Commerce and trade with Cuba – my observations on the future of this island nation.

Commerce and trade with Cuba – my observations on the future of this island nation.

Educationally, I hold an MBA degree in Finance and Marketing. I’m retired from the normal working world. Now, I carry a camera around with me and use it to record what I see. As I do so, my educational background has an impact on how I spend some of my vacation time and also, from time to time, influences where I point my camera.

What impact did my educational background have on my vacation activities during my recent visit to Cuba?

Well, while others visiting Cuba might have been discussing their suntans and SPF of their favourite lotion or the flavour of their chosen drinks, I usually spent part of my time talking to local people about economic and business topics. For instance, I asked Cubans about the impact that the U.S. embargo had on them as Cuban citizens. I asked them who they thought might fill all of the new hotel rooms under construction along the Varadero Peninsula (and I’m assuming elsewhere in resort areas)? I asked them about home ownership? I asked them about education and training? I asked those working in the tourist industry at the trainee level what languages they were learning?

I wasn’t meeting with the hotel managers or the corporate or political leaders of the country. I was meeting with tour leaders and bell hops and service workers whom any tourist would or could interact with during the course of a normal vacation. At this level of discussion, in some instances, I was somewhat surprised by the answers that I received and, in other instances, not surprised at all.

One individual, studying for a position in the tourism industry was quite proud to tell me, in broken English, that he was working on learning English and Russian as he saw those two languages as the most important to learn for future success in the tourist industry in Cuba. Considering the number of French-Canadians who travel from Canada to vacation the beaches of Cuba each year, I was somewhat surprised that French was not on his agenda, yet, at the same time, he, and I’m assuming his advisors and teachers, are continuing to see Russia as an important contributor to Cuban tourism. When I asked others about what they thought of all the resort complexes being built, and where they thought that all the tourists might be coming from to fill those rooms, the answers were pretty consistent – the Americans are coming! In the eyes and minds of these young Cubans, in the lower ranks of the service industry or in the process of training for future jobs in the tourist industry, the unanimous feeling was that within 5 years, Americans would once again be flooding into Cuba. This ‘fact’ was not whispered secretly but rather was discussed openly with me. So, based on this rather limited survey, from a Cuban perspective, the doors to allow American tourists to travel to Cuba directly without secretly sneaking there through other countries such as Canada, will be opened within five years. My feeling is that they might be right!

On the topic of home ownership, our tour guide now informed us that Cubans, with some restrictions, can now own their homes and can sell their homes but the state still owns the land upon which the home is built. Another restriction is that Cubans can only own one home at a time. They can become home owners through inheritance, through purchase or combine some level of sweat labour and funds and build one themselves. I didn’t take the time to explore the whole issue of who gets the biggest or best flat or home in Havana, but since such niceties are allocated by the government, I am assuming that the biggest homes or best locations go to the party faithful or those who occupy higher ranks within the public service or state-run ‘business enterprises’. The first point of who owns the land may be important to some but differs little from the many cottage properties in Canada and the US that are built on public lands under conditions of a 99 year lease or similar constrict. The second aspect, that of who has or gets the largest or the best home or location will be worth watching as Cuba continues to ‘modernize’.  As China and Russia modernized in recent years, the number of billionaires in those two countries has risen rapidly to the point where, I remember seeing statistics somewhere, the number of billionaires in China and Russia now easily eclipses the number of billionaires in the rest of the world. I combine wealth and prestige and home ownership in the same thought process because, I expect, that over the next five years, many higher-ranked Cubans, who now have the visible prestige of preferential home size or location, will also become known for their level of monetary wealth in much the same manner as levels of power, position and influence have become monetized in China and Russia. The pecking order is already in place.  How it is measured is likely to be the only change.

On the topic of education, Cuban health and education is said to be the highest among the Caribbean nations. It was interesting to watch one of their television programs outlining how the American embargo was in some ways responsible for the rise to prominence of the Cubans in the fields of education and health. Although I don’t always believe everything that I read in newspapers or see on television, this perspective on health, education and longevity was interesting. Even if only half true, it might have some bearing on other embargo attempts around the world. The basic premise was that, lacking access to American and some other world products in the medical field, the Cubans were forced to look inwardly for solutions and train their own people and as a result had made some of their own medical discoveries which now ere beginning to come to fruition. Some Cubans in the medical and education fields are gaining confidence that their work in these fields will yield potential commercial and humanitarian value not only in Cuba but on the international stage. It will be interesting to see how this exuberance deals with reality of the competitive outside world but some of the discussion centered on multi-valent vaccines and the treatment or eradication of tropical and semi-tropical diseases of importance to countries affected by such diseases and generally outside of the major focus of North American and European companies whose primary customers don’t encounter those diseases unless by exception.

On the topic of energy independence, Cubans pointed to the vast offshore drilling projects in the gulf coast regions of the US, Mexico and Venezuela and felt that such drilling programs would provide their nation not only with sufficient energy for their own needs but also supply energy for export to the USA if the current barriers were dropped. I have no insight into how much oil might lie beneath the surface of Cuban waters, but the idea of Cuba quenching even a small part of the US thirst for ever-increasing levels of energy, is an intriguing one. Early in the current year, the Spanish Company Repsol has leased a Chinese drilling rig,  the Scarabeo 9, to begin drilling in an area off the north shore of Cuba with the full support and best wishes of the Cuban state-owned oil company Cupet. Environmentalists are concerned that any oil spill, especially anything approaching the BP oil spill that occurred off the coast of Louisiana could have a serious impact on the Florida shoreline.  Until the results of those off-shore drilling efforts are known, Cuba will continue to be a net importer of oil (about 100,000 barrels per day) to supplement their domestic land-based oil production of perhaps 50,000 or so barrels a day.

What about the possibility of trade reopening between the US and Cuba one might ask? Well, as far as a few Cubans that I spoke to were concerned, there is still an embargo in place BUT, and it is a big BUT, significant trade already occurs between US companies and Cuban enterprises. By all accounts and my rather limited sources of information, the much publicized embargo imposed in the Kennedy years and the reduction of the Russian support of the 80’s led to some pretty tough times for the Cuban people and those times are not all rosy yet but, since legislative changes in the US in 2000 and onwards, the number of US businesses dealing directly with Cuban enterprises has increased substantially to the point where, by some estimates, the US is now Cuba’s fourth or fifth largest trading partner. Canada has not been a direct participant in the embargo and continues to be a strong trading partner of Cuba’s but what about other international concerns.  I learned during this visit that all, or almost all, of the milk consumed by tourists and most of the Cuban population in general is reconstituted powdered milk that comes from Canada! I am a milk drinker but not a great fan of reconstituted powdered milk. I thought that the cup of milk that I had at our Varadero resort had a familiar taste to it but I didn’t find out, until later in the week, where the milk probably came from or why the taste of it reminded me of camping trips of yore before UHT milk came along as a campground substitute :-).

And what about the nice new Chinese-built tour buses that were chauffeuring us tourists around Havana. Well, says one tour guide, they were a gift from China. Considering how many new tour buses were greeting us at the Varadero airport or plying the roads of Varadero and Havana, that was one great BIG gift. Well, maybe they were packaged as a gift but upon further inquiry, I learned that the gift was given in exchange for a significant tonnage of Cuban sugar. We were provided with similar stories about how oil from Venezuela was exchanged for Cuban assistance to Venezuela in the areas of educational and health. It appears that bartering at state-to-state level is still alive and well.

In the religious front, the Pope’s visit to Cuba this week might signal changes on the island or changes yet to come, but from the limited observations that I was able to make and discussions that I had during my brief ‘vacation’ this month in Cuba, change is in the wind and tourism will continue to be embraced by the people and by the government as a source of hard currency but other changes may no longer be far, far off in the future. Problems faced the government of Cuba are not as far different than in some other parts of the world. The birth rate is low. Who will care for the elderly? City populations are increasing while not enough people are staying on the farms to work the lands? Educated young people are attracted by bright lights elsewhere in the world. Inflated public service payrolls and real or imagined inefficiencies of government-run enterprises are under discussion. Etc. Etc. Presently, tour boats that stop in Cuba are then prohibited from landing in US ports. I’m only speculating, but wouldn’t be surprised if Havana harbour space will once again be shared with US bound tour boats but more than likely that will be one of those “don’t-hold-your-breath” developments, at least not in the short term.

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