International Business : U.S. Firms, Cuba Turn an Eye to Ending 30-Year Trade Freeze : Commerce: But the Clinton Administration's insistence on reform makes imminent change unlikely.

From Associated Press

Former Chrysler Chairman Lee Iacocca was here recently. So were executives from major U.S. pharmaceutical companies. And when Cuban officials hosted a reception in New York for U.S. businesses last month, about 100 firms showed up.

After more than three decades in which Cuba has been virtually off-limits to American business, there is a sense among many U.S. firms that change may be in the air.

This mood blends nicely with the hope among government officials and ordinary citizens here that U.S. business people may be coming back, helping to lift the struggling country from its prolonged depression.

But the Clinton Administration is insisting on democratic reform in Cuba before any moves toward lifting the embargo begin. Under that criterion, the prospects for change seem dim at the moment, because political repression has been on the increase, according to human rights activists.

Elizardo Sanchez, leader of the Cuban Commission on Human Rights and National Reconciliation, said dozens of dissidents have been detained and given stern warnings in recent weeks. He himself received death threats from state security agents, he said.

Beyond that, the government's second-ranking official, Raul Castro, the president's brother, said recently that if a second party were allowed to compete here, it would be an "imperialist party," meaning pro-American. That, he said, "we will never permit."

As long as the embargo remains intact, many of the most attractive investments here are being gobbled up by America's competitors. Raul Taladrid, vice minister in the Ministry of Foreign Investment and Economic Cooperation, said about 650 joint ventures already operate in Cuba, and a similar number are on the drawing board.

With Spanish firms taking the lead, tourism has become the country's most dynamic sector. Taladrid said in an interview last week that 700,000 tourists are expected to visit the island this year, spending $700 million. He expects a 30% increase in both categories next year.

Peter Carlson, executive vice president of Minneapolis-based Carlson Co., said 700,000 tourists is "a small number compared to the potential" for Cuba.

Carlson, with its hotel, restaurant and travel agency chains, is poised with other firms to leap into Cuba once ground rules permit. Some business people are coming here for a firsthand look. Iacocca, now involved in the entertainment business, visited Cuba in July and met with President Fidel Castro. Neither side will say what was discussed.

Some of the most active foreign investors are from Mexico and Canada, the two partners of the United States in the North American Free Trade Agreement.

The Canadians have made a large investment in Cuban nickel, while Mexicans are into oil refining, telecommunications and cement. The citrus industry is attracting Israeli investors.

Telecommunications is one of the few areas legally open to American firms, and a number of carriers are hoping to make a profit off U.S.-Cuban phone service, now being modernized for the first time in three decades.

Other American firms, though still barred from doing business, have signed letters of intent with Cuban enterprises, giving them an inside track if the two countries somehow find a way to be more neighborly after three decades of hostility.

Internationally, the U.S. embargo has scant support--a fact reinforced last week when the U.N. General Assembly voted 101 to 2, with 48 abstentions, to oppose the embargo.

The embargo against the Communist nation seems to many here and in the United States to be an anomaly. Just this year, the White House reopened trade with Vietnam, dropped a threat to cut back on trade with China and is talking about opening trade with Communist North Korea.

Domestic political considerations are at the heart of hard-line policy toward Cuba. So far, the Administration is still ardently courting the south Florida Cuban exile vote, much of which strongly supports the embargo.

Many influential figures in the United States, including some conservatives, question Clinton's policy. Former National Security Adviser Zbigniew Brzezinski favors negotiations with Cuba on political issues, contending that the current policy is too rigid and is intensifying social and political tensions on the island.

The New Democrat, a publication of moderate Democrats, said in an editorial in its current edition that the Administration should lift some restrictions on dealing with Cuba in return for moves toward capitalist reform.

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