Desire to Reopen Cuba to American Investment Goes Unfulfilled

Curtis Carlson, a Minneapolis tycoon who runs an empire of tourist hotels, restaurants and cruise ships, accepted an invitation from Fidel Castro five years ago to assess whether it would make sense to invest in Cuba.

So impressed was Carlson that he initiated plans for building two Radisson hotels, renovating an old Cuban hotel, opening several TGI Friday restaurants and making Havana a regular call of Caribbean cruise ships.

“There is a pent-up demand for this destination,” said T. Peter Blythe, president of worldwide development for Carlson’s Radisson operations. “People have visions of a beautiful and exciting place that goes back to the old newsreel films of the ‘50s. People feel that Havana still has a lot of intrigue and beauty.”

But the passion to reopen Cuba to American investment will have to go unfulfilled for the indefinite future. A slow thaw in U.S.-Cuban relations came to an abrupt end earlier this year when Cuban MIG fighters shot down two small planes flown by Cuban exiles from Miami who either entered or nearly entered Cuban airspace.

Congress responded by passing the Helms-Burton Act, a law that has generated international controversy for its sanctions against companies from other countries that invest in Cuba. But it also toughens the 35-year U.S. economic boycott of Castro’s Communist regime, a policy that forbids American tourists to go to Cuba and American companies such as Radisson to do business there.

Named for its sponsors, Sen. Jesse Helms (R-N.C.) and Rep. Dan Burton (R-Ind.), the act wrote the embargo into law. That means it can be repealed only by another law, not by a presidential order.

Blythe said enactment of Helms-Burton “put our plans on ice for an indefinite period. . . . We don’t see any indication that American businesses are going to be able to enter the Cuban market for many years to come.”

Nevertheless, many U.S. companies continue to line up for the inevitable day when relations with Cuba are normalized.

Cuba now receives 600,000 tourists a year, mostly Canadians and Europeans. Blythe said his planners estimated that an expansion of tourist facilities could raise that total to 7 million within a few years if Americans were allowed in.

Particularly galling to American business is the parade of Canadian, European and Mexican companies marching to Cuba.

“I think it’s just ridiculous that everyone in the world is free to do business in Cuba except us here in America,” said Dwayne Andreas, chief executive of Archer-Daniels-Midland, the agribusiness conglomerate. “Reagan opened up China. Bush opened up Russia. And it seems to me rather strange that here is this beautiful island where Americans might go and make investments and they can’t.”

Said Willard Workman, the U.S. Chamber of Commerce’s vice president for international relations: “Probably the best way to speed political change is to let a couple thousand American businessmen go down and talk to them about economic freedom.”

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According to the U.S.-Cuba Trade and Economic Council, 400 American business executives visited Cuba in 1994, 1,300 in 1995, and more than 1,000 during the first seven months of 1996. (The U.S. makes exceptions on the visitation ban for journalists, researchers and others, including business executives.) John Kavulich, the council’s president, said even the downing of the two planes in February failed to slow the flow.

Kavulich, who opened shop in the Soviet Union as a consultant working with American companies interested in doing business there before the country collapsed, said he gained cooperation from Communist government officials by telling them: “I don’t want to get into peace, love and happiness. I’m only interested in business.”

In the early 1990s, after the Soviet Union split apart and Russia turned capitalist, Kavulich decided to try the same tactic in Cuba. Communist Cuba struck Kavulich as about as receptive to investment as the Communist Soviet Union had been in the 1980s.

After selling the idea to American business people, Kavulich set up his council a couple of years ago. He says he told prospective backers: “The council will not get into politics. It will be an informational tool.” The council supplies its members--more than 100 U.S. companies--with continual information about Cuba’s politics, economy and investment climate.

Membership in the American Chamber of Commerce of Cuba in the United States has boomed since its chairman, Clarence Moore, revived it in 1993 after it had been all but dormant for many years. Merrill Lynch, Parke Davis, Reader’s Digest, Sprint, Bechtel, Chiquita Brands, Kellogg and Joseph E. Seagram joined its list of corporate members. Corporate executives wanted more information about conditions in Cuba.

Moore’s assessment is that the time has not come to invest in Cuba because Castro simply has not lifted restrictions enough to warrant investment.

Despite their interest in Cuba, American business executives--who once united to persuade the U.S. government to lift restrictions on investment in Vietnam--have never mounted a powerful lobbying effort to offset Cuban American leaders in Miami, who insist that an economic stranglehold can help bring down Castro.

Wayne Smith, a former foreign service officer who once headed the U.S. diplomatic office in Havana and now watches Cuban affairs for the private Center for International Policy, believes Cuba is simply not large enough to warrant much lobbying by American business.

“Cuba is a small island with 11 million people,” Smith said. “It’s an attractive market. A lot of American businessmen say it’s our natural market. Their juices flow when they see foreign companies there. But it’s just not a large enough market for businessmen to generate a strong effort.”

Moreover, the market is still a restricted one. Castro, for example, requires foreign companies to pay the Cuban government for its supply of workers.

“If you take the politics aside and look at the economics . . . right now Cuba is not an attractive investment,” Workman said. “There are other places in the world where the climate is more attractive.”