Cu-banned

Addition to US State Sponsors of Terrorism list hurts Cuban investment.

The Trump administration added Cuba to the State Sponsors of Terrorism list just before the end of its term. On the short-term, this compounds the impact of the economic and health crises that the country is facing. The price of food, basic goods and services are all expected to increase.

Joe Biden has previously said he wants to improve US-Cuban relations, he wants to restore some level of the commitment started with Obama, which includes allowing Cuban Americans to visit family members and send money. However, Biden’s inauguration speech made it clear that the US must focus on resolving internal issues first.

Membership of the State Sponsors of Terrorism list means the country cannot export arms or related products and loses access to certain economic support mechanisms. For example, countries on the list cannot access loans from the International Monetary Fund and other global institutions and insurers may suspend coverage.

A former political advisor and diplomat explains why this is a particularly acute problem now, “Cuba was making efforts to create a new business community, from scratch, this will not work if we don’t have access to external funding. How can British, German or Hong Kong funds invest if we are on this list? The country was moving towards best commercial and competition practices but the embargo and this list prevent us going further.”

“Cuba was making efforts to create a new business community, from scratch, this will not work if we don’t have access to external funding.”

Former political advisor, Cuba

Despite these challenges, there is some hope in Cuba that a Biden administration could offer more stability and create opportunity for business. Before being added to the list, Cuba had presented its new USD 12 billion Portfolio of Foreign Investment Opportunities 20/21 with investment called for in construction, pharmaceuticals, mining, food and professional services.

An official in the Ministry of Foreign Affairs outlined, “Cuba needs everything and has a lot to offer. In addition to our doctors, who have been fighting the pandemic around the world, we are also recognised for our research on tropical seeds and sustainable agricultural practices. There is huge potential for livestock and agriculture in Cuba.”

The Foreign Investment Opportunities portfolio specifically focused on technology to modernise the production of soybean oil, wheat flour, confectionery and drinks. Also, 34 projects were identified for the production of pork, chicken and beef.

Logistics is another sector where there could be huge opportunity for Cuba given its strategic location in the Caribbean. The official continues, “Brazil had been supporting investments in the port of Mariel but president Bolsonaro undermined that. South Korea has also shown interest in investing in not just Mariel but the whole logistics network. Being on the list prevents all of this.”

“The list is a hidden message to the military leadership, who run the juiciest businesses – investors do not like such a partner.”

Advisor to the office of the President of Cuba

The same source hope that tourism could also see strong growth in the short to medium term, “At the macro level, the tourism sector is called upon to reinvent itself because the crisis is global. We compete against the great hotel infrastructure of the Mayan Riviera, but it is also complementary, perhaps one of the few in the Caribbean. We want tourists going to Cancún to come across and spend some of their time discovering Cuba.”

And advisor to the office of the President of Cuba believes, “The list is being used to pressure Cuba’s business environment, but the embargo hurts us more. We are optimistic that we will leave the list eventually but on the short-term it makes it hard to diversify supplier and partners. The list is a hidden message to the military leadership, who run the juiciest businesses – investors do not like such a partner.”

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