal expansion, as well as the potential addition of a canal in Nicaragua, a controversial project that would be built with Chinese financing.

"This will open a huge opportunity," said Omar Everleny Perez, an expert with the University of Havana. He said Mariel could become a way station for sea traffic from the Americas to Europe and beyond.

The project is focused at Mariel, about 30 miles from Havana, because the capital's bay is more shallow and increasingly has become a tourist attraction, not an industrial operation.

Brazil is not alone: China, Singapore and other countries are planning to get in on the action. Among about 100 proposals for industrial projects, China would like to build an automotive factory, Brazil wants to produce pharmaceuticals, and several companies are planning solar, wind and other energy enterprises, Perez said.

Already, Argentina sends frozen meat to Mariel for transshipment to Europe, which is quicker than shipping it directly.

For Brazil, the port funding is an investment in the nation's quest to be Cuba's No. 1 partner, as a former foreign minister put it, and to establish itself as an alternative to Venezuela, which has cultivated a special relationship with Cuba.

With the center-left Workers' Party in power since 2003, Brazil has also long sought to secure its position as a dominant economic power in the Western Hemisphere.

But picking up nearly $700 million of the nearly $1-billion tab stirred opposition in Brazil, especially during President Dilma Rousseff's reelection campaign last year. It is unclear whether Brazil could have predicted President Obama's decision in December to restore U.S. ties with Cuba after half a century, but Rousseff clearly felt vindicated.

"It was extremely criticized during the election campaign, but the Mariel port has shown today just how important it is for the whole region and for Brazil," Rousseff said after the announcement was made. "It's strategic due to its closeness to the United States."

Cuba has used the Brazilian money also to build a railway and highway to Mariel to make it easier to bring in supplies and merchandise.

In return for the port financing — provided by Brazil's development bank, BNDES, via Brazilian companies that participated in the project — it was agreed that at least $800 million would be spent on Brazilian goods or services, and Brazilian companies will have a special place in a future special economic zone.

"The BNDES financing for Mariel had two important impacts for the Brazilian economy," the bank said in a statement. "It contributed to Brazil's trade surplus by creating the conditions for high-value technological exports … and supported the growth of Brazilian industry."

Although Brazil may be hoping for better access to the U.S. market, Cuba and numerous U.S. businesses, especially in the agricultural sector, also are counting on increased commerce between their countries.

But many experts caution: Not so fast.

First, the U.S. embargo imposed on Cuba in the early 1960s remains largely intact, limiting American business dealings with Cuba. Obama has loosened some of the restrictions, but only an act of Congress can lift it.

And, despite some openings in the Cuban economy, President Raul Castro has insisted that the basic socialist tenets of his country will remain intact. American businesses that hope to invest will face a slew of obstacles.

For example, in the Mariel port, companies must hire local workers through the government; the companies will pay the government top dollar for the workers, who in turn receive only a minimum salary that can be as low as $20 a month.

"You can still operate much more cheaply in Central America," said Gary Maybarduk, a former U.S. diplomat in Cuba and member of the Assn. for the Study of the Cuban Economy. Mariel "is a good location, but it's not really better than Mexico. Maybe better for the [U.S.] East Coast. But it's not cheap working in Cuba."

In Mariel, once a sleepy port town that became famous, or infamous, during the 1980 boatlift, there is also anticipation.

Yolexeis Abat Duanes, 34, has been busy working with construction crews at the port. "Before, all I was doing was building houses," he said. "This is much bigger."

Francisco Clavel, a 60-year-old math teacher in Mariel and enthusiastic backer of the 1959 revolution that brought the Castro dynasty and the Communist Party to power, said Cuba will finally be able to get a bigger piece of the Caribbean trade pie.

"We grew up believing in the revolution. I could study thanks to the revolution. It did a lot for us," said Clavel, the son of a farmer. "I'm confident in Cuba's future now more than ever."

Abel Gonzalez was running the cash register at a 24-hour store-and-bar in the center of Mariel, selling boxes of rum and liters of whiskey. He said he was optimistic about the future but less enthusiastically so. "Like the rain," Gonzalez said, "the future is in the hands of others, not us."

Times staff writer Wilkinson reported from Mariel and special correspondent Bevins from Sao Paulo, Brazil.

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